SignalPlus Vol Commentary (26 Jul 2024)
In the past two days, concerns over a potential AI investment bubble have affected U.S. stock indices, leading to a collective decline and putting pressure on cryptocurrency prices. Additionally, strong U.S. GDP data, which recorded 2.8% against an expected 2%, along with allegations of market manipulation by Bitfinex and Tether, have cast a shadow over bullish sentiments.
For ETH, the past two days have been particularly challenging. Although the inflow of funds from the three giants on the first day of the ETF listing offset selling from Grayscale, the selling of ETHE did not slow down over the past 48 hours. Other products’ inflows were cut off, resulting in net outflows of $152 million and $133 million respectively. ETH briefly dipped to around $3070, giving back nearly half of the gains from the early July rebound, but has since modestly rebounded to around $3250. However, some analysts remain optimistic about the eventual inclusion of a staking feature in the ETH Spot ETF, believing it will enhance the ETF’s appeal and lead the market to reassess the balance between short-term risks and potential long-term gains.
In the options market, the 28JUL24 options that settled on the day of the 2024 Bitcoin Summit were highly sought after immediately upon release, with the market pricing in high volatility expectations for that day’s Forward IV. ATM VOL was priced at a high of 90%. Concurrently, the Vol Skew curve sharply rose due to the market’s positive expectations, tilting towards bullish options. However, the high Vol Premium also attracted traders’ attention, leading to intense selling in the 67000/68000/69000 Calls (see the trading distribution chart below).
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