Crypto Options Analytics, May 19: Momentum in Precious Metals & Crypto

USA Week Ahead:

1. Monday: Fed governors speak

2. Tuesday: Fed governors speak

3. Wednesday 2pm: FOMC Minutes

4. Thursday 9:45am: PMI

5. Thursday 3:30pm: Fed governor speaks

6. Friday 8:30am: Durable Goods

7. Friday 9:35am: Fed governor speaks

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 Recap

Last Wednesday the market responded quite positively to a softening CPI print. 

CPI came in at +3.4% year-over-year, in line with expectations. A welcomed data point after 3-months of hotter-than-expected inflation data. 

Chart: Consumer-price index via WSJ.com

Alongside the inflation data we had retail sales which missed the mark of +0.4% expected, and came in at 0.0%.

Chart: U.S. Retail Sales, Monthly Change via WSJ.com

Together this is giving some credibility to the soft-landing scenario. 

Powell spoke last week and reiterated that rates aren’t expected to go any higher but that as long as the inflation data remains strong, the Fed will continue to hold rates “higher for longer”. 

The market viewed the recent CPI print as dovish for the Fed. Precious metals have been quick to price higher with real momentum. 

Chart: Gold Daily Chart (ThinkOrSwim)

Chart: Silver Daily Chart (ThinkOrSwim)

This explosion higher is especially interesting in Silver. A bit more of a retail product, Silver has been trading at historical lows versus Gold but Friday’s activity looks different… Like there’s real momentum behind this move, which is likely good for Crypto prices as well.

BTC: $66,782 (+9.2% / 7-day)

ETH :$3,086 (+4.7% / 7-day)

SOL :$167.28 (+15.9% / 7-day)

This week the FIT21 house vote could be a large catalyst for a bullish break-out, especially in Bitcoin. 

Given the context of hard-assets, such as Gold and Silver, having such a bullish past week, a regulatory breakthrough would likely allow crypto to catch-up. 

Bitcoin has historically been the “Digital Gold” moving in lockstep with regular Gold. Hence, I’d expect to see Bitcoin continue to lead next week. 

Chart: Finviz.com

The ETH/BTC chart still looks dismal for ETH. I still think the “altcoin” rotation play becomes worthy in the longer term, especially if the ETH ETF decision gets rescheduled later in the year. 

BTC vol continues to soften as Bitcoin spot prices are working through the $60k-$70k range. 

We can see the short-term volatility steepen lower week-over-week. 

Relative volatility is showing ETH a bit more expensive, but if the FIT21 bill passes the house and SAB 121 isn’t vetoed, a breakout of BTC above $70k likely brings relative volatility back to parity. 

Chart: BTC ∆25 RR-Skew

Chart: ETH ∆25 RR-Skew

Something that’s interesting is the current ∆25 RR-Skew for ETH compared to BTC right now. Both are priced nearly identically, despite the relative weakness in Spot ETH and the deeper levels of negative ∆25 RR-Skew seen last week for ETH. 

There’s an interesting short-term relative vol play for long BTC ∆25 and short ETH ∆25 should BTC follow precious metals next week. 

Later, ETH/BTC relative vol parity could provide a good longterm opportunity to buy ETH volatility in anticipation of an “altcoin rotation” for H2, especially as another ETH ETF decision would likely keep IV firm. 

Paradigm's Week In Review

BTC +8.55% / ETH +5.39% / NDX +1.90%

Paradigm Top Trades this Week 👇

Weekly BTC Cumulative Taker Flow 🌊

Weekly ETH Cumulative Taker Flow 🌊

BTC Cumulative OI 

ETH Cumulative OI

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BTC

ETH

The Squeethcosystem Report

Crypto markets remained active, ending the week up. ETH ended the week +4.69% and oSQTH ended the week at +7.04%.

Volatility

oSQTH IV remained active this week, ending in the 60s.

Crab Strategy

Crab saw gains ending the week +3.41% in USDC terms.

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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.