After all the excitement of the BTC rally from 20.5k to 28.5k in 1 week in the middle of March, it is noteworthy that crypto majors have been range bound ever since, with BTC mostly in a $2,000 range between 26.8-28.8k, and ETH mostly inside 1,700/1,840. In Asia on Thursday morning, BTC had a proper look above 29k in a fast move that topped out around 29.2k, but the move failed to find stop-losses and we quickly moved back into the range. XRP traded strong again, adding another net 10% to 51c, after trading up to a high above 58c midweek. The only other really outstanding feature is one of declining volumes, perhaps to be expected in a range bound market, but perhaps not a healthy signal, as could be construed as an indication of no fresh buyers at current levels.
Today, Saudi Arabia and OPEC+ announced oil production cuts of around 1 million barrels per day in response to lower demand. Oil prices are up around 6% on last week’s levels, which is quite a shock to markets which were pricing in lower future demand due to recent banking wobbles and lower growth expectations. A growing chorus of believers in BTC as an inflation hedge will have taken note.
Client flows again showed a strong preference to buy BTC (54.1%) over ETH (48.3%), which has been a persistent bias for a number of weeks. The other notable bias in our flows was to sell alts, with strong selling of DOG (55.4%), LTC (57.2%), SOL (65.1%), AVX (57.6%) and BCH (56.4%). We also saw some sizable selling in many of the lower volume coins we trade, including BNB, NEAR, ATOM, and TRX. DOT was the exception with 68.2% buy flow. By region, APAC were the better buyers, and EMEA clients the strongest sellers; by client category, we had good selling from banks, and our best buyers were exchanges and funds.
Futures basis has continued to rise, with Binance June BTC futures trading around 5% (up from 4%) and the equivalent contract for ETH trading 4.5% (up from 4%), in terms of annualised premium to spot. Deribit futures are also up about the same amount, and CME BTC futures for April expiry remain in the 10-12% range.
Implied volatility has remained contained in an established range between 55-62% basis April ATM options. The established positive spot/vol correlation also remains: while spot has been trading above 28k, April IV has been mostly in the top half of that range; below 28k on spot has seen April ATM in the lower half of the range. Options volumes have been lighter than previous weeks, but we did note more rolling out and up of BTC volume positions, indicating a continued commitment to the bullish view amongst longer term players.
Macro traders this week will be looking forward to US PMIs for manufacturing (Monday) and services (Wednesday); ADP employment data (Wednesday) and non-farm payrolls (Friday). Of course, NFP will be the main data point for the week, and the market is expecting data to confirm a slowing job market at 240k jobs, down from 311k last month. Traders will probably also keep one eye on oil prices this week, given the move today by OPEC+, and oil’s propensity to feed the inflation fire. BTC as an inflation hedge is a narrative which, whether you believe it or not, has taken root in the market, so rising oil prices could potentially feed the BTC rally this week. Technical levels remain unchanged, with 29/29.5k resistance, and support at 25.5/26k.
Buy/Sell Ratio by Category
Buy/Sell Ratio by Region
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