SignalPlus Volatility Column (20240708): Embrace uncertainty

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SignalPlus Volatility Column (20240708): Embrace uncertainty

SignalPlus Volatility Column (20240708): Embrace uncertainty

In the past 24 hours, the market witnessed a sharp drop in BTC after the opening of the Asian session. The price once fell below $55,000, then rebounded gently, and successfully returned to around $57,500 at the settlement time. The surge in realized volatility put both short gamma positions in an awkward position, and the implied volatility of options was then significantly raised, forming an inverted pattern.

SignalPlus Volatility Column (20240708): Embrace uncertainty

Source: TradingVie; SignalPlus, ATM Vol

Looking at the current situation, there are two different voices in the community. Negative traders pointed out that the selling pressure from the German government, the US government and Mentougou has not subsided, and the price of the currency may continue to fall. But today, more optimistic traders in the community spoke out. They first denied the excessive impact of the governments selling pressure, pointing out that the amount of BTC sold by the government was only 4% of the previous bull market; on the other hand, even in the downward trend of Spot, ETFs are still bringing positive capital inflows to the market, most of which have gone to FBTC; we can also see that Metaplanet, a consulting company known as Japans MicroStrategy, bought 42,466 Bitcoins at a bottom price yesterday, worth $2.5M. Now the company has a total of 203,734 Bitcoins, with an average price of around 62,000.

SignalPlus Volatility Column (20240708): Embrace uncertainty

Source: Farside Investors

No one can give a confident answer to what will happen next. A group of traders have set their sights on this weeks macro events, including the speech by Fed Chairman Powell and the release of important CPI/PPI data. In a few weeks, there will be a new round of FOMC meetings. When the current situation is still unclear, macro indicators may become an important signpost. Not only that, the market also expects the approval of the Ethereum ETF on November 12 this week, which injects more uncertainty into the market. The second half of the week is expected to be exciting.

SignalPlus Volatility Column (20240708): Embrace uncertainty

Source: SignalPlus, Economic Calendar

SignalPlus Volatility Column (20240708): Embrace uncertainty

Source: Deribit (as of 8 JU L2 4 16: 00 UTC+ 8)

From the perspective of trading, due to the release of important data on November 11-12 and the possibility of ETF approval, traders bought a large number of ETH 12 JUL put options to protect long positions. BTC is the opposite. The price rebound provides traders with confidence to sell 12 JUL put options. At the same time, the volume of long-term call options has skyrocketed, mainly distributed in the purchase of the wing and the sale of the further tail, forming a long call spread flow.

SignalPlus Volatility Column (20240708): Embrace uncertainty

Data Source: Deribit, overall distribution of BTC transactions

SignalPlus Volatility Column (20240708): Embrace uncertainty

Data Source: Deribit, overall distribution of ETH transactions

SignalPlus Volatility Column (20240708): Embrace uncertainty

Source: Deribit Block Trade

SignalPlus Volatility Column (20240708): Embrace uncertainty

Source: Deribit Block Trade

SignalPlus Volatility Column (20240708): Embrace uncertainty

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