QCP Asia Colour - 30 May 24
- BTC defended the 67.1k level for the fourth time in 2 weeks, continuing its consolidation within the range.
- Uncertainty about potential Mt Gox BTC supply hitting the market by October could hinder BTC, potentially benefiting ETH upon the launch of the ETH spot ETF.
- The desk observes bullishness in ETH, with sizeable buyers of 4k/5k ETH call spreads for end-June 2024.
- Traders are shifting focus to higher beta meme tokens like Shiba Inu (SHIBA), Dogecoin (DOGE), and Pepe (PEPE), which have seen double-digit gains (10-20%) and are polling in the top 10 for Open Interest.
- BlackRock filed amended S-1 forms overnight, with other issuers likely to follow soon. Approval may come by early July.
Trade Ideas:
With the market consolidating in the range and eagerly awaiting the ETH Spot ETF launch, accumulators continue to be attractive allowing you to consistently accumulate ETH at a discount!
ETH Accumulator (Indicative)
Spot Ref: 3,700 ETHUSD
Maturity: 11OCT24 (20 weeks)
Strike: 3,200 (-13.5%)
Upper Barrier: 4,400 (+18.9%)
Observation Frequency: Weekly
Buy ETH spot at 13.5% discount (3200) every week as long as spot price is under 4400. Any collateral not used to accumulate ETH for that week will be returned.
For BTC and ETH holders, we have developed some thoughts around strategies for earning yield on your coin holdings. (See above)
- BTC defended the 67.1k level for the fourth time in 2 weeks, continuing its consolidation within the range.
- Uncertainty about potential Mt Gox BTC supply hitting the market by October could hinder BTC, potentially benefiting ETH upon the launch of the ETH spot ETF.
- The desk observes bullishness in ETH, with sizeable buyers of 4k/5k ETH call spreads for end-June 2024.
- Traders are shifting focus to higher beta meme tokens like Shiba Inu (SHIBA), Dogecoin (DOGE), and Pepe (PEPE), which have seen double-digit gains (10-20%) and are polling in the top 10 for Open Interest.
- BlackRock filed amended S-1 forms overnight, with other issuers likely to follow soon. Approval may come by early July.
Trade Ideas:
With the market consolidating in the range and eagerly awaiting the ETH Spot ETF launch, accumulators continue to be attractive allowing you to consistently accumulate ETH at a discount!
ETH Accumulator (Indicative)
Spot Ref: 3,700 ETHUSD
Maturity: 11OCT24 (20 weeks)
Strike: 3,200 (-13.5%)
Upper Barrier: 4,400 (+18.9%)
Observation Frequency: Weekly
Buy ETH spot at 13.5% discount (3200) every week as long as spot price is under 4400. Any collateral not used to accumulate ETH for that week will be returned.
For BTC and ETH holders, we have developed some thoughts around strategies for earning yield on your coin holdings. (See above)
👍10❤6🔥2💯2
QCP Weekend Note – 1 Jun 24
- Vols have been absolutely crushed after ETH spot ETF approval this week in spite of prevailing catalysts:
1. Bearish BTC - potential supply from Mt. Gox distribution (~$9.6b) and also from DMM hack (~$305m)
2. Bullish ETH - ETH spot ETFs could start trading earlier than expected in June with the SEC urging applicants to submit S-1 forms by 31 May
- A sleepy market may get caught offside and our bet is on the bullish side, particularly for ETH.
Trade Ideas:
ETH Sep KIKOs (Knock-In, Knock-Out)
Sell 3000 Put w 2500 Knock-in (protection)
Buy 4500 Call w 6200 Knock-out
Cost: ZERO
Max payout: 175% pa or $1,700 USD per ETH if spot expires just below 6200)
Downside: At expiry, if spot is below 2,500, you buy ETH at 3,000.
(Spot ref: 3780 )
- Vols have been absolutely crushed after ETH spot ETF approval this week in spite of prevailing catalysts:
1. Bearish BTC - potential supply from Mt. Gox distribution (~$9.6b) and also from DMM hack (~$305m)
2. Bullish ETH - ETH spot ETFs could start trading earlier than expected in June with the SEC urging applicants to submit S-1 forms by 31 May
- A sleepy market may get caught offside and our bet is on the bullish side, particularly for ETH.
Trade Ideas:
ETH Sep KIKOs (Knock-In, Knock-Out)
Sell 3000 Put w 2500 Knock-in (protection)
Buy 4500 Call w 6200 Knock-out
Cost: ZERO
Max payout: 175% pa or $1,700 USD per ETH if spot expires just below 6200)
Downside: At expiry, if spot is below 2,500, you buy ETH at 3,000.
(Spot ref: 3780 )
👍9❤5🤯4👌2
QCP Asia and London Colour – 3 Jun 24
- The market remains stubbornly bullish in spite of negative headlines about Mt. Gox and the DMM hack last week, BTC rallied confidently above 69k today in Asia.
- Alts especially have benefited from bullish speculation, perhaps stoked by the surge in GameStop (GME) following the reappearance of Roaring Kitty revealing a massive $200m long position in GME. The GameStop memecoin rallied 300% on this!
- This bullishness is likely to continue as the market waits for the ETH spot ETF to usher in new demand. The options market certainly reflects this with ETH vols still trading 15% over BTC vols.
- Another reason for persistent bullishness is speculators increasing long positions in other crypto majors in anticipation of additional spot ETF approvals in the near future.
Trade Idea:
If you are moderately bullish (ie not looking to chase the market) and you are looking for rich yield, ZCCs generate a high upfront payment with some protection on the downside.
ETH ZCC (Zero Coupon Convertible)
Upfront payment: 26% pa ($251 per ETH)
Expiry: 27-Sep
At expiry, if spot is below 2,500, you buy ETH at 3,000.
(ETH spot ref: 3800)
- The market remains stubbornly bullish in spite of negative headlines about Mt. Gox and the DMM hack last week, BTC rallied confidently above 69k today in Asia.
- Alts especially have benefited from bullish speculation, perhaps stoked by the surge in GameStop (GME) following the reappearance of Roaring Kitty revealing a massive $200m long position in GME. The GameStop memecoin rallied 300% on this!
- This bullishness is likely to continue as the market waits for the ETH spot ETF to usher in new demand. The options market certainly reflects this with ETH vols still trading 15% over BTC vols.
- Another reason for persistent bullishness is speculators increasing long positions in other crypto majors in anticipation of additional spot ETF approvals in the near future.
Trade Idea:
If you are moderately bullish (ie not looking to chase the market) and you are looking for rich yield, ZCCs generate a high upfront payment with some protection on the downside.
ETH ZCC (Zero Coupon Convertible)
Upfront payment: 26% pa ($251 per ETH)
Expiry: 27-Sep
At expiry, if spot is below 2,500, you buy ETH at 3,000.
(ETH spot ref: 3800)
❤10👍3🎉1
QCP London and New York Colour – 4 Jun 24
- As BlackRock's BTC spot ETF becomes the fastest ETF ever to cross $20b in size, we are seeing more follow suit with Thailand's SEC approving the first BTC spot ETF and Australia's first BTC spot ETF starting to trade today.
- Unprecedented inflow access for traditional capital around the world will undoubtedly keep BTC price supported. BTC has touched 71k into the NY session.
- We expect a further boost to this bullish momentum with NFP this Friday. The markets are pricing in 0% chance for a rate cut in June and July, A weaker NFP number might change that. Could this be the catalyst to break all-time highs?
New Strategy Alert
We expect ETH to play catch up here especially with the ETH spot ETF about to go live. Snatch up some ETH at discount with the Early Delivery Accumulator.
Unlike the regular Accumulator, you buy coin at discount upfront (4 observations worth) instead of week by week, thereby reducing the chance of price rallying past the upper barrier.
ETH Early Delivery Accumulator
You buy 12.5% of your deployment upfront at 3380 (11.4 discount to spot!). From the 5th week onwards, you buy at 3380 every Friday as long as spot price is below 4400.
Expiry: 20-SEP (16 weeks)
Strike: 3,380 (-11.4%)
Early Delivery: First 4 weeks are settled immediately
Upper Barrier: 4,400 (+15.33%)
Observation Frequency: Weekly starting from 5-JUL
(ETH Spot Ref: 3,815 )
*please check with the desk for additional details
- As BlackRock's BTC spot ETF becomes the fastest ETF ever to cross $20b in size, we are seeing more follow suit with Thailand's SEC approving the first BTC spot ETF and Australia's first BTC spot ETF starting to trade today.
- Unprecedented inflow access for traditional capital around the world will undoubtedly keep BTC price supported. BTC has touched 71k into the NY session.
- We expect a further boost to this bullish momentum with NFP this Friday. The markets are pricing in 0% chance for a rate cut in June and July, A weaker NFP number might change that. Could this be the catalyst to break all-time highs?
New Strategy Alert
We expect ETH to play catch up here especially with the ETH spot ETF about to go live. Snatch up some ETH at discount with the Early Delivery Accumulator.
Unlike the regular Accumulator, you buy coin at discount upfront (4 observations worth) instead of week by week, thereby reducing the chance of price rallying past the upper barrier.
ETH Early Delivery Accumulator
You buy 12.5% of your deployment upfront at 3380 (11.4 discount to spot!). From the 5th week onwards, you buy at 3380 every Friday as long as spot price is below 4400.
Expiry: 20-SEP (16 weeks)
Strike: 3,380 (-11.4%)
Early Delivery: First 4 weeks are settled immediately
Upper Barrier: 4,400 (+15.33%)
Observation Frequency: Weekly starting from 5-JUL
(ETH Spot Ref: 3,815 )
*please check with the desk for additional details
👍7❤5🫡3
QCP Asia and London Colour – 6 Jun 24
- BTC ETFs saw yet another strong day with $488.1m in net inflows.
- The desk saw more call buying overnight, targeting Jul 100k strike.
- A lower than expected jobless claims report tonight and the CPI release next week might potentially be the trigger for a new all time high for BTC. There may also be added momentum to the rally as the market prices in rate cuts.
- Meanwhile ETH continues to lag as SEC Chairman Gary Gensler notes that the ETH ETF S-1 Approvals 'will take some time'.
Trade Idea:
With the S-1 approval delayed, we expect ETH to continue lagging in the short term but eventually outperform BTC once the ETF starts trading.
Accumulate ETH at discount immediately with our revised early accumulator to receive more ETH upfront now.
Early Delivery Accumulator 2.0 (ETH)
On a 500,000 USD Deployment, you will buy 35.7316 ETH at 3500 ETHUSD (9% discount). ETH is credited to your account immediately.
From the 5th week onwards, you will buy at 3500 every Friday as long as the spot price is below 4450.
Maturity: 20SEP24 (16 weeks)
Strike: 3,500 (-9.09%)
Upper Barrier: 4,450 (+15.58%)
Observation Frequency: Weekly starting from 5JUL24
(Spot Ref: 3,850 ETHUSD)
- BTC ETFs saw yet another strong day with $488.1m in net inflows.
- The desk saw more call buying overnight, targeting Jul 100k strike.
- A lower than expected jobless claims report tonight and the CPI release next week might potentially be the trigger for a new all time high for BTC. There may also be added momentum to the rally as the market prices in rate cuts.
- Meanwhile ETH continues to lag as SEC Chairman Gary Gensler notes that the ETH ETF S-1 Approvals 'will take some time'.
Trade Idea:
With the S-1 approval delayed, we expect ETH to continue lagging in the short term but eventually outperform BTC once the ETF starts trading.
Accumulate ETH at discount immediately with our revised early accumulator to receive more ETH upfront now.
Early Delivery Accumulator 2.0 (ETH)
On a 500,000 USD Deployment, you will buy 35.7316 ETH at 3500 ETHUSD (9% discount). ETH is credited to your account immediately.
From the 5th week onwards, you will buy at 3500 every Friday as long as the spot price is below 4450.
Maturity: 20SEP24 (16 weeks)
Strike: 3,500 (-9.09%)
Upper Barrier: 4,450 (+15.58%)
Observation Frequency: Weekly starting from 5JUL24
(Spot Ref: 3,850 ETHUSD)
👍12❤7
QCP Asia and London Colour – 7 Jun 24
- Front-end vols were pressed lower yesterday with BTC now well under 50% and ETH under 60%.
- We find this move lower in vols unusual ahead of an important NFP number. A miss here would likely see the market price in a higher probability of Fed rate cuts in June or July - a very bullish catalyst.
- Yesterday's rate cuts by Canada and ECB will also increase pressure on the Fed to cut rates.
Trade Idea:
With lower vols just ahead of a potential catalyst event, buying June Digital Calls could deliver outsize returns.
BTC 80k 28-Jun
5x payout if BTC spot price is above 80k at expiry.
(Spot ref: 71,000)
ETH 5k 28-Jun
10x payout if ETH spot price is above 5k at expiry
(Spot ref: 3,800)
- Front-end vols were pressed lower yesterday with BTC now well under 50% and ETH under 60%.
- We find this move lower in vols unusual ahead of an important NFP number. A miss here would likely see the market price in a higher probability of Fed rate cuts in June or July - a very bullish catalyst.
- Yesterday's rate cuts by Canada and ECB will also increase pressure on the Fed to cut rates.
Trade Idea:
With lower vols just ahead of a potential catalyst event, buying June Digital Calls could deliver outsize returns.
BTC 80k 28-Jun
5x payout if BTC spot price is above 80k at expiry.
(Spot ref: 71,000)
ETH 5k 28-Jun
10x payout if ETH spot price is above 5k at expiry
(Spot ref: 3,800)
❤7👍1
QCP Weekend Colour - 8 Jun 24
- A doubly strange session overnight starting with:
1. Strong upside surprise on NFP (272k vs 182k), higher payrolls that came with higher unemployment (from 3.9% to 4.0%). It was confusing enough to trigger a risk-off ahead of US inflation numbers and FOMC next Wed.
2. Followed by a Roaring Kitty live stream which had almost a million viewers, during which GME stock price crashed. It was probably not a coincidence that Alts and Memecoins started collapsing as well with over $40 billion wiped in market cap.
- Our desk saw bullish flows on this dip, both sellers of aggressive puts and buyers of call spreads especially in BTC.
- BTC and ETH have since bounced off the lows of 68.3k and 3575.
- We agree that this is a good opportunity to buy the dip as the markets will increasingly price in at least one Fed rate cut from here. It will be difficult for the US to ignore as the rest of the world continues to cut rates.
Trade Idea:
Maximum upside at zero cost with ERKO Seagulls.
BTC 27-Dec ERKO Seagull
Buy 75k call with 125k knock-out
Sell 60k put
Cost: ZERO
Max payout: 150.5% pa or $50k per BTC if spot price is just below 125k level at expiry.
(Spot ref: 69,200)
- A doubly strange session overnight starting with:
1. Strong upside surprise on NFP (272k vs 182k), higher payrolls that came with higher unemployment (from 3.9% to 4.0%). It was confusing enough to trigger a risk-off ahead of US inflation numbers and FOMC next Wed.
2. Followed by a Roaring Kitty live stream which had almost a million viewers, during which GME stock price crashed. It was probably not a coincidence that Alts and Memecoins started collapsing as well with over $40 billion wiped in market cap.
- Our desk saw bullish flows on this dip, both sellers of aggressive puts and buyers of call spreads especially in BTC.
- BTC and ETH have since bounced off the lows of 68.3k and 3575.
- We agree that this is a good opportunity to buy the dip as the markets will increasingly price in at least one Fed rate cut from here. It will be difficult for the US to ignore as the rest of the world continues to cut rates.
Trade Idea:
Maximum upside at zero cost with ERKO Seagulls.
BTC 27-Dec ERKO Seagull
Buy 75k call with 125k knock-out
Sell 60k put
Cost: ZERO
Max payout: 150.5% pa or $50k per BTC if spot price is just below 125k level at expiry.
(Spot ref: 69,200)
👍9❤7
QCP Asia and London Colour – 10 Jun 24
- Over the weekend, Trump continued to use crypto to gather more liberal support. At the SF tech fundraiser, he pitched himself as a ‘crypto president’ in front of Coinbase and Gemini executives and others.
- Despite all the chatter, spot continues to chop in a tight range following Friday's post-NFP dip. Could this be the calm before the storm?
- As we anticipate what the Fed has to say in this week's FOMC meeting, the desk saw more near-dated bullish flows this session, with Call skew increasing over Puts.
Trade Idea:
Capitalise on this dip and cheap vols. Get some topside exposure while staying protected on the downside.
BTC 26JUL24 KIKOs (Knock-In, Knock-Out)
Sell 63k Put (Knock-in: 58k)
Buy 70k Call (Knock-out: 80k)
Cost: ZERO
Max payout: 126% pa or $10,000 USD per BTC if spot expires just below 80k
Downside: At expiry, if spot is below 58k, you buy BTC at 63k.
(Spot ref: 69,400)
- Over the weekend, Trump continued to use crypto to gather more liberal support. At the SF tech fundraiser, he pitched himself as a ‘crypto president’ in front of Coinbase and Gemini executives and others.
- Despite all the chatter, spot continues to chop in a tight range following Friday's post-NFP dip. Could this be the calm before the storm?
- As we anticipate what the Fed has to say in this week's FOMC meeting, the desk saw more near-dated bullish flows this session, with Call skew increasing over Puts.
Trade Idea:
Capitalise on this dip and cheap vols. Get some topside exposure while staying protected on the downside.
BTC 26JUL24 KIKOs (Knock-In, Knock-Out)
Sell 63k Put (Knock-in: 58k)
Buy 70k Call (Knock-out: 80k)
Cost: ZERO
Max payout: 126% pa or $10,000 USD per BTC if spot expires just below 80k
Downside: At expiry, if spot is below 58k, you buy BTC at 63k.
(Spot ref: 69,400)
👍13❤10🤯2
QCP London and New York Colour – 11 Jun 24
- Crypto markets have come under some pressure for the following reasons:
1. NFP numbers caught the market by surprise. US Treasury yields are at recent highs as Jul and Sep cuts are being priced out.
2. Macron called for a snap election in France. EURUSD sold off on heightened geopolitical risk in the EU. This has contributed to Dollar strength and a general risk-off sentiment.
3. Markets are risk-off mode ahead of CPI and FOMC tomorrow. This month's FOMC will also release the Dot Plot, which informs the market how many cuts the Fed anticipates for the rest of 2024.
4. 64m outflow from BTC ETFs yesterday, possibly due to traders derisking ahead of the tomorrow's events.
Despite short term headwinds, we think this might be a good opportunity to accumulate coin. Bullish events on the horizon such as the eventual ETH spot ETF going live along with Biden and Trump in a verbal armsrace to win the crypto vote.
Trade Idea:
BTC Accumulator
Buy BTC spot at 13% discount (58k) every week as long as spot is under 74k
Maturity: 25OCT24 (20 weeks)
Strike: 58k (-13.11%)
Upper Barrier: 74k (+10.86%)
Observation Frequency: Weekly
(Spot Ref: 66750)
- Crypto markets have come under some pressure for the following reasons:
1. NFP numbers caught the market by surprise. US Treasury yields are at recent highs as Jul and Sep cuts are being priced out.
2. Macron called for a snap election in France. EURUSD sold off on heightened geopolitical risk in the EU. This has contributed to Dollar strength and a general risk-off sentiment.
3. Markets are risk-off mode ahead of CPI and FOMC tomorrow. This month's FOMC will also release the Dot Plot, which informs the market how many cuts the Fed anticipates for the rest of 2024.
4. 64m outflow from BTC ETFs yesterday, possibly due to traders derisking ahead of the tomorrow's events.
Despite short term headwinds, we think this might be a good opportunity to accumulate coin. Bullish events on the horizon such as the eventual ETH spot ETF going live along with Biden and Trump in a verbal armsrace to win the crypto vote.
Trade Idea:
BTC Accumulator
Buy BTC spot at 13% discount (58k) every week as long as spot is under 74k
Maturity: 25OCT24 (20 weeks)
Strike: 58k (-13.11%)
Upper Barrier: 74k (+10.86%)
Observation Frequency: Weekly
(Spot Ref: 66750)
❤14
QCP Asia and London – 12 Jun
- Both BTC and ETH spot prices still range bound as traders await the release of CPI data and FOMC meeting tonight.
- We are heading with into tonight's events with optimism due to:
1. BTC futures swap points bounced off the lows of 10% and rallied yesterday, as traders taking profit on their basis trade by closing up their short futures positions. With any catalyst, we could easily see yield pushed higher to levels above 15%.
2. We saw aggressive buying of 13-Jun calls today, coupled with a substantial increase in funding rate, indicating the market is positioning for an upside surprise.
- With the equity market registering their record highs for a second consecutive closing, we believe an inline CPI print and neutral FOMC outcome could propel the crypto market to retest its highs once more.
Trade Idea:
In this structurally bullish environment, ERKOs present an attractive risk-to-reward ratio with minimal cash outlay and no downside. We are poised for a breakout pending a catalyst, potentially emerging tonight post FOMC.
BTC 28-Jun Call ERKO
Strike: 68k
Knockout: 75k
Max Payout: 5.6x (if BTC spot price is just below 75k at expiry)
Cost: $1,250 per BTC
(Spot Ref: 67,800)
- Both BTC and ETH spot prices still range bound as traders await the release of CPI data and FOMC meeting tonight.
- We are heading with into tonight's events with optimism due to:
1. BTC futures swap points bounced off the lows of 10% and rallied yesterday, as traders taking profit on their basis trade by closing up their short futures positions. With any catalyst, we could easily see yield pushed higher to levels above 15%.
2. We saw aggressive buying of 13-Jun calls today, coupled with a substantial increase in funding rate, indicating the market is positioning for an upside surprise.
- With the equity market registering their record highs for a second consecutive closing, we believe an inline CPI print and neutral FOMC outcome could propel the crypto market to retest its highs once more.
Trade Idea:
In this structurally bullish environment, ERKOs present an attractive risk-to-reward ratio with minimal cash outlay and no downside. We are poised for a breakout pending a catalyst, potentially emerging tonight post FOMC.
BTC 28-Jun Call ERKO
Strike: 68k
Knockout: 75k
Max Payout: 5.6x (if BTC spot price is just below 75k at expiry)
Cost: $1,250 per BTC
(Spot Ref: 67,800)
❤15🏆2
QCP London and New York Colour – 13 Jun 24
- Last night's CPI numbers ignited a breakout in risk assets. US equities hit new all-time highs, while BTC surged to 70k before settling back to 67.3k this morning.
- Market is pricing 2 rate cuts in 2024. Interest-rate futures now indicate a 56% chance of a rate cut in September, with the second cut to happen in December.
Our view:
- The Fed's dot plot remains ambiguous, making it challenging to predict whether officials prefer one or two rate cuts this year. However, we anticipate a rate cut in September, with the Fed likely adopting a wait-and-see approach for subsequent meetings in November and December.
- We maintain a structurally bullish outlook for the remainder of the year, driven by the anticipated ETH ETF S-1 approval and potential rate cuts in September and at the year end.
Trade Ideas:
- Given the current steepness of the vol curve, we like building a coin position using a longer-tenor accumulator, capitalizing on the higher vols further out.
ETH Early Delivery Accumulator
Buy ETH at 3100 (11.4% discount to spot) IMMEDIATELY for 25% of the total deployment.
From the 9th week onwards, buy at 3100 every Friday as long as the spot price remains below 4750.
Expiry: 17JAN25
Strike: 3,100 (-11.4%)
Barrier: 4,750 (+35.7%)
Early Delivery: First 8 weeks are settled immediately
Observation Frequency: Weekly starting from 9-AUG
(ETH Spot Ref: 3,500)
- Last night's CPI numbers ignited a breakout in risk assets. US equities hit new all-time highs, while BTC surged to 70k before settling back to 67.3k this morning.
- Market is pricing 2 rate cuts in 2024. Interest-rate futures now indicate a 56% chance of a rate cut in September, with the second cut to happen in December.
Our view:
- The Fed's dot plot remains ambiguous, making it challenging to predict whether officials prefer one or two rate cuts this year. However, we anticipate a rate cut in September, with the Fed likely adopting a wait-and-see approach for subsequent meetings in November and December.
- We maintain a structurally bullish outlook for the remainder of the year, driven by the anticipated ETH ETF S-1 approval and potential rate cuts in September and at the year end.
Trade Ideas:
- Given the current steepness of the vol curve, we like building a coin position using a longer-tenor accumulator, capitalizing on the higher vols further out.
ETH Early Delivery Accumulator
Buy ETH at 3100 (11.4% discount to spot) IMMEDIATELY for 25% of the total deployment.
From the 9th week onwards, buy at 3100 every Friday as long as the spot price remains below 4750.
Expiry: 17JAN25
Strike: 3,100 (-11.4%)
Barrier: 4,750 (+35.7%)
Early Delivery: First 8 weeks are settled immediately
Observation Frequency: Weekly starting from 9-AUG
(ETH Spot Ref: 3,500)
❤17
QCP Asia Colour - 14 Jun 24
- BTC is struggling to recover post-FOMC despite the strong momentum in equities.
- Why the divergence? We think this is because BTC miners are undergoing the post-halving capitulation, directly capping the price.
- Flowbank, one of the banks that Binance has a triparty agreement with, is also currently facing bankruptcy proceedings.
What's next?
- We are in for a quiet summer, with a lower vol environment and no catalyst to drive the market either way.
- We think there will be no immediate fireworks for ETH, with Gensler expecting the spot ETH ETF approval to happen late summer.
Trade Idea:
This is the ideal time to put on trades for accumulation ahead of the long quiet summer, particularly for ETH. Currently ETH vols are trading at a 10 vol premium to BTC, and we expect the spread to narrow with ETH overwriters returning as we wait in anticipation of an S-1 Form approval late summer.
Spot Ref: 3500
ETH Accumulator
Buy ETH spot at 14.29% discount (3000) every week as long as spot is under 4070
Maturity: 1NOV24 (20 Weeks)
Strike: 3000 (-14.29%)
Upper Barrier: 4070 (+16.29%)
Observation Frequency: Weekly
- BTC is struggling to recover post-FOMC despite the strong momentum in equities.
- Why the divergence? We think this is because BTC miners are undergoing the post-halving capitulation, directly capping the price.
- Flowbank, one of the banks that Binance has a triparty agreement with, is also currently facing bankruptcy proceedings.
What's next?
- We are in for a quiet summer, with a lower vol environment and no catalyst to drive the market either way.
- We think there will be no immediate fireworks for ETH, with Gensler expecting the spot ETH ETF approval to happen late summer.
Trade Idea:
This is the ideal time to put on trades for accumulation ahead of the long quiet summer, particularly for ETH. Currently ETH vols are trading at a 10 vol premium to BTC, and we expect the spread to narrow with ETH overwriters returning as we wait in anticipation of an S-1 Form approval late summer.
Spot Ref: 3500
ETH Accumulator
Buy ETH spot at 14.29% discount (3000) every week as long as spot is under 4070
Maturity: 1NOV24 (20 Weeks)
Strike: 3000 (-14.29%)
Upper Barrier: 4070 (+16.29%)
Observation Frequency: Weekly
👍15❤8
QCP London and New York Colour - 18 Jun 24
- BTC continues to sell off post-FOMC and tested 65k today.
- While BTC seems to have sneezed, alts seemed to have caught a cold as they dropped 20-30% over the weekend.
- We attribute this weakness in majors to a lack of news flow. Boring markets usually shake out weak hands, and nobody likes to pay 11% ann. to hold a long position in perps.
What do we do in boring markets?
- Ranging markets are difficult to trade, but why not earn yield while waiting for this range to resolve itself?
Trade Idea:
- With BTC at 65k and in the middle of the 60k - 72k range, its the best time to put on range accruals. Rather than getting chopped up within this range, earn yield instead!
Principal Protected Range Accrual (USD Principal)
Receive weekly 30% p.a. coupon if BTC is trading between 60k and 71k during observation
Maturity: 13-Sep (12 weeks)
Coupon Frequency: Weekly from 28JUN24
Coupon Rate: 30% p.a. in USD if BTC/USD fixes at-or-within Coupon Range, 0% pa otherwise
Coupon Range: 62,000 to 69,000
- BTC continues to sell off post-FOMC and tested 65k today.
- While BTC seems to have sneezed, alts seemed to have caught a cold as they dropped 20-30% over the weekend.
- We attribute this weakness in majors to a lack of news flow. Boring markets usually shake out weak hands, and nobody likes to pay 11% ann. to hold a long position in perps.
What do we do in boring markets?
- Ranging markets are difficult to trade, but why not earn yield while waiting for this range to resolve itself?
Trade Idea:
- With BTC at 65k and in the middle of the 60k - 72k range, its the best time to put on range accruals. Rather than getting chopped up within this range, earn yield instead!
Principal Protected Range Accrual (USD Principal)
Receive weekly 30% p.a. coupon if BTC is trading between 60k and 71k during observation
Maturity: 13-Sep (12 weeks)
Coupon Frequency: Weekly from 28JUN24
Coupon Rate: 30% p.a. in USD if BTC/USD fixes at-or-within Coupon Range, 0% pa otherwise
Coupon Range: 62,000 to 69,000
❤13
QCP London and US Colour - 19 Jun 24
- ETH spot prices sharply rebounded from a morning low of 3,400, with implied volatility notably rising to 65% in the front end.
- This strong bullish sentiment is supported by two developments:
1. The SEC is closing its investigation into Ethereum 2.0, ruling out any charges alleging that sales of ETH are securities transactions
2. Prospective issuers of Ethereum ETFs are reportedly responding to SEC comments and aim to hand them back this week
- The options market has also reflected this optimism, with the desk observing heavy buying activity of top-side calls across various tenors
- Despite uncertainty around the reception of the ETH ETF, capturing 10-20% of Bitcoin ETF flows could propel ETH above 4,000, nearing its peak of 4,800.
Trade Idea
Given the market's reactivity to the ETH ETF progress, digital options are appealing as a potential breakout strategy to capture profits on a move higher in ETH.
ETH 26-Jul 4,500 Digital
6.3x Payout if ETH spot price is above 4.5k at expiry
ETH 30-Aug 5,000 Digital
6.7x Payout if ETH spot price is above 5k at expiry
(Spot ref: 3,550)
- ETH spot prices sharply rebounded from a morning low of 3,400, with implied volatility notably rising to 65% in the front end.
- This strong bullish sentiment is supported by two developments:
1. The SEC is closing its investigation into Ethereum 2.0, ruling out any charges alleging that sales of ETH are securities transactions
2. Prospective issuers of Ethereum ETFs are reportedly responding to SEC comments and aim to hand them back this week
- The options market has also reflected this optimism, with the desk observing heavy buying activity of top-side calls across various tenors
- Despite uncertainty around the reception of the ETH ETF, capturing 10-20% of Bitcoin ETF flows could propel ETH above 4,000, nearing its peak of 4,800.
Trade Idea
Given the market's reactivity to the ETH ETF progress, digital options are appealing as a potential breakout strategy to capture profits on a move higher in ETH.
ETH 26-Jul 4,500 Digital
6.3x Payout if ETH spot price is above 4.5k at expiry
ETH 30-Aug 5,000 Digital
6.7x Payout if ETH spot price is above 5k at expiry
(Spot ref: 3,550)
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QCP Asia and London Colour - 20 Jun 24
In spot action, BTC continues to defend the 65k level well despite the following developments:
1. A wallet identified by Arkham as belonging to the German Police transferred 500 BTC to Bitstamp and Kraken, suggesting an imminent sale. This wallet currently holds approximately 43k BTC worth $2.83 billion.
2. BTC ETFs also saw $714 million in net outflows last week.
In the options market, we observed abnormally large buying flow of Dec and Mar 90-100k calls in the last 24 hours. We believe this suggests the market is calling the bottom and positioning itself for a sustained rally, possibly lasting into 2025.
Trade Idea
Take advantage of this consolidation period to accumulate BTC at a discount before the next leg up.
BTC Accumulator
Buy BTC spot at 10% discount (59,000) every week as long as spot is under 77,000
Maturity: 1NOV24 (20 Weeks)
Strike: 59000 (-14.29%)
Upper Barrier: 77000 (+16.29%)
Observation Frequency: Weekly
In spot action, BTC continues to defend the 65k level well despite the following developments:
1. A wallet identified by Arkham as belonging to the German Police transferred 500 BTC to Bitstamp and Kraken, suggesting an imminent sale. This wallet currently holds approximately 43k BTC worth $2.83 billion.
2. BTC ETFs also saw $714 million in net outflows last week.
In the options market, we observed abnormally large buying flow of Dec and Mar 90-100k calls in the last 24 hours. We believe this suggests the market is calling the bottom and positioning itself for a sustained rally, possibly lasting into 2025.
Trade Idea
Take advantage of this consolidation period to accumulate BTC at a discount before the next leg up.
BTC Accumulator
Buy BTC spot at 10% discount (59,000) every week as long as spot is under 77,000
Maturity: 1NOV24 (20 Weeks)
Strike: 59000 (-14.29%)
Upper Barrier: 77000 (+16.29%)
Observation Frequency: Weekly
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QCP US Colour - 22 Jun 24
- We've been given good reasons to be bullish this week: Microstrategy buying 11,931 BTC (about $786M), Arthur Hayes' bullish macro narrative, Michael Dell tweeting about BTC.
- Yet price action continues to be weak with BTC trading to 63.3k lows.
Why so weak?
- Miners have been under tremendous pressure to sell given higher breakeven prices post-halving. Miner BTC holdings have dropped to the lowest level we've seen in the past 14 years, with total reserves lower by 50,000 from the start of the year.
- The market has also been spooked by the emergence of a new large pool of supply. The German government allegedly sold around 3k BTC in the last few days with 47k more to go.
What is the Vol market whispering?
- Price is likely to be capped in the near-term but explosively bullish into year-end.
- Our desk has seen large selling of calls for expiries under 1-month and aggressive buying of calls for September into December.
- Vols are pricing a summer consolidation and fireworks into the US elections.
- ETH bullishness persists with ETH vols trading at an 18% premium to BTC in expectation of an imminent ETH spot ETF launch.
Trade Idea:
Monetize the premium in ETH vol to earn a high yield as ETH grinds higher over the summer.
ETH CFCC
Coupon payment: 55% pa every Friday as long as spot price is above 3,500
Expiry: 13-Sep, 3 months
Strike: 3,000
Protection: 2,500
At expiry, only if spot price is below 2,500, the USD deployed is converted to ETH at 3,000 price.
(spot ref: 3520)
- We've been given good reasons to be bullish this week: Microstrategy buying 11,931 BTC (about $786M), Arthur Hayes' bullish macro narrative, Michael Dell tweeting about BTC.
- Yet price action continues to be weak with BTC trading to 63.3k lows.
Why so weak?
- Miners have been under tremendous pressure to sell given higher breakeven prices post-halving. Miner BTC holdings have dropped to the lowest level we've seen in the past 14 years, with total reserves lower by 50,000 from the start of the year.
- The market has also been spooked by the emergence of a new large pool of supply. The German government allegedly sold around 3k BTC in the last few days with 47k more to go.
What is the Vol market whispering?
- Price is likely to be capped in the near-term but explosively bullish into year-end.
- Our desk has seen large selling of calls for expiries under 1-month and aggressive buying of calls for September into December.
- Vols are pricing a summer consolidation and fireworks into the US elections.
- ETH bullishness persists with ETH vols trading at an 18% premium to BTC in expectation of an imminent ETH spot ETF launch.
Trade Idea:
Monetize the premium in ETH vol to earn a high yield as ETH grinds higher over the summer.
ETH CFCC
Coupon payment: 55% pa every Friday as long as spot price is above 3,500
Expiry: 13-Sep, 3 months
Strike: 3,000
Protection: 2,500
At expiry, only if spot price is below 2,500, the USD deployed is converted to ETH at 3,000 price.
(spot ref: 3520)
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QCP Asia Colour - 24 Jun 24
- BTC fell off a cliff and printed lows of 60.5k after Mt. Gox Trustee announced it will start distribution by early July.
- Despite repeatedly extending its deadline over multiple years, the Exchange Trustee transferred over 140,000 BTC (valued at 9bn) earlier this year in preparation for repayment.
Options Market
- We see little activity in the July options market, suggesting the market is not anticipating volatility around the distribution itself.
Trade Idea
With spot stabilizing above the 60k support level and little activity expected in July, we favor deploying accumulators.
BTC Accumulator
Buy BTC spot at 12% discount (54,000) every week as long as spot is under 69,000
Maturity: 8NOV24 (20 Weeks)
Strike: 54,000 (-12.05%)
Upper Barrier: 69,000 (+12.38%)
Observation Frequency: Weekly
Spot Ref: 61,400 BTCUSD
- BTC fell off a cliff and printed lows of 60.5k after Mt. Gox Trustee announced it will start distribution by early July.
- Despite repeatedly extending its deadline over multiple years, the Exchange Trustee transferred over 140,000 BTC (valued at 9bn) earlier this year in preparation for repayment.
Options Market
- We see little activity in the July options market, suggesting the market is not anticipating volatility around the distribution itself.
Trade Idea
With spot stabilizing above the 60k support level and little activity expected in July, we favor deploying accumulators.
BTC Accumulator
Buy BTC spot at 12% discount (54,000) every week as long as spot is under 69,000
Maturity: 8NOV24 (20 Weeks)
Strike: 54,000 (-12.05%)
Upper Barrier: 69,000 (+12.38%)
Observation Frequency: Weekly
Spot Ref: 61,400 BTCUSD
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QCP London and New York Colour - 25 Jun 24
- BTC traded to 58.5k which is where we see the 200D EMA and also the bottom of the range. We have since bounced to 61.5k.
- We think there will continue to be selling pressure in the market as markets try to digest what 140,000 BTC means for markets and prices that in. Existing Mt Gox creditors are probably unhedged given how expensive it is to hold perp positions and option positions for long periods of time.
Trade Idea
Spot has tested the 200D EMA and the bottom of the range. We expect some short term relief, and dips should be bought given the potential of a ETH ETF in July. We still favor deploying accumulators.
BTC Accumulator
Buy BTC spot at 12% discount (54,000) every week
Maturity: 8NOV24 (20 Weeks)
Strike: 54,000 (-11.91%)
Upper Barrier: 68,500 (+11.75%)
Observation Frequency: Weekly
Spot Ref: 61,300 BTCUSD
- BTC traded to 58.5k which is where we see the 200D EMA and also the bottom of the range. We have since bounced to 61.5k.
- We think there will continue to be selling pressure in the market as markets try to digest what 140,000 BTC means for markets and prices that in. Existing Mt Gox creditors are probably unhedged given how expensive it is to hold perp positions and option positions for long periods of time.
Trade Idea
Spot has tested the 200D EMA and the bottom of the range. We expect some short term relief, and dips should be bought given the potential of a ETH ETF in July. We still favor deploying accumulators.
BTC Accumulator
Buy BTC spot at 12% discount (54,000) every week
Maturity: 8NOV24 (20 Weeks)
Strike: 54,000 (-11.91%)
Upper Barrier: 68,500 (+11.75%)
Observation Frequency: Weekly
Spot Ref: 61,300 BTCUSD
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QCP Asia Colour - 26 Jun 24
- As we approach the quarter-end options expiry this Friday, the options market has been notably quiet, with the typical quarter end vol sell off taking effect.
- Some chatter appeared today suggesting the imminent trading of ETH ETFs:
1. VanEck has filed their 8-A form, worth highlighting the same form for Bitcoin ETF was filed exactly 7 days before the launch.
2. VanEck subsequently announced zero fees for the initial phase of their ETH ETF.
- The ETH options market for July expiries in particular, has not shown much excitement thus far. If there is a substantial breakthrough in the approval process, it could catch the market by surprise.
Trade Idea
ETH has shown robust support levels at 3,200 and 2,800, with the latter not touched for over four months. This forms a strong basis for creatively expressing one's bullish view by deploying into a Conditional Fixed Coupon Convertibles (CFCC), yielding up to 66% p.a.
ETH Conditional Fixed Coupon Convertible
Coupon Payment: 66% p.a. every Friday as long as spot price is above 3,200
Expiry: 13-Dec, 6 months
Strike: 3,200 (-5.8%)
Protection: 2,800 (-17.6%)
At expiry, only if spot is below 2,800, the USD deployed is used to buy ETH at strike of 3,200
(Spot Ref: 3,400)
- As we approach the quarter-end options expiry this Friday, the options market has been notably quiet, with the typical quarter end vol sell off taking effect.
- Some chatter appeared today suggesting the imminent trading of ETH ETFs:
1. VanEck has filed their 8-A form, worth highlighting the same form for Bitcoin ETF was filed exactly 7 days before the launch.
2. VanEck subsequently announced zero fees for the initial phase of their ETH ETF.
- The ETH options market for July expiries in particular, has not shown much excitement thus far. If there is a substantial breakthrough in the approval process, it could catch the market by surprise.
Trade Idea
ETH has shown robust support levels at 3,200 and 2,800, with the latter not touched for over four months. This forms a strong basis for creatively expressing one's bullish view by deploying into a Conditional Fixed Coupon Convertibles (CFCC), yielding up to 66% p.a.
ETH Conditional Fixed Coupon Convertible
Coupon Payment: 66% p.a. every Friday as long as spot price is above 3,200
Expiry: 13-Dec, 6 months
Strike: 3,200 (-5.8%)
Protection: 2,800 (-17.6%)
At expiry, only if spot is below 2,800, the USD deployed is used to buy ETH at strike of 3,200
(Spot Ref: 3,400)
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QCP Asia Colour – 27 Jun 24
- BTC continues to defend the 60k support level despite the US government transferring 3,940 BTC to Coinbase Prime after receiving approval to liquidate.
We think the 60k support will be defended because:
1. The German Government is slowing down the pace of sending BTC to exchanges, with only 250 BTC being sent yesterday. This could be a possible indication that we are approaching the tail end of their current selling regime.
2. The BTC Spot ETF finally reported net inflows of $52.4 million over the past two days after 7 consecutive days of outflows.
Trade Idea
With selling regimes appearing to start easing up and ETF inflows finally turning positive. One may argue Mt Gox release may have been largely priced in and its time to slowly start accumulating BTC.
BTC Accumulator
Buy BTC spot at 11.11% discount (54,000) every week
Expiry: 8NOV24 (20 weeks)
Strike: 54,000
Barrier: 66,000
Observation Frequency: Weekly
Spot Ref: 60,750 BTCUSD
- BTC continues to defend the 60k support level despite the US government transferring 3,940 BTC to Coinbase Prime after receiving approval to liquidate.
We think the 60k support will be defended because:
1. The German Government is slowing down the pace of sending BTC to exchanges, with only 250 BTC being sent yesterday. This could be a possible indication that we are approaching the tail end of their current selling regime.
2. The BTC Spot ETF finally reported net inflows of $52.4 million over the past two days after 7 consecutive days of outflows.
Trade Idea
With selling regimes appearing to start easing up and ETF inflows finally turning positive. One may argue Mt Gox release may have been largely priced in and its time to slowly start accumulating BTC.
BTC Accumulator
Buy BTC spot at 11.11% discount (54,000) every week
Expiry: 8NOV24 (20 weeks)
Strike: 54,000
Barrier: 66,000
Observation Frequency: Weekly
Spot Ref: 60,750 BTCUSD
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QCP Weekend Brief - 28 Jun 24
An onslaught of bearish headlines throughout the week has taken BTC back down to the 60k support region.
Can this level hold?
- 58-60k in BTC has been a hardy support level in Q2.
- However, this time, the market has to deal with overwhelming supply from the Mt. Gox unlocks as well as selling by government bodies.
Our view
- We think the scary supply numbers are probably overstated and that the market will grind sideways in a range.
- We could test lower towards 50k levels but the market will find strong support there, as interest from TradFi continues to permeate given the general regulatory easing across the world.
- The ETH spot ETF remains a bullish catalyst and it is likely to start trading in early July.
- Additionally, spot ETFs for other majors like SOL will also trigger some excitement.
Trade ideas
For BTC, prioritise yield generation in a sideways market for Q3 and use the returns generated to make some Q4 directional bets.
For ETH, it might be worth taking a short-term bullish punt into the ETF launch.
(Spot ref 60k BTCUSD, 3365 ETHUSD)
BTC CFCC (27-Sep 3 months)
Earn 55% pa every Friday as long as spot price is above 60k, the current spot level.
Threshold: 60k BTCUSD
Strike: 55k BTCUSD
Protection: 50k BTCUSD
At expiry, only if spot price is below 50k, the USD deployed is converted to BTC at 55k price.
ETH Zero-Cost ERKO Seagull
Max Return: 901.2% p.a. or $2,000 per ETH if spot price is just below 6k level at expiry.
Sell 3k Put to buy 4k Call with 6k knock-out
Cost: ZERO
Expiry: 26-Jul
An onslaught of bearish headlines throughout the week has taken BTC back down to the 60k support region.
Can this level hold?
- 58-60k in BTC has been a hardy support level in Q2.
- However, this time, the market has to deal with overwhelming supply from the Mt. Gox unlocks as well as selling by government bodies.
Our view
- We think the scary supply numbers are probably overstated and that the market will grind sideways in a range.
- We could test lower towards 50k levels but the market will find strong support there, as interest from TradFi continues to permeate given the general regulatory easing across the world.
- The ETH spot ETF remains a bullish catalyst and it is likely to start trading in early July.
- Additionally, spot ETFs for other majors like SOL will also trigger some excitement.
Trade ideas
For BTC, prioritise yield generation in a sideways market for Q3 and use the returns generated to make some Q4 directional bets.
For ETH, it might be worth taking a short-term bullish punt into the ETF launch.
(Spot ref 60k BTCUSD, 3365 ETHUSD)
BTC CFCC (27-Sep 3 months)
Earn 55% pa every Friday as long as spot price is above 60k, the current spot level.
Threshold: 60k BTCUSD
Strike: 55k BTCUSD
Protection: 50k BTCUSD
At expiry, only if spot price is below 50k, the USD deployed is converted to BTC at 55k price.
ETH Zero-Cost ERKO Seagull
Max Return: 901.2% p.a. or $2,000 per ETH if spot price is just below 6k level at expiry.
Sell 3k Put to buy 4k Call with 6k knock-out
Cost: ZERO
Expiry: 26-Jul
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