TA Tuesday: Crypto Markets Weather Volatility, Market Expectations, and Year-End Strategies

Markets today by TradingView

Week-over-week performance:

  • BTCUSD: 41,970 / +1.08%
  • ETHUSD: 2,236 / +1.22%
  • US10Y: 4.19% / -4 bps
  • DXY: 103.88 / +0.27%
  • GOLD (USD/OZ): 1,988 / -2.21%
  • NDX: 16,221 / +2.41%
  • VIX: 12.64 / -3.43%


On the macro side:

Macro figures stayed in line with expectations, reinforcing the consistent upward trend of conventional markets.

NDX is 3.5% below its all-time high, and gold is declining in the high-volatility environment. Equity Volatility persists at historically low levels and UST yields are gradually decreasing.

For significant changes, both in prices and volatility, we will require more substantial deviations in the figures.

My bias for the year-end continues to lean towards lower yields and a market favouring risk-on sentiment in a low-vol environment.

Looking ahead:

  • Tuesday: US CPI
  • Wednesday: UK GDP, US PPI, and FOMC
  • Thursday: SNB Interest Rate Decision, BoE Interest Rate Decision, ECB Interest Rate Decision, and US Jobless Claims

 

On the FX side:
The upcoming policy rate decisions from the US, UK, CH, and EU this week might create market turbulence, potentially leading to increased volatility and high vol-of-vol.

Currently, market expectations favour a status quo scenario with all economies likely to maintain their existing rates.

Yet, if any of these economies surprise by implementing a rate cut, brace yourself for a jolt of excitement in the markets. 

In my view, Switzerland stands out as a potential candidate for a rate cut, given its low inflation figures.

The pain trades are against CHF (short CHF). 

One particularly interesting pair is EURCHF, currently at 0.9458. 
The pain trade here +EURCHF, with a TP (Take Profit) at 0.9574 and a SL (Stop Loss) at 0.9404.

Chart 1: EURCHF 1d

Turning to the US Dollar Index, I maintain a bias for high vol-of-vol, anticipating swings in the range of 103 to 104.27.
Chart 2: DXY 1d

On the crypto side:

Another week of high vol-of-vol unfolded, with fluctuations and moments of panic that drove BTCUSD down to $40.1k.

Despite the turbulence, the swift market recovery signals bullish sentiment.
The sell-off appears more a result of an over-extended market than driven by news.

Interestingly, profit-taking around $43k transformed into accumulation around $41k at our desk.
With BTC’s 30-day Realized Volatility at 53%, placing it in the top 25% of one-year historical observations, and RSI in the 60s, I expect a consolidation above $40.5k.

Chart 3: BTCUSD 1d

In contrast, ETHUSD seems weaker, and ETHBTC even more so.
ETHBTC’s failure to break the channel at 0.05498 leads me to expect a jump down to 0.051.

Chart 4: ETHBTC 1d

In derivatives, the sell-off prompted a repricing of the skew, creating a favourable opportunity to close the skew trade.
As we approach year end, my favourite year-end trade comes into play: accumulation into the new year.
Specifically, selling puts in the $40Ks and calls in the $45Ks, supported by crypto-vol following equity-vol lower.


Chart 5: DVOL vs. VIX

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