Chart of the Week: Who Leads Who?

• ETH and NASDAQ 100 (ETF ticker: QQQ) are the same chart. A trading strategy simply based on these two closing any gaps that occur between them appears to work well recently. One such gap has materialised now, as the NASDAQ 100 has rallied but ETH has not. Is ETH going to play some catch-up, or are we looking at a decoupling? 

Fund Flow Tracker

• Aggregated exchange balances of BTC dipped during the past week, while ETH’s rose. In the past week, aggregated exchanges saw net outflows of 48.9K for BTC, and net inflows of 136.2K for ETH. BTC balance held on OTC desks dropped slightly as well.

Derivatives Pulse

• Options implied volatilities (vol) for BTC and ETH continue to fall across the curve, and term structure has reverted back to “normal” (upward sloping). 1-week implied vol currently stands at 58.7% and 73.3% for BTC and ETH, respectively.

• Options put-call ratios for BTC and ETH are on different trajectories. Investors appear to be increasingly hedging BTC exposure (BTC put-call ratio climbing), reflecting caution - although we note that most people buy protection late. The ETH put-call ratio is going in the opposite direction i.e., falling, potentially indicating some shift to more positive sentiment.

• Options skews are still elevated, indicating that buying put-protection now remains relatively expensive. Front-end skews are printing higher than back-end, reflecting the premium being put on near-term risks, as we approach an expected U.S. Fed 50bps rate hike on 16 June.

• No significant action in BTC and ETH perpetual futures funding rates, which are mainly in positive territory, indicating that long positioning tilt remains.

• Asset managers’ net-long position in CME Bitcoin futures is coming down, while the other reportable group’s (which includes corporate treasuries) net-long position is increasing.

• Leveraged traders are typically hedge funds and various types of money managers, including commodity trading advisors and commodity pool operators. The traders may be engaged in managing and conducting proprietary futures trading, and trading on behalf of speculative clients.

• The asset manager category consists of institutional investors, including pension funds, endowments, insurance companies, mutual funds, and those portfolio/investment managers whose clients are predominantly institutional.

• The dealer category consists of participants typically described as the “sell-side” of the market. These include large banks and dealers in securities, swaps, and other derivatives. The other reportable category consists of traders mostly using markets to hedge business risk, and includes amongst others corporate treasuries.

Technically Speaking

• BTC has been stuck in a sideways range since 9 May - we take a look at the Fibonacci retracement levels for some technical indications of short-term support and resistance. The Fibonacci retracement levels (and corresponding BTC prices at these levels) are: 0 (US$32.4K), 0.236 (US$30.7K), 0.382 (US$29.7K), 0.5 (US$28.8K), 0.618 (US$28.0K), 0.786 (US$26.8K), 1 (US$25.3K).

Price Movements

Source: Crypto.com

News Highlights

• Intraweek, U.S. non-farm payrolls rose by 390K in May implying a tighter labour market, while unemployment held steady at 3.6% with increased labour participation rate hinting at the Fed to remain hawkish to cool increased demand. Additionally, the  ISM manufacturing PMI came in positively at 56.1%.

• According to Arcane Research, Bitcoin exchange-traded-products saw higher capital inflows through May and the first two days of June despite potential macroeconomic headwinds.

• The Biden administration has launched a study of the Bitcoin mining industry, focusing on the impact on energy consumption and greenhouse gas emissions. The report is expected in August.

• The Bored Ape Yacht Club Discord server was hacked on the weekend, resulting in 200 ETH worth of NFTs stolen.

Catalyst Calendar

* Consensus forecasts from Trading Economics

Disclaimer:

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