Key Takeaways
Looking back
Crypto majors appeared to be breaking lower out of recent ranges on Thursday morning in Asia, but the move through $26,000 was rejected, and ETH never made much ground below $1,750. Since then crypto was grinding higher until the news over the weekend of a deal being done to raise the US debt ceiling took us up quite quickly, to print highs around $28,470 and $1,928. Ultimately though, these numbers are not new ground; merely in the middle of a 2+ month range. XRP has continued to outperform, rallying again from 45 cents to 50 cents.
Flows over the week have again showed a preference for BTC (51.1% buyer) over ETH (47.0% buyer), while we had strong buying in DOG (60.5%), SOL(55.8%) and BCH (59.9%), and strong selling in XRP (63.5%), AVAX (66.6%) and MATIC (58.6%). By region, APAC and Americas were better buyers (both 56-57%) while EMEA were strong sellers (70.2%); by category, exchanges, brokers, and funds were our better buyers (58-60%), while banks were sellers (65.5%).
Exchange traded futures bases have continued to tighten a little: June BTC basis on Binance is up from 4.0% to 6.5%, and the same date on Deribit is up from 2.5% to 3.5%, but on CME the June basis weakened late last week before reverting to around 8%. OTC borrowing interest remains firm for USD and stables, continuing to indicate a healthy demand to deploy capital to risk.
Implied volatility plunged even lower depths last week, bottoming out on Friday as usual, with Sept ETH - recently the whipping boy of the crypto vol market - trading below 45%, a remarkable level. Yet it appears there are few players with a strong enough directional view to take advantage of the fire-sale. BTC vols also moved left, with Jun atm trading close to 40% at one stage. With realised vol for both BTC and ETH continuing to drag in the low 30’s, if one did want to purchase anything for year-end, it would still appear sensible to hedge out decay by selling short dated options, implying again that curves remain too flat, particularly in BTC, with Jun/Sep at only 3.25 vols (5 vols in ETH).
Looking ahead
The highlight of the week will be NFP, where the market consensus is currently for 193k jobs added in May, and unemployment slightly up at 3.5%. However, since US data keeps outperforming, these numbers will be keenly watched, and any strength will almost probably force the market to price in a hike for June rather than July. Outside the US, we have Chinese PMIs on Wednesday, and EU inflation numbers on Thursday.
Buy/Sell Ratio by Category
Buy/Sell Ratio by Region
All data sourced from our real time systems supporting global 24/7 crypto liquidity provision
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