Key metrics: (14Apr 4pm HK -> 21Apr 4pm HK):

  • BTC/USD +3.6% ($84,450-> $87,500) , ETH/USD -1.9% ($1,620-> $1,590)

  • Another week on from the test below $75k (which was the post-election pivot level) and we have received further confirmation that the double-bottom has marked a strong support/base, with price action this week holding cleanly above the $80–81.5k resistance/support level. Our base case is that the market will hold within this higher $82–90k range for the next few sessions, if not weeks. A break above $91–92k and the market will be looking to test $100k, and potentially then onto the highs again. If instead we get a move below $73–74k then we could see spot breaking down more structurally to $60–65k

  • We remain structurally bullish over the medium term and think that the next few quarters will see a move to new highs, targeting $115–125k technically, but the path/timing continues to remains difficult to pinpoint

Market Themes

  • Much calmer week overall across markets as a huge amount of position rebalancing/de-grossing in equities/treasuries/FX/crypto has been done by this point, while most of the ‘bad news’ related to tariffs is now out there (including freshly announced export restrictions on chips to China). Powell spoke and struck a more cautious tone on rate cuts, noting the risks of higher inflation, which was not particularly well received by the market or Trump. Reports then came out over the weekend that Trump is ‘looking at ways to remove Powell’, which sparked a fresh wave of USD selling and weakness in US assets on the Monday open after Easter weekend, with the credibility of US assets continuing to be undermined by Trump’s actions. VIX continues to remain sticky above the 30 level despite lower realised volatility, as the market remains very nervous of further unexpected headlines from Trump and his administration

  • As for crypto, BTC is for the first time since late February attempting to break its correlation to SPX/equity beta, and reacting more to the USD weakness side of the story, rallying against the USD on Monday in line with Gold and G10 FX, despite weaker equities/higher VIX. Altcoins meanwhile struggle to rally in this environment of weaker equities, so the BTC outperformance looks specific to the story of diversification away from USD holdings/assets, and if this continues to play out then BTC should have decent room to catch up to the large moves higher in the likes of Gold this year, and it has always been our view in this environment that the SPX-BTC correlation needs to breakdown in order for BTC to really take its next leg higher

BTC$ ATM implied vols

  • Implied vols trended aggressively lower last week after a sharp drop-off in realised volatility, clocking in the mid 30s last week with positioning a lot cleaner and spot finding equilibrium in a fairly tight $83–85k range for the majority of the week. The move lower was fairly weighted with front-end vols most significantly selling off ahead of the Easter holiday weekend, before reflating naturally once the weekend was over and with spot showing signs of life on the move higher

  • While the cross-asset backdrop remains more volatile than previous environments, BTC in particularly is starting to de-correlate from other assets, notably SPX, and if this should continue then ultimately that could weigh further on implied volatility further out the curves, and begin the more structural repricing lower of BTC volatility that is essential for its continued adoption/capital allocation as a non-speculative store of value/USD diversification play

BTC$ Skew/Convexity

  • Skew prices in shorter-dated expiries moved from pricing deeply for puts over towards flat, in line with the spot move higher and pick-up in realised performance on higher spot on Monday. However ultimately it feels as though the market is a lot more ‘comfortable’ in this zone of spot, as implied volatility levels have not rolled up much despite the 5% rally in 24hours, suggesting that the market has some overhang of long volatility positions in this vicinity of spot, while we have seen some longer term players using the pop in spot to re-initiate covered calls

  • Convexity broadly moved lower in-line with the reprice lower of base volatility and also with supply of wings from overlay sellers both sides of spot, given spot is consolidating in this well-established technical band of $82–90k. However should this range now break we would expect an acceleration of realised vol (and implied vol) either side of spot, therefore we continue to advocate owning wing strikes in this environment given the technical spot outlook, and given the higher realised vol-of-vol and the strong risk-reversal vs spot correlation that continues to be exhibited either side of spot

Good luck for the week ahead!