Amberdata Derivatives Newsletter: ETH Leads Rally, BTC Nears ATH's

Markets held steady after the FOMC decision, but optimism is building as U.S.–China trade tensions ease and crypto surges—with ETH leading the rally and BTC nearing all-time highs ahead of a key inflation data week. Learn more in this week's Amberdata Derivatives newsletter!

USA Week Ahead (ET):

1. Tuesday 8:30a - CPI

2. Thursday 8:30a - PPI

3. Thursday 8:40a - Jerome Powell Speech

4. Friday 10a - Consumer Sentiment

*Various Fed Governors Speak*

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

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

MACRO Overview

Last week, we had the FOMC rate decision. This was a non-event as expected by the market. Rates remained unchanged, Powell reiterated his “wait-and-see” approach and acknowledged that the economy remains resilient despite the Q1 GDP dip due to trade wars. 

In terms of trade wars we’re seeing some thawing, especially as China and the US held trade talks over the weekend. 

Previous tensions had escalated tariffs to 145% (U.S.) and 125% (China) but now both sides now appear ready to significantly reduce tariffs, according to Goldman Sachs.

Chart: ZeroHedge.com (Goldman Sachs Research)

This bodes well for risk-assets and crypto alts will likely continue to outperform if risk-on sentiment continues. 

This upcoming week we have important inflation data being released with CPI on Tuesday and PPI on Thursday. 

The week concludes with consumer sentiment preliminary reading on Friday.

BTC: $104,508 (+9.6% / 7-day)

ETH :$2,508 (+37.7% / 7-day)

SOL :$173.59 (+17.4% / 7-day)

Crypto Options Overview

What an amazing week for crypto!

+37% gain for ETH week-over-week, absolutely unheard of! 

The ETH/BTC ratio finally had the “Snap-back” rally, that we mentioned in last week’s newsletter. The 1800/2200 call spread buyers were handsomely rewarded! 

Chart: Finviz.com (1hr ETH/BTC Ratio)

Chart: Finviz.com (Weekly Chart ETH/BTC Ratio)

We can see the 1-hour intraday chart being decidedly strong for the ETH/BTC ratio. Zooming out to the weekly chart, we can see this move is barely a drop in-the-bucket. There’s room to run higher for ETH relative strength. 

Bitcoin rallying as well, +9.7% week-over-week, is another tail-wind for higher prices overall. 

Chart: Finviz.com (SOL/USD Daily Chart)

Another interesting trade is the Solana $200 May expiration calls we mentioned a couple weeks ago.

There was a large seller of these calls and concentration risk around that strike. 

I can’t help but think these contracts continue to be a good buy as this seller will likely buy-to-close or at least stop selling them as SOL rallies higher. 

There’s a strong chance that Solana can rally past $200 in the near term. 

Chart: SOL $200 Call June Expiration Block (pro.amberdata.io)

Traders also got long the $200 June expiration last week. This was the biggest block trade, trading 50,000x contracts in total for $263,000 in premium. Traders paid 84% IV for these calls, which isn’t high for Solana. Solana volatility often trades in the triple digits. 

Chart: ATM IV Solana, 1yr daily chart (pro.amberdata.io)

Bitcoin remains a strong bullish play as prices have crossed $100k and are approaching ATHs again. 

Chart: Bitcoin (BTC) GEX snapshot (pro.amberdata.io)

Chart: Bitcoin (BTC) Net GEX Timeseries (pro.amberdata.io)

We can see dealers are caught short a lot of volatility here as traders continue to bet on higher vol. I think the high vol. bet makes sense, especially as BTC breaks-out into new ATHs, it’s easy to imagine prices exploding higher.

Given the strong term structure Contango for BTC, the June 27th Expiration seems like a decent upside delta and vega play. 

A real move higher should flip the term structure in Backwardation and this current downward steepness is a good entry opportunity in my mind given the new ATH inflection point we’re approaching.

Chart: 5y Daily Term Structure Richness (pro.amberdata.io)

We can see from the above chart, that the current term structure has room to run higher in relative terms to the past 5yrs of data. 

Paradigm's Week In Review

Paradigm Top Trades This Week

Weekly BTC Cumulative Taker Flow

ETH Cumulative Taker Flow

BTC Cumulative OI

ETH Cumulative OI

BTC

ETH

Derive funding rates for ETH and BTC were very negative this week, leading to huge arbitrage opportunities outlined here and here.

Derive pro with a significantly improved portfolio margin engine is due to be released very shortly. This will also allow users to use all forms of collateral while using portfolio margin (currently, only USDC is permitted). Some forms of collateral (e.g. LRTs like LBTC and weETH) will also cancel risk, further lowering margin requirements. More details to be released soon.

A proposal passed this week to reallocate DeFi tokens from the Derive DAO treasury to fund additional $DRV buybacks.

TVL on Derive has hit $114 million.

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.