CryptoBits: Topside Breakout

Written by
Adam Farthing

Published

February 7, 2022

Flow Analysis

Last week was indeed all about US non-farm payrolls. BTC spent Monday to Friday locked inside a $36k/39k range, before exploding higher through channel downtrend resistance - at $38,250 - after a huge payrolls number. By the closing bell in New York, BTC had traded up roughly 10% to reach $41,500, where it stayed throughout the weekend. This morning in Asia we have seen further attempts at higher prices, topping out so far just below $43k. ETH has followed in lock step, trading through its downtrend at $2,730 to reach a high on Friday evening of around $3,000, and is currently just shy of $3,100.

For the first time in a while, we saw a significant preference for buying BTC over ETH.

In line with last week, crypto exchanges and banks have remained our biggest buyers but, unlike last week, our family office clients have joined them. By region, we also see the same trend as last week, with APAC and EMEA quite biased towards the buy side. By coins, our clients have been better buyers of BTC, and better sellers of ETH. Aside from the majors, we have seen better buying of SOL and XRP, and better selling of DOGE and MATIC.

Futures market basis has yet to react to the new spot levels. If anything, short-dated basis is slightly lower than it was a week ago with 1-month at around 1-2%, which may be due in part to gamma hedging of long call options the market is seeing on DOVs. In line with futures basis, on the OTC lend/borrow side we are yet to detect any increase in demand for fiat/stablecoin borrows, whilst BTC and ETH borrow demand remains strong.

Options markets have been impacted recently by DOV call selling, which has pushed put skew to high levels right down the curves. BTC and ETH vols held quite stable during the week, despite the lack of spot action, but vol started to fall late on Friday as spot climbed into the low 40s, and the market became even longer gamma. With the bid side thin in a weekend market, front end vols were sold into a hole. BTC Feb ATM volatility dropped from the low 60s to the low 50s, but has since recovered to trade 64 vols. Put skew has come off hugely in both BTC and ETH, with 25 delta riskies dropping 5 vols right out to March, and 3 vols in June.

This week, the economic data calendar is dominated by US consumer prices, to be released on Thursday. Expectations for the year-on-year number are 7.3% which would be a 40-year high, although economists also expect core CPI month-on-month to drop to 0.5% from 0.6% in December.

Regionally APAC and EMEA were better buyers once again.
Exchanges and banks have again been buyers, with family offices joining them this week.

Download Here

About B2C2

More than just a liquidity provider, 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.

Sign up to our news alerts to receive our regular newsletter and insights into the crypto market direct to your inbox.

Subscribed! Thank you.
Oops! Something went wrong while submitting the form.
We use cookies to improve user experience and analyze website traffic. By clicking “Accept“, you agree to our website's cookie use as described in our Cookie Policy. You can change your cookie settings at any time by clicking “Preferences.