Key Takeaways

• Another range-bound week for the majors
• Many mid-caps down ~10%
• Term futures basis remains low across most exchanges
• Implied vols continue to trade soft
• CPI tomorrow; market starting to focus on US debt ceiling risk
  

Looking back

Crypto majors remain within well established trading ranges; BTC made a weekly high of $29,850 early Saturday in Asia, but has traded soft since, making a low of $27,280 so far today. ETH reached as high as $2,020 on Saturday, but ended the day around $1,900, and remains a little heavy, with a low so far today around $1,810.  The much-vaunted alt-season is not materialising; mid-caps and alts have had a poor week, with DOGE, SHIB, XRP, MATIC, DOT, and a raft of other coins all down around 10%, and many displaying rather negative technical signals.

Flows over the past week show a continued preference to buy BTC (51.5%) over ETH (47.4%).  Of our higher volume coins, we saw selling bias in XRP (58.3%), LTC (59.5%), and SOL (56.9%), but better buying in DOGE (62.7%) and ADA (57.9%). EMEA clients were strong sellers again with 57.6% sell flows, while APAC client flows were 58.7% buyers; by client category, exchanges remained our strongest buyers for the second week running

Futures basis remain at low levels relative to earlier in April. June BTC futures basis has trended lower from 3.75% to 3.25%, and the equivalent for ETH from 3.5% to 2.5%.  On the CME, May BTC basis has dropped from 3% to 2%; while on Deribit, June BTC basis has dipped from 1.50% to 0.75%.  Futures markets continue to tell a story of falling interest in leveraged length.

Option implied volatility also remains soft, with most of the BTC curve down another 1-2 vols from last week, with June atm currently 48.0%, and Dec atm around 52.5%.  Risk reversals have not changed much, trading around flat, so do not tell much of a story right now.  ETH vols are also quite offered, though we have recently seen longer term players looking to enter bullish structures.

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Looking ahead

This week the key data will be US CPI for April, out on Wednesday, where the market consensus is for core CPI to dip slightly to 5.4-5.5% from last month’s reading of 5.6%. Core services are expected to be lower, slightly offset by higher prices for core goods, especially used vehicles.  Otherwise there will be the BoE rate decision on Thursday, which could create some turbulence as the UK has had the least success in curbing inflation so far, so there is some disagreement with regard to the rates outlook.  

Data aside, market participants are starting to really focus on the possibility and implications of an impasse on the US debt ceiling. US politics is far more polarised than the last time we got this close to a US debt default in 2011, and those at the centre of the discussion have made promises to more extreme elements during efforts to shore up their own power bases. As a result, we can expect this debate to go right to the wire. So the question is, would a US debt default be good or bad for BTC. While a risk-off sentiment may cause crypto to sell off in the lead up to the event itself, in the following days and weeks presumably US rates and the USD would fall, and the market may find a renewed interest in buying BTC as an anti-USD trade.  With options trading generally cheap, one might consider buying implied volatility right now.

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Buy/Sell Ratio by Category

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Buy/Sell Ratio by Region

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All data sourced from our real time systems supporting global 24/7 crypto liquidity provision

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