Key Takeaways

• BTC broke out to topside in NY yesterday; breached $30k in Asia today
• ETH continues to underperform; remains in focus for activity post-Shanghai
• CME basis implies move possibly due to demand from US institutions
• Implied vols themselves are volatile; crushed last week, pumped now
• CPI and Shanghai ETH upgrade this Wednesday

Looking back

After a slow week in which ETH played catch up for a while, and a very slow Easter holiday weekend, BTC broke up through $29k in Monday’s New York session, and continued this morning in Asia, finally breaking $30k, to trade a high so far around $30,450.  ETH again underperformed but reached $1940, the same level it touched last Tuesday; and with the Shanghai upgrade this week, ETH remains in focus.  DOG was the other main story of last week, rallying ~35% to 10.5c when Twitter switched its logo to the Doge logo, before giving up 80% of the move later in the week.  

Last week our flows again showed a preference to buy BTC (54.8%) over ETH (49.2%).  It will be fascinating to see if this bias reverses after the Shanghai upgrade, which is expected to eventually unlock up to 1.8m coins.  Amongst the larger volume coins of the week, we had good buying of XRP (57.5%), ADA (55.3%), and MATIC (55.2%); good selling of LTC (58.0%), SOL (72.2%), AVAX (58.8%), and BCH (56.9%).  By Geography, APAC clients were biased to the buy side, with EMEA clients also buyers, and Americas clients more balanced.  By client category, funds, banks and crypto exchanges were strong buyers.

Futures basis did little last week, but the last 24 hours has been informative.  While the bases on many crypto native exchange futures have done little, CME basis has firmed considerably, possibly indicating that this recent buying spree has come out of US regulated institutions.  BTC basis for April is up from 6% to 14%, and for May from 7% to 10%; ETH basis for April is up from 5% to 12%, and for May from 5% to 8%.

Implied vols had a big move lower last week as realised volatility dropped into the mid-30s on a 7 day observation period, and long vol positions set for this week stopped out into a falling market.  April ATM vol dropped as low as 50% and 14-Apr ATM was quoted either side of 46% at one point on Friday. Over the weekend, however, vols bounced back and the BTC curve stabilised yesterday around 55% in the April contracts.  However with the overnight spot move, vols are fairly pumped again, with April now around 60%.  The options market has however been surprisingly quiet today, so perhaps most players are well positioned for the move higher.  

Looking ahead

This week is going to be all about the Shanghai upgrade in ETH, and US CPI for March, two very different events which happen to both occur on Wednesday this week.  CPI is expected to show a slower rise in headline inflation (due to lower energy and food costs) but core CPI is expected to have remained relatively strong due to persistent rises in the costs of housing and rent.  The ETH upgrade should itself create little volatility, but the market has been concerned about additional supply of ETH due to a potential unlock of 1.8m coins.  That fear may however signal that the market is a little underinvested in ETH (and possibly alts in general), so the Shanghai upgrade could possibly be a turning point for the 3 month trend higher in BTC dominance.  Next resistances are $31.8-32.3k in BTC and $2010-2030 in ETH. Good luck!

Buy/Sell Ratio by Category

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Buy/Sell Ratio by Region

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