TA Tuesday: BTC and ETH consolidate, while the Fed keeps an eye on CPI and banking crisis

BTC and ETH consolidate; the Fed keeps an eye on CPI and banking crisis; crypto vol mimics the VIX

Week-over-week performance:

  • BTCUSD: 27,696, -1.51%
  • ETHUSD: 1,846, +0.65%
  • US02Y: 3.99%, +13 bps
  • DXY: 101.39, -0.57%
  • GOLD (USD/OZ): 2,022, +2.02%
  • NDX: 13,291, +1.10%
  • VIX: 17.3, +5.62%
  • VVIX: 91.98, +4.52%

On the macro side:

Looking ahead:

  • Wednesday 8am: German CPI (YoY) (Apr): exp 7.6%, prev 7.8%
  • Wednesday 2.30pm: US CPI (YoY) (Apr): exp 5%, prev 5%
  • Thursday 1pm: BoE Interest Rate Decision (May): exp 4.5%, prev 4.25%
  • Thursday 2.30pm: US Jobless claims and Core PPI

The Fed recently increased interest rates by 25 bps, indicating that they may have completed raising rates, but this decision is not final yet and will depend on various factors, including employment, the CPI, and the banking crisis.

While the employment report has surpassed expectations, the banking crisis has resurfaced, with JPMorgan acquiring First Republic, and other banks are still struggling, which is favourable for the Federal Reserve’s monetary policy.

The CPI and PPI reports this week will be significant in terms of macroeconomic events, but they are unlikely to impact the Federal Reserve’s policy very much.

With the VIX at 17 and VVIX at 92, market participants seem to be moderately comfortable with the current market conditions. This sentiment is gradually translating into the cryptocurrency market as well.

On the crypto side:

Both BTC and ETH are relatively quiet, hovering around the POC levels from March to May. BTCUSD remains at around 28k, while ETHUSD is at 1,850. The RSI for both is in the 40s, leading me to adopt a “wait and see” approach.

BTC’s 30-day Realized Volatility (RV) is trading at 44%, which is in the bottom 25%, leading to a decrease in the Implied Volatility (IV), which is trading at 48% for the 30-day tenor (bottom 5%). Similarly, ETH’s 30-day RV is trading at 55% (bottom 25%), and its 30-day IV is trading at 49% (bottom 1%). The at-the-money (ATM) surface is notably flat, and the wings remain inexpensive.

Investing in long volatilities is always hard to digest; current gamma does not provide a significant payout, and theta remains costly. My bias keeps being towards relative vol trades (+ETH, -BTC) and certain structures such as condors, which allow me to benefit from the cheap wings.



As for the alts: projects we are closely watching are the following:

  • DexTools ($DEXT): MCap: $65M
  • Mute ($MUTE): MCap: $27M

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