Bitcoin has fallen from its $31,000 highs, currently trading at $27,250, with bitcoin futures continuing to play a dominant role in short-term price action. Despite this recent drop, the Volmex bitcoin implied volatility index (BVIV) remains well below its March highs of 76.3, currently at 57.3. In the bitcoin options market, 25 delta skew (the relative richness of put versus call options, expressed in terms of implied volatility) for 1-week options has gone from extremely near term bullish — minus 10% 25 delta skew, meaning calls pricier than puts — to the most defensive since the Silicon Valley Bank and USDC scare from mid-March — plus 10.3%, meaning puts pricier than calls. Liquidity remains near nonexistent in crypto markets compared to 2021. Although spot and futures volumes remain very low, on-chain free float supply constraints remain. This looks to continue to increase on meaningfully medium and long timeframes, with price still significantly above the 200-day moving average ($21,321), realized price ($19,912), and other important weighted average price metrics. As long as implied volatility in U.S. equities remains, the speculative bid and flow of funds is likely to continue in the interim. We are still of the opinion that this tightening cycle will approach a moment of reckoning. One in which central banks will have to ramp fully into accommodative mode, with late 2023 and early 2024 serving as the key window. A comparable time period in bitcoin’s history is 2019-2020, where price found a capitulation low ($3,300), before facing seller exhaustion and a short squeeze induced rally, before being stung by macro factors aggressively in March 2020 right before Bitcoin’s third halving.
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PRO Market & Mining Dashboards 4/21/2023
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Market Dashboard
Market Summary
Bitcoin has fallen from its $31,000 highs, currently trading at $27,250, with bitcoin futures continuing to play a dominant role in short-term price action. Despite this recent drop, the Volmex bitcoin implied volatility index (BVIV) remains well below its March highs of 76.3, currently at 57.3. In the bitcoin options market, 25 delta skew (the relative richness of put versus call options, expressed in terms of implied volatility) for 1-week options has gone from extremely near term bullish — minus 10% 25 delta skew, meaning calls pricier than puts — to the most defensive since the Silicon Valley Bank and USDC scare from mid-March — plus 10.3%, meaning puts pricier than calls. Liquidity remains near nonexistent in crypto markets compared to 2021. Although spot and futures volumes remain very low, on-chain free float supply constraints remain. This looks to continue to increase on meaningfully medium and long timeframes, with price still significantly above the 200-day moving average ($21,321), realized price ($19,912), and other important weighted average price metrics. As long as implied volatility in U.S. equities remains, the speculative bid and flow of funds is likely to continue in the interim. We are still of the opinion that this tightening cycle will approach a moment of reckoning. One in which central banks will have to ramp fully into accommodative mode, with late 2023 and early 2024 serving as the key window. A comparable time period in bitcoin’s history is 2019-2020, where price found a capitulation low ($3,300), before facing seller exhaustion and a short squeeze induced rally, before being stung by macro factors aggressively in March 2020 right before Bitcoin’s third halving.
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