CryptoBits: Crypto Remains Weak on Macro Concerns

Opinions

Written by
Adam Farthing

Published

April 25, 2022

Key Takeaways
• Price weakness and high correlation to equities continue
• No crypto theme so far to override weakness from rates/growth/inflation/war concerns
• While derivatives markets remain subdued, interest in buying longer dated upside persists
• Regionally, EMEA were the standout buyers; by client type, banks and family offices were better buyers.


Looking back

Crypto markets remain short of idiosyncratic themes, and the past week has again seen prices move in lock step with equities. We started last week with BTC testing the $39,000 support level, it then spent the next three days grinding higher to test $43,000 on Thursday morning in London, before dipping again with equities after Powell, the Fed Chair, again injected more fear into markets with hawkish commentary.

This morning in Asia, ETH is leading the weakness, with the cross testing the lower bounds of the 0.073/0.077 range. This is the range it has traded within for most of April. Liquidity and volumes across the market remain quite poor.

Our clients have been better buyers of BTC and better sellers of ETH, indicating some risk aversion.  Amongst the other coins, we have had strong selling in SOL, LUNA, MATIC and BNB; and strong buying in ADA, LNK, XLM, XTZ and AVAX.   Broken down by client category, our better buyers were banks and family offices.  Regionally, EMEA were the standout buyers.

We had selling in SOL, LUNA, MATIC and BNB; and buying in ADA, LNK, XLM, XTZ and AVAX.

The lend-borrow market remains quiet, with continued interest to borrow alts, but limited interest in  stablecoins.  Futures basis has also been moribund, unchanged on the week.  

Vol markets have also been quite stable, supported by the price action (market makers short put skew) and capped by the low level of realised volatility, meaning short gamma positions are not difficult to manage, if prices were to  fall.  BTC ATM vol for May is ranging between 56-59 vols, and the equivalent ETH contract is 61-65 vols.  There continues to be interest in buying back end call options in both ETH and BTC, with a large buyer of Dec ETH 7k calls showing their hand on Friday.

Looking ahead

Quite a big week for equities with earnings for the major tech and social media groups, which could show the way for risk in general this week.  On the macro front, the economic calendar is quite bare, so players may focus on potential risks arising in the following week (Fed, BoE, Payrolls). Suggests we can possibly expect weakness to persist as risk positions continue to be pared back until the end of this week.  The war in Ukraine is also heating up, with the US sending more and more attack weaponry, so could jump to the front of investors’ minds once more, risking another leg down in prices.

Regionally, EMEA were the standout buyers.
Our better buyers were banks and family offices.

About B2C2

B2C2 is a digital asset pioneer building the ecosystem of the future.

The firm has unlocked institutional access to crypto by providing reliable liquidity across market conditions. B2C2’s success is built on crypto native technology and continuous product innovation, making it the partner of choice for diverse institutions globally.

Founded in 2015 and majority owned by Japanese financial group, SBI, B2C2 Ltd is headquartered in the UK, with offices in the US and Japan. B2C2 Ltd is registered in England and Wales under company number 07995888 with its registered office at 86-90 Paul Street, London, EC2A 4NE.  B2C2 Ltd is the parent company of the B2C2 group of companies. Products may be provided by different members of the B2C2 group of companies, depending on the jurisdiction of the client and the regulatory status of the product and/or B2C2 group member. B2C2 is a registered trademark.

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