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QCP Asia Colour - 11 November 24

- BTC continues to soar to record highs! Despite making new highs, vols have not reacted much as a result of large profit taking on long Calls. This means that the market was well positioned for this rally.

- With BTC's break of key resistance and it's multi-month range, the market is certainly in a state of euphoria. Perp funding is very elevated and basis yields are at 7-month highs. While we remain structurally bullish, we are cautious of any pullbacks especially from leveraged washouts. Historically, such spikes in basis yields have not lasted very long either.

- In the near term, we expect spot to chop around these levels and vols to soften even as we anticipate this week's macro events. Key events this week are: US CPI (Wed), US PPI (Thu) and Powell speech (Fri) where we'll get more clarity on the expected 25bps rate cut in December.

QCP Asia Colour - 12 November 24

Since the election, gold has declined by 5% while Bitcoin has surged by 30%, signaling a shift as Bitcoin gains traction as "digital gold." This movement appears increasingly structural, with capital reallocating from traditional safe havens like gold into BTC.

Bitcoin’s market cap, now at $1.73 trillion, recently surpassed that of silver but remains well below gold's $17.5 trillion. If even 1% of capital from gold were to flow into BTC, it could propel Bitcoin to around $97k, highlighting the potential upside as this narrative continues to solidify.

With BTC just below the critical $90k level, the end-November basis has surged to over 18%, accompanied by strong interest in far-out calls at 110k and 120k strikes. This trend points to heightened demand for margin and leverage as investors position for further breakout potential.

QCP Asia Colour - 13 November 24

BTC has entered "a new phase" after nearly breaking the 90k mark, solidifying its position as a treasury asset increasingly held by corporations, governments, and institutions. Record-breaking demand for BTC ETFs is setting the market on fire, with a massive $2.28 billion flowing in over just three days. Following last week's U.S. election, BTC ETFs raked in $1.8 billion, starting this week strong with another $1.1 billion in net inflows. It’s clear: the market is adjusting to BTC’s new highs, and the demand has never been hotter.

On the other hand, memecoin activity ramped up as well. DOGE skyrocketed Tuesday night, building on its post-election rally after Trump announced the formation of the Department of Government Efficiency, referred to as “DOGE.” Tesla’s Elon Musk and former Republican candidate Vivek Ramaswamy will lead the new department, with plans to "dismantle government bureaucracy, slash excess regulations, and streamline federal agencies." DOGE jumped nearly 20%, trading at $0.37 by early morning after briefly touching $0.43. The meme coin has surged 153% since election day, outperforming Bitcoin’s 30% rise, and recently overtook XRP to claim the sixth spot by market cap.

Today’s focus is on the release of CPI and core CPI, anticipated to hold steady at 0.2% and 0.3% for October, with annual CPI projected to rise by 2.6%. Markets are pricing in a final rate cut for the December meeting with a 70% probability, but today's CPI, upcoming PCE on November 27, and potential policy shifts from Trump could all impact the Fed's ultimate decision.

QCP Asia Colour - 14 November 24

BTC refreshed all-time high during last night’s New York session, rallying to a peak of $93,480. The move came after US headline and core inflation matched expectations at 2.60% and 3.30% respectively. Market is currently pricing in 82.5% chance of a 25bps cut in the upcoming December FOMC meeting.

As of this morning, crypto up has pushed the global market cap of crypto above $3 trillion, above its 2021 peak of $2.77 trillion.

Where are we going from here?

In view of Bitcoin’s impressive rally since the US election, our view is that $100,000 – $120,000 may not be too far off. As we prepare for the next move up, it is important to note the following trends and risk factors:

- Implied vols have been falling on the move up as many large players were positioned for it and sold calls into the rally. With each new high, our desk observed market is selling calls and buying puts to hedge their downside risk

- Market remains extremely leveraged especially in alts. Heavy leverage buying has pushed perp funding up to 50-100%, especially for alts. The risk of deleveraging may be quite significant.

We believe that the underlying strength in BTC represents a systematic shift in the market in anticipation of Trump’s return to office. His idea of launching a strategic BTC reserve and rotation from Gold to BTC, provides a strong narrative that keeps BTC prices supported.

QCP Asia Colour - 18 November 24

While BTC and ETH traded sideways over the weekend, SOL outperformed both majors as it rallied ~17% from Friday's lows. It does seem like SOL and other altcoins are starting to gain some traction especially with a pro-crypto Trump administration. So is alt-coin season around the corner?

Historically, we've seen altcoins outperform whenever the majors consolidate after a significant rally as profits rotate into smaller-cap coins. BTC's dominance is around 60% now and it will probably need to be around <58% to signal the start of altcoin season.

Investors might not be ready to fully rotate into altcoins just yet as BTC does seem to have more legs to go before that 100k milestone. As we anticipate pro-crypto policies from the Trump administration and more rate cuts, we won't be surprised to see altcoin season in full swing in the coming months.

Despite having nett ETF outflows last Thursday and Friday, BTC still looks relatively well supported and institutional adoption remains strong. Earlier today, Japan's Metaplanet announced plans to purchase more BTC from funds raised from its bond sales, following the likes of MicroStrategy. Seems like predictions of BTC at 100k aren't a pipedream anymore as the political and institutional stars start to align.

QCP Asia Colour - 19 November 24

NASDAQ will begin listing options on BlackRock's BTC spot ETF (ticker: IBIT) today. This marks a significant milestone for the Bitcoin derivatives market, as derivatives for traditional assets often grow to be 10-20 times the size of the underlying market cap.

This development is poised to attract a new wave of institutional investors who face restrictions on accessing native crypto options markets like Deribit. These investors are likely to focus on generating yield on their long-term spot ETF holdings, potentially leading to further compression of implied volatility.

This mirrors the trend of institutions using MicroStrategy as a proxy for Bitcoin exposure. Q3 13F filings revealed that institutional holders of MicroStrategy surged from 667 to 738, with Vanguard increasing its holdings by nearly 16 million shares—a staggering 1,000% jump.

Amidst all this positivity, Goldman Sachs is also planning to spin off its digital asset platform, further highlighting the growing integration of crypto into traditional finance.

The December 100k strike continues to hold the highest concentration of open interest. With spot finding its footing above 90k — evidenced by implied vol flies dropping 1 point from last week — we believe this could provide the foundation BTC needs for a move higher.

QCP Asia Colour - 20 November 24

Is crypto finally becoming a key part of macro? The options market for BlackRock's BTC spot ETF (IBIT) made a strong debut, trading an astounding 73k contracts within the first hour on Tuesday with a bullish call-to-put ratio of 4.4:1. This activity places IBIT among the top 20 most active non-index options, underscoring the growing institutional confidence in Bitcoin as a mainstream asset class.

This market response is likely to attract new investor cohorts and enable diversified trading strategies, which could help reduce both volatility and downside risk, solidifying Bitcoin’s place in mainstream markets. Other BTC spot ETFs such as the Grayscale BTC Trust (GBTC) and Fidelity Wise Origin Bitcoin Fund (FBTC) are expected to have options listed soon.

On the other hand, Trump’s Cabinet picks are turning heads, especially with crypto-friendly names like Elon Musk, chosen to lead the newly created Department of Government Efficiency (DOGE), and Pete Hegseth, nominated for Secretary of Defense. Hegseth, a vocal advocate for Bitcoin's decentralized value, has even pledged to hold, not sell, his Bitcoin holdings.

With Republicans securing control of the Senate, most nominees are expected to sail through confirmation. Trump aims to finalize his Cabinet picks by Thanksgiving, just a week away. These selections highlight an alignment between the new administration and the growing influence of digital assets in policy and finance.

QCP Asia Colour - 21 November 24

Bitcoin reached a new all-time high of $97,900 this morning, following last night’s rally. The surge was driven by growing optimism for crypto, fuelled by headlines emphasizing Bitcoin’s increasing importance in the corporate world and rising capital inflows into the asset.

1. MicroStrategy is expected to raise $2.6 billion to purchase more Bitcoin, with MSTR surpassing a $100 billion market cap and topping US trading volume last night.

2. Several corporate treasuries are following the likes of MicroStrategy by adding Bitcoin to their reserves, with Acurx Pharmaceuticals reported to have purchased up to $1 million worth of Bitcoin.

3. There has been overwhelming buying of January calls as we approach the Trump inauguration rally.

What’s Next?

With BTC holding firmly above the 97k mark, it's now closer than ever to that 100k milestone. Throughout the week, our desk observed aggressive demand in March and June Calls, signalling investors' long-term bullish sentiment for next year.

BTC spot ETFs have extended their winning streak to three days, with a total of $1.84 billion in net inflows during that period. The BTC ETF has been the biggest driver of additional capital into Bitcoin this year, with US-based ETFs accounting for $29.4 billion in net flows.

As we continue to see strong demand for BTC alongside further easing of monetary policy by global central banks, BTC prices are likely to remain supported as we approach the end of the year

QCP Asia Colour - 25 November 24

Crypto dipped lower yesterday as more than 100m worth of BTC and ETH positions were liquidated across exchanges. However, both are still trading comfortably above their key support levels (95k and 3200).

Even with the retracement over the weekend, backend vols remain relatively elevated. The market seems to be expecting BTC to trade sideways until December as attention shifts towards ETH in the near term. ETH risk reversals remain heavily skewed in favor of frontend Calls, while BTC Calls seem to be more bid only from 27DEC24 onwards, driven by the potential impact of Trump's pro-crypto policies which are only likely to take effect later next year.

As we mentioned last week, there could be a gradual rotation from BTC to ETH and other alts if BTC keeps rejecting 100k. In fact we are already starting to see this play out as BTC dominance dropped from 62% to 59% over the past week.

Despite consistently strong spot ETF inflows and impressive IBIT options skewed in favor of Calls, BTC seems to be fighting an uphill battle given the huge 100k sell wall. So will it reach its 100k milestone any time soon or will attention gradually shift to alts?

Just today, Michael Saylor hinted at purchasing even more BTC. MicroStrategy's purchases definitely fueled BTC's post-election breakout so the market is surely waiting to see if another purchase will take BTC to six-digits. If it does, we wouldn't be surprised to see BTC squeeze higher and altcoins to take the backseat for a little longer.

QCP Asia Colour - 26 November 2024

Bitcoin has slipped below 93k since our last commentary, with over $430 million in long liquidations. This decline coincided with spot ETFs ending their five-day streak of net inflows, recording a $438 million outflow on Monday, while MicroStrategy dropped another 4.4%.

The pullback follows MicroStrategy’s record $5.4 billion Bitcoin purchase last week. With U.S. holidays approaching and no immediate catalyst to push prices higher, BTC’s path to the symbolic 100k level has stalled.

ETH implied volatility has shifted sharply toward puts over calls, reflecting similar sentiment in BTC as the market takes a breather. Growing concerns about downside risks may intensify, particularly with tonight’s FOMC minutes and Wednesday's PCE data on the horizon.

However, to put things into perspective, this isn’t an excessive pullback. Bitcoin is merely retracing to levels seen early last week. The market had become extremely overbought since the election with excessive leverage, making a pause inevitable.

QCP Asia Colour - 27 November 2024

Bitcoin appears to have found a comfortable spot above the $93K mark as the holiday season nears. Meanwhile, MicroStrategy’s stock took a 35% hit after its recent $5.4 million BTC purchase at $97,862 per BTC went underwater. Despite this, MSTR found support at its 20-day EMA, holding session lows and signaling potential support above $350.

After BTC’s dip, ETH is staging a comeback, gaining over 4% yesterday while BTC dropped 1.5% at the same time. The market is shifting flows to ETH, as evidenced by a 13% surge in the ETH/BTC pair to 0.0366 from its post-election low of 0.0318. ETH even outperformed the broader CoinDesk 20 Index, which rose just 0.5%.

Wall Street achieved record highs after President-elect Trump nominated Scott Bessent as Treasury Secretary, lifting market sentiment. The Dow surged 439 points (+0.99%) to 44,860, while the S&P 500 broke the 6,000-point mark, and the Nasdaq Composite index gained 0.75%.

Bessent outlined his “3 Arrows” strategy for the U.S. economy, targeting a 3% budget deficit by 2028, 3% GDP growth, and an increase of 3 million barrels in daily oil production. Bessent’s market-friendly approach and potential willingness to moderate Trump’s tariff policies fueled optimism, driving a broad rally across markets, with risky assets leading the charge.

QCP Asia Colour – 28 November 24

BTC reclaimed the critical 95,000 level last night after PCE price index came in as expected.

ETH was the main outperformer yesterday as it rallied 11.65% to a high of 3,688. This is aligned with our thesis of capital rotation from BTC to ETH, as shared on Monday.

With BTC dominance breaking down from its high at 61.50%, ETHBTC has held up nicely and is currently at 0.03760, up 17.8% from last week. This brings 0.0400 into focus as the next level to watch.

ETH spot ETFs continue to record strong net inflows, totaling $90.1 million yesterday and marking a 4-day winning streak. These healthy inflows highlight the market's growing optimism despite this week’s retracement.

Given that ETH has lagged behind BTC and SOL in the current rally, its recent strength supports the case for it to retest its all-time high of 4,868 (+35.4%).

QCP Asia Colour – 2 December 24

BTC briefly touched 98k over the Thanksgiving weekend, driven by Saylor's BTC investment strategy presentation to Microsoft. Microsoft's shareholders are scheduled to vote on a proposal to add BTC to its balance sheet on December 10. Could this be the catalyst BTC needs to break 100k before year end?

Microsoft's top shareholders such as Vanguard, BlackRock and Fidelity already have exposure to crypto with investments in MSTR, Coinbase and other crypto firms. One could argue that they already possess sufficient exposure. On the other hand if the proposal passes, it would be bullish not only for BTC but also for their other investments.

As we await Microsoft's verdict next week, US employment and labor data will take center stage again this week. ISM manufacturing and PMI data are scheduled for release on Monday and Wednesday, respectively. This week's highlight, however, is NFP data on Friday. The market will be closely monitoring this week's reports to get a better sense of inflation, especially ahead of rate cut decisions on 17-18 December.

QCP Asia Colour - 3 December 2024

- BTC rose above 97k since our last commentary but has since retraced to hover above 95k. This pullback coincided with reports of the U.S. government moving 10k BTC (approximately $963 million at the time of transfer) linked to Silk Road. The front-end vol curve has shifted further toward puts over calls following the move.

- On the institutional demand side, optimism persists. Spot ETFs recorded another $350 million in inflows yesterday, while MARA Holdings has followed MicroStrategy's lead, acquiring $618 million worth of BTC over the past two months.

- Other crypto mining companies like Riot Platform are increasingly likely to halt BTC sales, with some considering expanding holdings. Coupled with news of Microsoft contemplating a BTC purchase, this underscores growing corporate interest in Bitcoin as a reserve asset.

- Meanwhile, equities continue to set new records, with the S&P 500 marking its 54th all-time high this year. Several Fed members have signaled an inclination to lower borrowing costs at the next meeting, albeit contingent on forthcoming economic data—an announcement likely to add volatility around the event window.

QCP Asia Colour - 4 December 2024

Reject modernity, embrace tradition. These 4 four words would have served you well in navigating (and profiting!) from crypto markets in the past week.

Seasoned coins that have been around since 2021 have staged a spectacular rally in the past two weeks. XRP broke the 2021 high of $2, staging a spectacular 400% move since November to top at $2.90. Other aged coins such as ADA, HBAR and XLM have also made moves of 300%, 800% and 600% respectively.

So why have these coins been pumping, and why is the altcoin market so juiced up?

Trump announced a proposal to eliminate capital gains taxes on cryptocurrencies issued by American companies in November. This spark ignited the mad frenzy in altcoin markets that has persisted till today. The anticipation of a crypto friendly cabinet has added more fuel to the fire.

We didn't start the fire. Trump did.

Gary Gensler who has been a thorn in the crypto communities' side is rumoured to be replaced by Paul Atkins to lead the SEC. Other candidates also look to be crypto friendly. Howard Lutnick, current CEO of Cantor Fitzgerald, is set to be Commerce Secetary. Cantor Fitzgerald is currently in talks with Tether, making Lutnick look like a crypto proponent.

The enactment of martial law in Korea did little to dampen animal spirits yesterday. BTC traded to a low of 93500 as news of martial law hit the tape and Korean traders pared exposure. The buyback following that in both Majors and Alts only goes to show how strongly bid the market it.

We do see some macro risk in the near term. Worries of inflation rearing its ugly head again have caused markets to pare back expectation of US rate cuts to just 3 in 2025. Geopolitical risk from Trump against China, Mexico, Canada and BRICS are also present.

Despite the risks, we think the crypto market is poised for higher. Trump's team will most possibly enact crypto friendly policies, drawing in more institutional interest. BTC above 100k is possible, and ETH above ATHs looks more a near reality than a dream. Respect the pump.

QCP Asia Colour - 5 December 2024

- The day is finally here! BTC crossed the long awaited 6-figure milestone earlier this morning, rallying to a high of 103,620. The rally above 100,000 triggered a short squeeze which led to the liquidation of US$90 million worth of BTC shorts over 2 hours.

- Aggressive topside buying by short sellers cemented BTC’s current price as it stabilised below the 103,000 figure. This is reinforced by market makers hedging their short delta exposure as well.

- BTC vols spiked up across all tenors during the rally, with front-end vols rising 10pts and back-end vols jumping 5pts. Vols continue to be elevated even as it has fallen through the day.

- The desk observed two very distinct reactions to this morning’s price action:

a) For the front-end traders, they were frantically covering their short positions as the continued rally squeezed into their shorts

b) Mid-tenor traders were relatively muted as many were positioned for this move up

- With market in an unchartered territory, we are now in a new price discovery zone. We have returned to a binary scenario, where the spot price could either be driven higher, or selling pressure could push it back below $100k.

QCP Asia Colour - 9 December 2024

- The 4k and 100k levels are lines in the sand for ETH and BTC. The majors breached these key levels last week before trading lower for most of today.

- Looking at the tenor with the highest OI, 27DEC24, those levels coincide with the strikes with the highest OI: ETH-27DEC24-4k (90k contracts) and BTC-27DEC24-100k (16k contracts). So, will there be a squeeze higher if spot trades higher as dealers look to cover?

- We’re less inclined to think so. Just today, we saw takers taking profit on their long BTC-27DEC24-100k-C positions and possibly rolling them out to March (130k–150k). This indicates there should be ample supply of topside gamma. Furthermore, perp funding is flattish on Deribit and slightly higher than usual on major exchanges, making a flush to the topside less likely.

- Although we’re still structurally bullish, spot is likely to range here for the remainder of the holiday season. Historically, ETH does not usually put in a new all-time high until January of the post-halving year. This sentiment is also reflected in the options market, where ETH risk reversals are skewed toward calls only from January onwards.

QCP Asia Colour – 10 December 24

Bitcoin was rocked by $1.5 billion in long liquidations, plunging 3,000 points before rebounding off the critical 95k support. It now consolidates around 97-98k, leaving altcoins in its wake.

Yet, BTC and ETH spot ETFs are on an impressive streak, posting 8 and 11 consecutive days of net inflows, respectively. Riot Platforms is emulating MicroStrategy's playbook by issuing $500 million in convertible notes to buy Bitcoin. With a 0% coupon and strong demand, can anyone afford to stay on the sidelines?

Microsoft shareholders vote today on adding BTC to the balance sheet—a potential surprise to the topside if approved, despite the board's recommendation against it. Adding to the intrigue, Amazon shareholders reportedly push for Bitcoin adoption as a reserve asset.

With inflation data due, macro volatility has eased slightly amid political stability in France and Korea, while Asia rallies on China’s stimulus promises. BTC and ETH front-end vols remain elevated, skewed toward puts. A pivotal catalyst is needed to reignite momentum toward the 100k level.

QCP Asia Colour – 11 December 24

Bitcoin remained resilient at $97.5K, recovering from a modest 3% dip to $94.5K lows. The sell-off occurred shortly after Microsoft shareholders decisively rejected a BTC treasury proposal to allocate 1% of total assets into BTC as an inflation hedge.

Despite MicroStrategy Chairman Michael Saylor’s efforts to sway opinions, Microsoft maintained its stance, citing concerns over BTC's volatility.

MSTR, on the other hand, doubled down with another $2.1 billion BTC purchase last week—its fifth consecutive week of accumulation. This move signals strong support for downside movements and reinforces their $42 billion strategy, suggesting more acquisitions are on the horizon.

The crypto lobby has intensified its efforts against SEC Commissioner Caroline Crenshaw ahead of the Senate committee vote due to her alleged anti-crypto stance. The timing of Crenshaw’s vote is labelled by the Republicans as a last-minute effort to counter Trump’s agenda of reshaping the SEC into a pro-innovation, pro-business advocate for digital assets.

With the stage set for a high-stakes battle, the future of digital assets is at a crossroads.