Monday 6:50pm - Fed Governor Speaks
Tuesday - Fed Govs speak throughout the day
Wednesday 8:15am - ADP Payrolls
Thursday - Fed Govs speak throughout the day
Friday 8:30am - NFP
Friday - Fed Govs speak throughout the day
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.
Last week we had a PCE reading coming in at 2.5% Y/Y, but the Core PCE (excluding food and energy) was 3.5%.
This is proving to be a lack of progress for the data-dependent Fed.
Looking at the 1Q 2024 data versus the 2H 2023 data is showing to be a step in the wrong direction.
Overall, Jerome Powell has stated that he just needs to see more data before reacting by changing the 2024 rate cut forecasts.
Next week we will have many Fed speakers appear for talks and more importantly the NFP employment numbers.
Chart: WSJ.com
Crypto and gold rallied last week. Marking new ATHs for gold, which has been long awaited.
Chart: Finviz.com
There’s been speculation of a revised inflation target from 2% → 3% from some big banks.
Although this revision would be great for gold and crypto (not good for fiat), given how cautious and data-dependent Jerome Powell has been, I’d be VERY surprised to see that actually happen anytime soon.
I also think crypto isn’t very sensitive to US Risk-Free rates right now, given the 90-day basis is currently hanging out at +25%, although overall risk-on/risk-off sentiment is still an important second-order effect.
Chart: 90-day BTC basis (annualized)
BTC: $70,970 (+7.7% / 7-day)
ETH :$3,638 (+7.6% / 7-day)
SOL :$200.41 (+13.5% / 7-day)
Trading fundamentals (vs) market positioning, that’s how I really view the current environment.
Admittedly, I don’t have clear conviction this week, except for a potential “sell-the-news” play.
Looking at the fundamental picture for BTC, there are really good reasons to be long.
That said, everyone seems positioned for this.
Chart: ∆1 BTC OI
The ∆1 products have large amounts of OI established with CME continuing to lead the way.
Chart: 90-day BTC futures Basis (annualized)
This is translating into an elevated futures basis… the cost of leveraged longs barely retraced before moving higher again today.
Chart: BTC ATM term structure
If we look at the options market, we see an interesting structure. A steep Contango before 4/26 and a high forward volatility kink for the 4/26 expiration.
The options market is pricing in the halving event as well.
Chart: 7-day IV/RV
Without a proper breakout through to new ATHs in BTC, we’re unlikely to get a valuable payoff for long-call volatility buyers, given the declining RV and growing VRP.
That said, the current positioning being so extended is setting the market up for a VERY interesting “sell-the-news” halving cycle play.
Should there be a real pull-back we stand to see excessive ∆1 OI become liquidated, volatility RR-skew to favor puts, and a collapsing basis.
From an options trade perspective that’s the most interesting play on the horizon I currently see.
Until halving, I suspect the market favors longs but it’s still a hard call given the market is already so invested.
BTC +6.19% / ETH +3.17% / NDX +0.06%
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Crypto markets found some selling this week. ETH ended the week +7.03% and oSQTH ended the week at +11.94%.
oSQTH IV saw declines this week ending back in the 90s.
Crab saw gains ending the week +3.96% 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.