TA Tuesday: Crypto market holds up even in the face of high US CPI numbers

Crypto is holding up well and the options market is showing confidence in continued spot price consolidation.

Last week we saw US CPI numbers coming in worse than expected, but lower than before: 8.2% vs. 8.1 YoY.

Most crypto assets sold off around the press release to then recover – with high-betas like DeFi and small caps outperforming BTC. Exchange tokens are also holding up well, with LEO and HT doing particularly well.

Looking at the macro picture it is hard to believe that the bottom has already been touched, but the fact that crypto is holding up so well with bearish news tells me that the market is already too well positioned for the downside and is happy to take on some risk going forward.

Crypto vols are lower week over week as we are approaching the year minima for most digital assets:

  • BTC 30d Realised Vol: 34.14%
  • ETH 30d Realised Vol: 45.68%
  • SOL 30d Realised Vol: 52.9%

As a reference, TradFi volatility is higher: NDQ 30d RV is 40.18%!!

The front-end of the implied volatility curve inched lower for BTC, ETH, and SOL, and the back-end saw a parallel shift of around 5%; as a result, all the curves are in steep contango. Option markets are reflecting a confidence in continued spot price consolidation.

Indeed, Volatility sellers are having a great time as they are enjoying the volatility premia and a rolling-down term-structure.

I believe that 30-day vols are very low considering the overall market situation, but if we do not have a catalyst, I expect them to stay this low. December might be the right time for buying volatility.

Looking ahead:

I expect $BTC to be range-bound the entire week as we do not have any volatility event and the RSI is neutral. Support is at $17.5k and resistance is at $20k.

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