Key Takeaways
Looking back
In the early part of last week, BTC held $27k support and moved higher Tuesday on better macro sentiment from tech earnings, and on continued worries about First Republic Bank. On Wednesday that move continued and by lunchtime in London BTC was back above $30k. However late NY afternoon, the market dropped $2,500 to as low as $27.25k, before again recovering to $28.4k, and then back above $29k, where it held for the remainder of the week. There was a lot of chatter that the sharp move lower was on the back of alerts from a US chain monitor about large BTC movement from old wallets associated with Mt Gox and also the US government, but the timings were not in line, so in the end it seems nobody came up with a totally plausible explanation. ETH has continued to underperform, despite some commentary suggesting improvements in the ratio of new entrants to the queue to become a validator, to departing validators in the exit queue.
Flows over the past week were quite balanced for BTC (50.2% selling), but clients still strongly preferred it to ETH (55.9% selling). We also saw strong selling interest in MATIC (73.4%) and COMP (59.7%); strong buying in BNB (58.2%), XLM (59.7%), and BCH (58.0%). By geography, EMEA clients were strong sellers; by client category, banks were strong sellers, and exchanges strong buyers.
Futures basis has recovered a little but remains at quite low levels relative to earlier in April. Having spent much of early April between 5-6% annualised premium, Binance June BTC basis has spent the past week recovering from 2.75% to 3.75%, but still looks historically cheap given spot remains in the $27-30k band. The implication here would be that Binance customers are less bullish and less leveraged now than they had been a few weeks ago. CME basis has mostly followed spot around this week, with May BTC basis the most active, trading up from 6% to 10% and back down to 4%.
Since ETH vols rallied in the days around the Shapella upgrade, implied vols for both ETH and BTC have moved lower. Since 20 April, for example, the entire BTC vol curve right out to Dec is down between 4-5 vols. This is surprising, given the increased realised volatility in BTC last week, and the fact that we have the Fed and ECB this week, NFP at the end of the week, and a slow-burn banking crisis going on, which could be interpreted as equally bullish and bearish by different players.
Looking ahead
This week is data heavy, with EU inflation numbers Tuesday; US Services PMIs, ADP Employment and the Fed Wednesday; ECB on Thursday, and Non-Farm Payrolls on Friday. In addition to that, we have a banking crisis gathering pace in the US, and perhaps brewing elsewhere too. The salient point about the First Republic Bank story is perhaps that the government turned to JPM due to the fact that there was nobody really interested to take down this business. With equity owners on the hook, this is a very different environment from 2008, when investors were queuing up to buy failing banks. In any event, the Fed’s commentary about the future course of rates will be examined in minute detail tomorrow, and any unexpected slant could have a large impact on prices.
Buy/Sell Ratio by Category
Buy/Sell Ratio by Region
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