Crypto Options Analytics, June 16th, 2024: Crypto Sentiment Shifts

USA Week Ahead:

1. Monday: Fed Governors Speak

2. Tuesady: Fed Governors Speak

3. Thursday 8:30am: Jobless claims

Disclaimer: Nothing here is trading advice or solicitation. This is for educational purposes only.

Authors have holdings in BTC, ETH, and Lyra and may change their holdings anytime.

Macro

The FOMC on Wednesday left rates unchanged while communicating that we’d likely see only one rate cut in 2024. Earlier in March the market broadly expected a total of three cuts in 2024. 

Although the FOMC meeting tone remains a bit hawkish, the CPI release Wednesday came in flat, which is a win against the inflation fight. 

It’s important to keep in mind one-off CPI wins are not enough to ease Powell's fears against inflation, however. 

“We’ll need to see more good data to bolster our confidence that inflation is moving sustainably toward 2%” Powell. 

Overall, the Fed would likely be the last mover to a Dovish tilt. Meaning, we’ll see Dovish economic data in Jobs and inflation before a Dovish Fed. 

Elsewhere, Trump continues to position himself as pro-crypto, calling BTC and the BTC mining industry the last line of defense against CBDCs.

This feels like a broadly favorable bias developing for crypto in the US.

BTC: $66,707 (-4.3% / 7-day)

ETH :$3,627 (-2.3% / 7-day)

SOL :$150.28 (-7.1% / 7-day)

The ETH relative volatility premium over BTC continues to hold, getting further boosted by anticipation of early July ETF trading in Ethereum. 

caption...

This sent ETH rallying into the Friday close and adding a small forward volatility kink between 6/28 to 7/5 expirations.

I continue to remain skeptical that this relative volatility premium remains persistent. 

A lot of cold water was splashed on the BTC ETF Inflows narrative, given the speculation that funds are merely trading the BTC basis as opposed to taking outright ETF exposure. 

If this is true, does the ETH ETF truly react aggressively to the start of an ETF trading? Especially by such a large margin across the board in the term structure. 

ETH (blue) / BTC (yellow) 180-day RV

I think the true resolution to this question comes when we see the actual ETF inflows and volume. If this looks anything like the CME OI between BTC futures and ETH futures, I think ETH still doesn’t have the mainstream enthusiasm that BTC has seen.

Longterm I still love ETH, but there seems to be a trading opportunity around the “immediate” ETH relative vol pricing today.

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AMBERDATA DISCLAIMER: The information provided in this research is for educational purposes only and is not investment or financial advice. Please do your own research before making any investment decisions. None of the information in this report constitutes, or should be relied on as a suggestion, offer, or other solicitation to engage in, or refrain from engaging, in any purchase, sale, or any other investment-related activity. Cryptocurrency investments are volatile and high risk in nature. Don't invest more than what you can afford to lose.