Amberdata Derivatives Newsletter: Fed Impact, Volatility, & BTC Trends

Markets stumbled last week after Powell's cautious tone spooked investors and elevated volatility, with Gold surging to new highs and Bitcoin eyeing a similar "right-tail" breakout. As Fed independence becomes a political talking point, volatility in both traditional and digital assets is catching fresh attention.

USA Week Ahead (ET):

*Fed governors speak everyday this week*

1. Monday 10a - US leading Indicators

2. Wednesday 9:45a - Flash PMI

3. Wednesday 10a - New Home Sales

4. Wednesday 2pm - Beige Book

5. Thursday 8:30a - Durable Goods

6. Thursday 10a - Existing Home Sales

7. Friday 10a - Consumer Sentiment

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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

Hope everyone had a Happy Easter!

Last week was a shortened trading week with markets closed for Good Friday. However, Powell’s speech on Wednesday (4/16) sent markets sharply lower.

During his remarks, Powell expressed uncertainty about the Fed’s ability to respond to an economic downturn, noting that tariffs could limit the effectiveness of rate cuts due to short-term, supply-side inflationary pressures.

This stagflationary tone weighed on equities and kept the VIX elevated, as the index hovered between 30 and 35 throughout the week.

Chart: ThinkOrSwim (Cash VIX)

In the chart above, we can see that Powell’s comments spiked VIX up +5pts, testing the weekly high of VIX-35.

Unhappy with the remarks, Trump responded by suggesting that Powell is moving too slowly to support the economy and market. After the COVID inflation, Powell has leaned hawkish on rates… Any threats to Fed independence would likely be inflationary. 

Regardless, Powell’s term ends next year, and Trump is likely going to appoint someone dovish to head the central bank, which could also be inflationary. 

Taken together, this provides strong ammunition for the Bitcoin “right-tail” thesis… Gold is currently on its own “right-tail” path higher.

Chart: Finviz.com (GOLD Daily Prices, breaking new ATHs)

Not only is Gold breaking into new ATHs daily, but the associated volatility with Gold is also following the asset higher… Showing a rush into the asset. 

Is digital Gold next to move higher? Why not?

Chart: TradingView.com (GVZ Daily chart) AKA (GOLD VIX) 

Next week, we have the Fed Beige Book release and multiple Fed governors speaking throughout the week.

Any threats against the Fed’s independence could be a catalyst for Gold and BTC to head higher.

BTC: $87,018 (+3.1% / 7-day)

ETH :$1,612 (-0.1% / 7-day)

SOL :$141.59 (+8.1% / 7-day)

Crypto Options Overview

Given the US monetary landscape and the reaction in the Gold market, owning the right-tail thesis hedge seems very interesting right now.

The associated volatility is also near historical lows. 

Chart: IBIT Term Structure

The current IBIT term structure is pricing 54% 6-month vol and about 56% 2-year vol. 

Chart: BTC 180-DTE ATM IV

Looking at the Deribit BTC market since April 2019, we can put the 6-month at-the-money (ATM) implied volatility (IV) into context.

There have been four instances where 6-month ATM IV reached as high as 120%. In contrast, today’s level of 54% IV is hovering near the lower end of its historical range over the past six months.

(Of course, there are structural reasons that could explain this.)

As discussed on the Deribit podcast, there’s a strong case to be made for both right-tail and left-tail trades in BTC.

Bitcoin still occasionally trades in line with other “risk-on” assets, so an equity market downturn could easily drag crypto, including BTC, lower. With this in mind, owning options for right-tail exposure remains a compelling way to secure upside potential.

Paradigm's Week In Review

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Weekly BTC Cumulative Taker Flow

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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.