8/13/2019 — BTC Market Commentary

Today we focus on BTC. Although it may seem redundant in writing on the BTC market so frequently, we deem it appropriate in lieu of the dominance it has held in crypto this quarter. A month ago we referenced this in our BTC Dominance piece where BTC at the time was ~65% of the total market cap in crypto. About a week ago, this Dominance touched ~70% and is just under that today.

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Three weeks ago, we published a chart in our BTC Crossroads piece showing two technical trends. A longer-term bullish channel, and a shorter-term downward wedge. Since the creation of this chart, we have extended the trend lines and what we are seeing now is BTC as being on the precipice of a break out. The two trends are converging and we stand ready to witness a breakdown in these technical formations to shape up the next move for BTC.

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With the protesting over in Hong Kong, and the Chinese Military assembling near the border, we see this potential boiling pot as a catalyst for a sharp rally in BTC. However, the options market is telling us otherwise. BTC implied vols were rangebound between 95%-105% for the month of July, however have been weak since the beginning of August. Implied vol touched 90% August 3rd, rose to 100% as BTC rallied from $10,800 to $12,300, but has been leaking back off ever since. Options are now trading sub 90% for the first time since late June. Call skew is flattening out, especially the tinnie calls that blew out a month ago.

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Finally, we have seen the CME Futures curve come in ever so slightly. The CME Q/U Futures spread was trading roughly $175 about 10 days ago and now are trading around $130-$140.

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