The Fed kept rates unchanged last week, signaling patience as inflation continues to ease. Meanwhile, Circle’s $53B IPO and the passing of the Stablecoin Bill sparked major momentum in crypto markets. Volatility trends and macro signals are creating fresh opportunities across both equities and digital assets. Learn more in this week's Amberdata Derivatives Newsletter:
Tuesday 10am - Consumer Confidence
Thursday 8:30am - Q1 GDP (revised)
Friday 8:30am - PCE inflation index
Visit Amberdata.io
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.
This past week, we had the FOMC rate decision. Rates were unchanged as Powell continues to reiterate a “wait-and-see” approach.
The FOMC expects two rate cuts sometime in 2025. The market expects the first cut to occur in September.
Fed Governor Waller is the most dovish and recently argued for a rate cut as early as July. Waller says that inflation continues to drop, and cutting in July doesn’t hurt. Should inflation return, Waller argues the Fed can merely hold “higher for longer” going forward.
Inflation has been good lately despite fears of tariff-related price hikes. The most recent inflation reading was +2.8% year-over-year.
This week, we have the PCE inflation index release on Friday. This is the Fed’s preferred inflation gauge.
US equity vol closed the week higher as Iran/Israel/US war moves spooked the markets a bit. That said, the futures open for US equities on Sunday (as of this writing) seem very tame. The markets don’t seem frightened to me.
Chart: VIX (finviz.com)
Outside of that, crypto news was huge last week as well. The Stable Coin bill passed the Senate by a large margin and JPM entered the stablecoin issuance landscape as well.
Lastly, the stablecoin bill does seem to give an edge for USDC over USDT due to a compliance head- start.
BTC: $102,734 (-2.2% / 7-day)
ETH :$2,274 (-9.6% / 7-day)
SOL :$133.39 (—9.0% / 7-day)
The market opened weak for Bitcoin and Ethereum as news about Iran and US involvement caused risk-off sentiments. The equity markets are holding strong, however, which will likely help crypto rally back, all else held constant.
Crypto aside, the big story right now revolves around the blockbuster “CRCL” IPO.
Circle closed the week at $240 per share, making the market cap $53B.
Chart: CRCL Term Structure Week-over-week (pro.amberdata.io)
The massive rally in CRCL lifted the term structure for CRCL options nearly +80% vol week-over-week.
Chart: CRCL Term Structure w/ fwd volatility (pro.amberdata.io)
It’s easy to think this might only be IPO hype, but when I think of the valuation of CRCL vs crypto peers, I think CRCL can move MUCH higher.
Here’s my thinking:
Chart: CRCL ATM IV hourly chart since IPO (pro.amberdata.io)
If we look at the ∆20 risk-reversal for CRCL, we see that short-dated 10-day options have a +40% call skew. No surprise given the massive rally and stablecoin bill momentum through Congress. CRCL spot owners could monetize this via covered calls.
Chart: CRCL ∆20 RR (pro.amberdata.io)
To me, there’s a strong thesis for owning CRCL spot as a long-term investment, but buying IPO highs doesn’t seem great.
Given the massive amount of volatility in CRCL, I like owning the stock through cash-secured put selling.
Should prices come down, IV likely drops as well, but more importantly, selling cash-secured puts 50% OTM still pays a decent premium, and taking ownership of the stock around $120-$150 seems interesting to me.
Chart: COIN ATM IV Daily 4yrs (pro.amberdata.io)
Looking at CRCL peers (COIN and MSTR) can help us contextualize the volatility landscape for crypto-related equities.
We can see above that COIN had a similar volatility spike a few years ago. The elevated IV eventually disappeared.
Chart: MSTR ATM IV Daily 12-months (pro.amberdata.io)
MSTR is another great example. Earlier this year, MSTR IV reached +250% only to give it all back within 30 days (above). This again shows us that crypto-related equity vol can give up quickly.
This CRCL situation is the most interesting trading opportunity in my eyes right now.
Note: You can check out all these volatility charts for free at pro.amberdata.io (just make a free account using a valid email).
Chart: ETH Term Structure (pro.amberdata.io) - Deribit
Looking at crypto vol. on Deribit, we see that ETH is currently in backwardation, due to the recent “risk-off” selling.
Chart: ETH ATM IV 30-days 1hr (pro.amberdata.io) - Deribit
For the most part, ETH volatility has been anchored around 70% this past month, fading the downward move in spot. Using ratio structures (buy 1x put, sell 2x OTM puts) could be interesting as ETH is likely to recover should stocks remain strong this week.
Chart: BTC Term Structure (pro.amberdata.io) - Deribit
Bitcoin volatility, on the other hand, continues to be calm. The Term structure remains in Contango, and prices only briefly broke below $100k before rebounding (a constructive sign).
Chart: BTC realized VRP (pro.amberdata.io)
We can see that BTC realized vol has recently underperformed implied volatility expectations.
As BTC matures, the spot markets have become more tame and vol. buyers have been overpaying for options.
I think that trend likely continues in the medium term.
Although I continue to believe BTC spot prices go higher, it will likely be in a controlled “grind higher” fashion.
TL:DR - CRCL trading opportunity is the most interesting here. I could see CRCL eventually reach a marketcap similar to ETH.
BTC
ETH
DERIVE PRO has just launched!
https://x.com/derivexyz/status/1935834372684628137
New and improved portfolio margin is here as well
https://docs.derive.xyz/docs/pm2
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.