Amberdata Derivatives: Navigating Volatility Amid Trade War Headlines

Markets remain volatile amid macro uncertainty, with crypto consolidating within key ranges as trade war headlines dominate. A resolution could trigger a rally, while current conditions present opportunities for volatility trades.

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USA Week Ahead (ET):

1. Monday 10:00am - ISM Manufacturing

2. Wednesday 8:15am - ADP employment

3. Friday 8:30am - NFP Employment Report

*Various Fed Speakers throughout the week*

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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 Lyra and may change their holdings anytime.

MACRO Overview

This week macro will continue to run the headlines and I expect a lot of different headline catalysts. 

First we have the employment situation reports this week, ADP on Wednesday and NFP on Friday.

Then we have various Fed speakers scheduled to talk throughout the week, they will likely be questioned and share opinions on impact of trade Tariffs, which could move the markets. Their current thinking below: 

Finally, we’ll see what actually happens with tariff negotiations. Trudeau responded “in-kind”, Mexico will share their Plan A, Plan B and Plan C. 

China will file a complaint to the WTO. 

Let’s see. 

I wouldn’t completely discount the potential for a mini-resolution.

BTC: $97,083 (-7.3% / 7-day)

ETH :$2,929 (-12.1% / 7-day)

SOL :$199.48 (-21.4% / 7-day)

Crypto Options Overview

This weekend is dominated by the trade war headlines, which are affecting crypto and traditional risk assets. 

In my mind, consolidation remains “the base case” and we’re merely experiencing the panic needed for a downside swing to support.

This is providing a great opportunity for vol trades. 

Chart: Weekly Spot BTC (finviz.com)

The weekly trend chart does not look broken to me. Instead I see a price range of 110k-90k and we’re merely just trading in that boxed range. 

Markets are freaking out and sending the term structures into backwardation. 

To contextualize the current backwardation we can see the “term structure” richness chart below, shows the current level of 1.01

Chart: Term Structure Richness hourly chart

Chart: Term Structure richness daily chart 5yrs (previous day)

Which according to the past 5yrs of data (above) is greater than about 85% of observations. 

Looking at the actualized VRP given the Friday and weekend volatility, vol sellers were barely hurt. Except for 1 day expirations, the rest of the term structure had already priced in this type of vol.

Chart: Concurrent IV vs RV 30

In my mind nothing is broken here. We likely test the $90k price level, which doesn’t seem crazy for spot, but any resolution in the trade war / tariff negotiations… and we’ll have an excuse to rally back to $110k (top of the consolidation range). 

TL:DR: the market needs some sideways time to figure out what’s going on. 

This environment, with a brand new administration bringing a lot of new changes quickly leads to PANIC and FOMO. 

Consolidation and chop are THE PAIN-TRADE (imo) as markets PANIC on day and FOMO long the next. 

The DVOL spike is a good short vol thesis entry to me.

With IBIT options trading really decent volume I continue to think the BTC RV vol VRP gets structurally squeezed out and moves lower. 

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 Overview

• BTC options on Derive remain extremely bullish despite the recent downturn with almost 80% of OI being calls.
• Derive borrow rate remains one of the lowest in DeFi at 4.8%
• Derive recently breached 100K cumulative new users!
• ETH 7 day 25 delta skew has dropped - reflecting bearish sentiment in light of Trump’s tariffs and the fears it could stoke inflation.
• DRV staking yield remains high at 5.5%
• There appears to be a fairly even distribution of calls and puts bought and sold in the last 24 hours reflecting market uncertainty in the days ahead.
• The most traded ETH instrument by far in the last 7 days was ETH-20250207-3800-C which is most likely going to end up expiring OTM.

Chart: BTC

Chart: BTC

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.