Key metrics: (31Mar 4pm HK -> 14Apr 4pm HK)

  • BTC/USD +3.0% ($82,000-> $84,450) , ETH/USD -11.1% ($1,800-> $1,620)

  • Technical price action was quite constructive in the past 2-weeks amidst all the cross-market chaos, with BTCUSD seemingly putting in a double bottom last week right ahead of $74k, which was the initial resistance zone on 6Nov24 where spot stabilised after the Republican sweep. Subsequently we broke through some more medium-term downtrend from the end-Jan highsand now find ourselves wedged between strong support at $81.8–82.3k, while big resistance continues to come in between $88–90k.

  • Overall the technicals are suggestive of sideways consolidation in this broader $82–88k range in the coming weeks, with positioning likely a lot cleaner as well. Should this double-bottom at $74k hold then that may indeed mark the end of the corrective wave from the post-election highs that we expected and set up for a final wave ascent to $115–120k in the coming months

Market Themes

  • Extreme volatility across markets in the past 2 weeks as Trump implemented reciprocal tariffs that exceeded even the most hawkish estimates, with China particularly feeling the pressure as a tit-for-tat escalation culminated in tariff rates >100% both sides, effectively rendering trade impossible between the nations. VIX spiked from 20 at the start of April to a high of almost 60 as the market struggled to stomach the implications, with almost a week of Trump failing to budge stance as he attempted to bring nations to the negotiating table. However, with the US bond market in a fragile state, announcement of a 90-day pause on tariffs for all nations ex-China brought some relief to the markets, with VIX eventually closing out last week back below 40

  • The implications were not just confined to equities, with the market effectively rejecting US assets on the back of the announcement, with the DXY dropping just under 5% in April so far alone, while long-dated US Treasuries, once a safe-haven, also sold off, akin to an ‘emerging market crisis’. Ultimately there is (estimated) over $10trillion of unhedged USD asset holdings out there, so while the pace at which this adjustment to the USD will almost certainly slow, the trend looks very much set now as the market looks to reposition hedges in the Trump era

  • As for crypto, the equity-beta dominated price action for the most part, with BTC$ probing range lows of $74–75k on a couple of occasions, while ETH$ also saw a significant liquidation to below $1,400 briefly. However as the equity outlook began to improve, following the 90-day pause and with VIX lower, BTC$ in particular began to regain ground, with the diversification away from USD/FIAT starting to kick in. Ultimately we will need some continued stability in the macro backdrop for any rally above $88/90k to sustain in BTC$, while on the downside we would need to see fresh lows in US equities/fresh highs in VIX to take out the range lows of $74k. Overall it looks like we are setting up for some sideways consolidation ahead of Easter

BTC$ ATM implied vols

  • Drastic vol-of vol over the past 2 weeks as the market took its cue from equity volatility markets over the Trump tariff saga. There did not seem to be a huge amount of demand for volatility on the downside moves, aside from some more tactical shorter dated put protection demand, and as such the vol term-structure inverted steeply as realised performance drove gamma contracts higher.

  • With VIX settling towards the end of the week and US bonds also finding some equilibrium, the case for higher volatility in crypto in the coming 90 days (during the tariff pause window) seems quite weak, and as such we would expect to see some overlay selling both sides of the distribution as we settle back into the range. Should we see some further disorder in equity/rates markets then the risk of some CB intervention may rise (including potential quantitive easing); the fattening of such tails would push crypto vol higher.

BTC$ Skew/Convexity

  • Skew prices moved aggressively for puts on each spike in VIX/dip in US equities as the local BTC-SPX correlation remained high and the BTC spot-vol correlation performed accordingly with SPX. The skew move was less pronounced in Vega tenors for BTC with a lack of structural demand for downside hedges beyond the end-April expiries, although a few buyers of June 60–70k puts were seen in the market

  • Convexity broadly ended the period unchanged despite drastic performance of implied vol-of-vol and also spot vs risk-reversal correlation both sides of spot (skew strongly bid puts on lower spot then reversing a lot of the move on higher spot). Ultimately local realised performance was relatively high in this period and spot has consolidated in the middle of the broad $74–90k range, and therefore appetite to own wings in the current regime is low. Structurally we continue to believe these flies are priced too low based on the noted performance of vol-of-vol and spot vs risk-reversal dynamics

Good luck for the week ahead!