Market Deep Dive: BlackRock’s Bitcoin ETF and Crypto Market Performance

On Monday afternoon, Bloomberg reporter Eric Balchunas spotlighted a previously overlooked detail: the listing of BlackRock’s Bitcoin ETF, ticker IBTC, on the DTCC website. Though this detail had been available since August, it gained prominence with Balchunas’s tweet as traders took it as a potential sign of the SEC nearing approval for the ETF. Adding to the narrative, BlackRock recently disclosed in their most recent spot amendment that they intend to seed the Bitcoin ETF in October.

Accordingly, Bitcoin experienced a 17.5% increase WoW, fluctuating between $30,000 (recorded on Monday morning after a 250-point weekend hike) to $35,160 (observed on Tuesday night and Thursday afternoon), and currently hovers just above the $34,000 threshold. Ethereum followed suit and saw a 14.1% boost WoW, with values ranging from $1,660 (Monday morning, post a 60-point weekend rise) to $1,870 by Thursday afternoon, and is currently trading around the $1,800 mark.

As the IBTC ticker attracted too much attention, the DTCC website crashed, and the ticker was temporarily removed, only to reappear shortly thereafter. This led to a quick crash of over 3% in BTC’s price in just 15 minutes. Nevertheless, the markets processed the news and recovered; prices have remained relatively stable and there has been no big retracement to date. Two significant BTC liquidations occurred on Binance (2 million USD; yesterday) and Bybit (1.1 million USD, today), which might suggest that crypto whales are anticipating a short-term price bottom around the $33,700-$33,800 range.

A quick look at the volatility numbers show that BTC’s 30-day at-the-money implied volatility has risen to 51% (+17% WoW), while ETH’s has increased to 46% (16% WoW). The 7-day ATM volatility temporarily reached more than 65% on Tuesday (30-day ATM IV: 58%) before retracing. Consequently, the dip suggests that Monday’s surge was more a result of turbulent short covering than a fundamental shift in BTC options. This signals, that the majority of option dealers were positioned short on the upside (short vega). Such positioning further contributed to Tuesday’s dramatic movement, where dealers were gamma squeezed and compelled to further spot buying during the rally. Some traders have been caught off guard which can be attributed to their previous success in selling volatility over the past year around the $30k level.

When observing the 25-delta skewness in BTC and ETH options one can clearly see a higher positive skew for ETH options across all time frames, indicating that traders prefer ETH calls over BTC. The latter argument, the reduction of BTC dominance from 54.50% to 54% since Wednesdays strengthens my opinion that investors are further rotating from BTC into ETH and altcoins (e.g., Oracle tokens such as Chainlink and Tellor experienced a huge price spike since last week). A potential rotation into altcoins would also reinforce my medium-term bullish bias, as high beta altcoins tend to rally towards the end of a trend/market cycle; hence, investors trying to get ahead of the market cycle and position themselves in high beta altcoins would seem to be a bullish sentiment and a further indicator of an incoming crypto summer.

On the macro front, with the exception of Tuesday, equities experienced a continued sell-off throughout the week. Diminished yields coupled with robust US PMIs (Services PMI: act 50.9, exp. 49.8) and better-than-expected earnings from large caps helped major indices upwards on Tuesday.

On Wednesday, US New Home Sales surged by 12.3% in September, reaching 759k from the previous 676k, far surpassing the expected 680k. Yet the market turbulence persisted, with traders contending with fluctuating yields, Google’s significant 9.5% slide (affecting major indices) and geopolitical tensions with Israel initiating ground offenses against Hamas in northern Gaza.

Yesterday, US data released exceeded expectations, with GDP growth at 4.9% compared to the projected 4.3%, and Durable Goods orders at 4.7% versus the anticipated 1.7%. Meanwhile, the ECB maintained its policy stance, and no indications were provided regarding upcoming policy adjustments.

After a subdued PCE figure yesterday, today afternoon’s US inflation numbers, might be more optimistic, with forecasts for the Yearly Core PCE Price Index at 3.7% and the Yearly PCE Price Index at 3.4%.

Looking ahead to next week, key economic events include German CPI (MoM), China Manufacturing PMI data on Monday, German GDP, EUR CPI and US CN Consumer Confidence on Tuesday. On Wednesday, all eyes are on the US including JOLTs Job Openings, ISM Manufacturing PMI, and of course the Fed’s interest rate decision. On Thursday, there is the Bank of England interest rate decision, while on Friday Nonfarm Payrolls are published in the US.

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