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This week brings key macro catalysts with NFP and CPI expected to remain stable, keeping the Fed firmly in wait-and-see mode. In crypto, volatility finally spiked, but positioning still points to a short-term bounce rather than true capitulation. Read the full Amberdata Derivatives Newsletter below for the complete analysis and charts.
USA Week Ahead (ET):
- Wednesday 8:30 am - NFP / US Employment Report
- Friday 08:30 am - CPI
Various Fed Governors Speak throughout the week
MACRO Overview
This upcoming week, we have the NFP/US employment release for January, coming out on Wednesday.
Unemployment for December stood at 4.4%, this is expected to be unchanged.
This will be followed by the CPI release on Friday at 8:30 am (ET).
The CPI number for Friday is expected at +0.3.
As both these measures seem stable, unless markets crash, I expect the Fed to continue to “wait-and-see”… For now, rates will be where they are imo.
The big headline items that affect crypto is the nomination of Kevin Warsh and the potential passage of the Clarity Act.
Kevin Warsh has a background with finance big-wig Stanley Druckenmiller, working with his firm as a partner after leaving the Fed in 2011.
Kevin also seems to believe in the value proposition of Bitcoin as the “younger generations' digital gold”.
These are good fundamental views for the long-term health of the industry (even if prices go lower from here.)
The Clarity Act is being held up on the point of stable yield being allowed to be paid-out to customers or not.
Stablecoin issuers prefer that it isn’t paid out, exchanges like Coinbase prefer that it is.
Trump mentioned the end-of-February as a deadline to get things figured out. We’ll look for further developments.
BTC: $71,101 (-7.8% / 7-day)
ETH: $2,114 (-8.7% / 7-day)
SOL: $87.81 (-14.2% / 7-day)
Crypto Options Overview
BTC finally had the volatility move we were expecting. It’s hard to see Gold and Silver volatility being at all-time highs and not have any contagion into BTC (assuming the digital gold narrative).
BTC DVol moved from sub-40 to a high of around 90.
Chart: DVOL index (pro.amberdata.io)
This top vol level of 90 also sent the term structure richness to the peak area of backwardation of 1.30 (below).
It’s interesting to see how reliably strong the backwardation level finds market inflection around 1.30
(Covid, TerraLuna, FTX, Spot ETF approval, US election, current meltdown) - This is one of my favorite market indicators.
Chart: BTC Term Structure Richness
We can see the intraday hourly version of the chart below.
The question now remains, did BTC find a short-term bottom, or did we find a long-term bottom?
Another place I’m curious to look to answer that question is the funding rates and futures basis.
We can expect that funding would flip net negative for the week as the markets dropped.
The cumulative funding for the week became negative for many exchanges but actually not all.
The funding rates (essentially floating rates) would be the most sensitive to current market prices.
The fixed dated futures can be assumed to reflect an expectation for next 90-days of 8hr funding payments being net negative or positive.
Although 90-day basis dropped lower on each leg down for BTC, these moves barely ranged -100bps. Today fixed basis remains around 4% for BTC (inline with risk-free treasury yields).
Looking at a longer time-frame, we can see the FTX meltdown sent 90-day basis as low at -9%.
This lack of “reaction” in the futures basis, doesn’t make me confident we hit a true CAPITULATION moment.
Yes, volatility did indeed hit peak levels… and the short-term bottom came in.
The surface today is still around peak wing extremes historically, meaning we’re going to need to side-ways trading to allow some normalization.
But the environment we’re in isn’t bullish, and the same players are basically still invested.
There hasn’t been a transfer of ownership from the past cycle (a capitulation) into fresh hands for a new cycle to begin.
#1
IBIT ETF flows: still net positive by a large margin, although average ownership is underwater.
#2
DATs: Still owners of their stash, haven’t sold but probably aren’t net new buyers pushing prices back up.
#3
Price levels: Although equities are near all-time highs… BTC prices are below the April 2025 tariff meltdown lows and actually erased all the gains from the Nov 2024 Trump election.
(If deregulation was the catalyst for a crypto rally, all the positive developments there have been retraced).
If BTC can retrace… can the AI bubble retrace?
TL:DR - We had a short-term bounce, but long-term this doesn’t feel like the true CAPITULATION bottoming move yet. Although Vol needs to normalize from here, in terms of prices the same people own the same things.
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.
