CryptoBits: BTC and ETH Remain Bumpy, Aligned with Uncertain Macroeconomic Outlook

Written by
Collin Howe


September 27, 2022

Key Takeaways
• BTC dropped $1,700 and ETH dropped $160 at the beginning of week

• Both saw a slight recovery, but quickly dropped again following Fed announcement

• BTC futures basis quite muted with slightly more movement in the ETH basis

• After some turbulence, 1 week BTC vol ended where it started at 70. ETH saw a similar vol squeeze at the beginning of the week, settling at 87.

Looking back

It’s been a choppy week for crypto price action, with BTC starting the week off with a dive from $20,100 straight down to $18,400. While it briefly got as high as $19,700 by mid week, the Fed raising rates on Wednesday quickly sent the market spiraling, sending BTC back down to $18,300. Although the price has since recovered a bit, there wasn't any fuel for a real move to the upsideas BTC hovered above and below the $19,000 level for the tail end of the week. ETH performed similarly, going from $1,450 to $1,290 at the week’s open, and then falling off the $1,390 level, it reclaimed down to $1,240 following the Fed announcement.

Over this past week we’ve seen fairly balanced flows in most coins, with BTC and ETH in particular seeing a near even split. The notable exceptions were DOT, EOS, and XTZ, all symbols we saw heavy selling in. By client category, Banks saw outsized selling, while crypto exchanges and retail brokers were skewed towards buying. Finally, by region we saw much better selling by EMEA clients, while APAC were better buyers.

Balanced flows, with a slight skew towards the sell side, in most coins. DOT, EOS, and XTZ in particular though all saw heavy sell flows

The BTC futures basis has been quite muted over the past week, with the 1 month basis trading around flat and 3 month hovering near 1% on major exchanges. There was slightly more movement in the ETH basis on the other hand; the 1 month basis got as low as -4% before finishing off the week around -2%, while the 3 month basis remained stable at -0.5% to -1%.

In the options space, short term implied vols have seen a decent bit of movement, while vols for longer tenors were generally more stable. In BTC, 1 week vol started at 70, spiked up to 80 off the post Fed spot move, proceeded to get crushed to as low as 58, until recovering to 70 vols at week's end. BTC 3 month vols kept stationary though, as they maintained levels around 67 vols. Similarly, in ETH there was a massive vol squeeze in the front end, with 1 week vols briefly touching 110, before settling down around 87, while 3 month ETH vol hovered around 90.

Looking ahead

Between CPI, the merge, and the Fed, it’s been a hectic few weeks for the crypto ecosystem, with price action definitely reflecting that. While there have been some sharp moves in both directions, a definitive trend has yet to emerge. As such, barring some as of yet unforeseen catalyst, expect crypto to trade on macro for the foreseeable future.

Crypto exchanges and retail brokers were both skewed to buy, while banks were very strong sellers

EMEA were outsized sellers this past week

All data sourced from our real time systems supporting global 24/7 crypto liquidity provision

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