QCP London & New York Colour - 9 May 24
- The US dollar is inching higher again, placing a cap on risk assets including crypto.
- The Swedish Riksbank cut interest rates from 4.00% to 3.75%. This follows the Swiss National Bank (SNB) which cut earlier in March and the ECB is also expected to cut in June.
- The USD is rallying as the market prices out expectations that other central banks will wait for the Fed to cut before following, especially as economic performance and inflation levels continue to diverge between the US and the rest of the world.
- Markets are currently pricing in two Fed cuts this year, with the first cut only expected in Sep.
- To make things worse, BTC spot ETF flows have flattened out again after strong inflows from last Friday and the recent Monday.
- The desk is not seeing any bearish panic but more trades that express a lower volatility, consolidation view.
Trade Ideas:
We remain structurally positive BTC into the end of the year and on this dip we like topside strategies that provide the best risk-reward.
The following uses the enhanced upfront yield from ZCC to buy double the topside exposure from ERKO calls. Unleveraged with protection on the downside while ramping up returns on the topside. (spot ref: 61k)
BTC ZCC + ERKO Call (2x)
Cost: ZERO
Max payout: $80,000 per BTC notional
Expiry: 27-Dec
Put Strike: 55,000
Protection Level: 45,000
Call Strike: 70,000
Call Knockout: 110,000
Collateral requirement: $55k per BTC notional
What does it mean?
At expiry,
1. If spot is just under 110k, your profit is $80k (110k-70k) x2
2. As long as spot if above 70k, there is profit from the 70k call
3. If spot is anywhere between 45k and 70k or above 110k, there is no loss or profit as the structure expires out-of-the-money
4. If spot is below 45k, you will buy BTC at 55k
- The US dollar is inching higher again, placing a cap on risk assets including crypto.
- The Swedish Riksbank cut interest rates from 4.00% to 3.75%. This follows the Swiss National Bank (SNB) which cut earlier in March and the ECB is also expected to cut in June.
- The USD is rallying as the market prices out expectations that other central banks will wait for the Fed to cut before following, especially as economic performance and inflation levels continue to diverge between the US and the rest of the world.
- Markets are currently pricing in two Fed cuts this year, with the first cut only expected in Sep.
- To make things worse, BTC spot ETF flows have flattened out again after strong inflows from last Friday and the recent Monday.
- The desk is not seeing any bearish panic but more trades that express a lower volatility, consolidation view.
Trade Ideas:
We remain structurally positive BTC into the end of the year and on this dip we like topside strategies that provide the best risk-reward.
The following uses the enhanced upfront yield from ZCC to buy double the topside exposure from ERKO calls. Unleveraged with protection on the downside while ramping up returns on the topside. (spot ref: 61k)
BTC ZCC + ERKO Call (2x)
Cost: ZERO
Max payout: $80,000 per BTC notional
Expiry: 27-Dec
Put Strike: 55,000
Protection Level: 45,000
Call Strike: 70,000
Call Knockout: 110,000
Collateral requirement: $55k per BTC notional
What does it mean?
At expiry,
1. If spot is just under 110k, your profit is $80k (110k-70k) x2
2. As long as spot if above 70k, there is profit from the 70k call
3. If spot is anywhere between 45k and 70k or above 110k, there is no loss or profit as the structure expires out-of-the-money
4. If spot is below 45k, you will buy BTC at 55k
❤10👍3🍾1
QCP London / New York Colour – 10 May 24
- Vols continue to drag as prices fail to break out of the narrow range (BTC May into the 40s and ETH May in the mid 50s).
- We are leaning on two possible bullish factors from here into year-end:
1. US elections will conclude in Nov this year and historically markets tend to be bullish into elections. Specific to this election, Trump has been making crypto-friendly overtures which could illicit a a similar tone from Biden as both try to win the crypto vote. Could this result in crypto-positive rhetoric as the respective campaigns get underway?
2. Unless the Fed clearly rules out rate cuts or hints at rate hikes, it seems like the markets will continue to price in cuts especially on the back of any signs of the US economy slowing down and with other Central Banks cutting as well. These expectations are likely to keep a bullish tone in the market for awhile.
Trade Idea:
Updating levels from yesterday's suggested strategy which we think offers good downside protection for high convexity on the topside for zero cost!
(spot ref: 63k)
BTC ZCC + ERKO Call (2x)
Cost: ZERO
Max payout: $100,000 per BTC notional
Expiry: 27-Dec
Put Strike: 60,000
Protection Level: 50,000
Call Strike: 70,000
Call Knockout: 120,000
Collateral requirement: $60k per BTC notional
What does it mean?
At expiry:
1. If spot is just under 120k, your profit is $100k (120k-70k) x2
2. As long as spot if above 70k, there is profit from the 70k call
3. If spot is anywhere between 50k and 70k or above 120k, there is no loss or profit as the structure expires out-of-the-money
4. If spot is below 50k, you will buy BTC at 60k
- Vols continue to drag as prices fail to break out of the narrow range (BTC May into the 40s and ETH May in the mid 50s).
- We are leaning on two possible bullish factors from here into year-end:
1. US elections will conclude in Nov this year and historically markets tend to be bullish into elections. Specific to this election, Trump has been making crypto-friendly overtures which could illicit a a similar tone from Biden as both try to win the crypto vote. Could this result in crypto-positive rhetoric as the respective campaigns get underway?
2. Unless the Fed clearly rules out rate cuts or hints at rate hikes, it seems like the markets will continue to price in cuts especially on the back of any signs of the US economy slowing down and with other Central Banks cutting as well. These expectations are likely to keep a bullish tone in the market for awhile.
Trade Idea:
Updating levels from yesterday's suggested strategy which we think offers good downside protection for high convexity on the topside for zero cost!
(spot ref: 63k)
BTC ZCC + ERKO Call (2x)
Cost: ZERO
Max payout: $100,000 per BTC notional
Expiry: 27-Dec
Put Strike: 60,000
Protection Level: 50,000
Call Strike: 70,000
Call Knockout: 120,000
Collateral requirement: $60k per BTC notional
What does it mean?
At expiry:
1. If spot is just under 120k, your profit is $100k (120k-70k) x2
2. As long as spot if above 70k, there is profit from the 70k call
3. If spot is anywhere between 50k and 70k or above 120k, there is no loss or profit as the structure expires out-of-the-money
4. If spot is below 50k, you will buy BTC at 60k
❤6🫡4👍3🎉1
QCP Asia and Europe Colour - 13 May 24
- Spot has recovered most of Friday's losses, with the 5% drop in BTC to 60k on Friday triggered by hawkish Fed comments.
- We think price action could chop around here as the market digests fundamentals from the several macro events lined up this week:
Tue: US PPI, Powell to speak
Wed: CPI, Retail Sales
Thu: Unemployment Claims
- Given the strong bounce from last week's lows, 60k still seems like a strong support level barring any hawkish surprises (BTC risk reversals are at neutral levels).
- Overall, the desk still remains structurally bullish BTC even as spot continues to consolidate here while the market gets more clarity from the Fed.
- Options flows today saw buyers of BTC Jun topside (65k) and BTC Dec topside (90k-100k strikes).
Trade Idea:
With Spot-Forward Basis yields still in the single digits, you can still generate decent >20% yields from UFCCs (Unconditional Fixed Coupon Convertible). Indicative example below:
BTC UFCC (USD deployment)
(spot ref: 63,000)
Earn a weekly coupon of 22%pa.
At expiry, as long as BTC spot is above 50k, 100% of the principal is returned.
If BTC spot is below 50k at expiry, you will buy BTC at 55k level.
Maturity: 12JUL24 (8 weeks)
Strike: 55,000
Protection Level: 50,000
Coupon Rate: 22% p.a.
- Spot has recovered most of Friday's losses, with the 5% drop in BTC to 60k on Friday triggered by hawkish Fed comments.
- We think price action could chop around here as the market digests fundamentals from the several macro events lined up this week:
Tue: US PPI, Powell to speak
Wed: CPI, Retail Sales
Thu: Unemployment Claims
- Given the strong bounce from last week's lows, 60k still seems like a strong support level barring any hawkish surprises (BTC risk reversals are at neutral levels).
- Overall, the desk still remains structurally bullish BTC even as spot continues to consolidate here while the market gets more clarity from the Fed.
- Options flows today saw buyers of BTC Jun topside (65k) and BTC Dec topside (90k-100k strikes).
Trade Idea:
With Spot-Forward Basis yields still in the single digits, you can still generate decent >20% yields from UFCCs (Unconditional Fixed Coupon Convertible). Indicative example below:
BTC UFCC (USD deployment)
(spot ref: 63,000)
Earn a weekly coupon of 22%pa.
At expiry, as long as BTC spot is above 50k, 100% of the principal is returned.
If BTC spot is below 50k at expiry, you will buy BTC at 55k level.
Maturity: 12JUL24 (8 weeks)
Strike: 55,000
Protection Level: 50,000
Coupon Rate: 22% p.a.
👍11❤5🍾1
QCP Asia and Europe Colour - 14 May 24
- Spot came off for BTC and is now hovering at 61.8k, right in the middle of the range from yesterday's highs (63.5k) and last Friday's lows (60.1k).
- We expect Powell's speech tonight to be carefully worded as always, resulting in a muted market reaction.
- On the other hand, CPI numbers tomorrow may be the catalyst to finally help the market pick a direction.
- While the general market continues to drift off into the summer, GME has emerged after a long slumber, pumping 80+% yesterday off the back of Roaring Kitty's tweet. 🙀
-Could this be the start of a memecoin frenzy?
Trade Idea:
Utilize our ZCC to receive upfront yields on your dollars for punting memecoins.
BTC ZCC (USD deployment)
Receive upfront payment of 25% p.a. upon deployment
At expiry, as long as BTC spot is above 47k, 100% of the principal is returned.
If BTC spot is below 47k at expiry, you will buy BTC at 57k level.
Maturity: 9AUG24 (12 weeks)
Strike: 57,000
Protection Level: 47,000
Upfront Payment: 25% p.a.
- Spot came off for BTC and is now hovering at 61.8k, right in the middle of the range from yesterday's highs (63.5k) and last Friday's lows (60.1k).
- We expect Powell's speech tonight to be carefully worded as always, resulting in a muted market reaction.
- On the other hand, CPI numbers tomorrow may be the catalyst to finally help the market pick a direction.
- While the general market continues to drift off into the summer, GME has emerged after a long slumber, pumping 80+% yesterday off the back of Roaring Kitty's tweet. 🙀
-Could this be the start of a memecoin frenzy?
Trade Idea:
Utilize our ZCC to receive upfront yields on your dollars for punting memecoins.
BTC ZCC (USD deployment)
Receive upfront payment of 25% p.a. upon deployment
At expiry, as long as BTC spot is above 47k, 100% of the principal is returned.
If BTC spot is below 47k at expiry, you will buy BTC at 57k level.
Maturity: 9AUG24 (12 weeks)
Strike: 57,000
Protection Level: 47,000
Upfront Payment: 25% p.a.
❤8👍4🔥1🍾1
QCP Asia and Europe Colour - 15 May 24
- Two significant headlines broke overnight:
1. The State of Wisconsin has bought $100m worth of Blackrock's BTC spot ETF. We are watching to see if other state institutions or pension funds will follow suit.
2. Vanguard, the second largest US asset manager, who have so far avoided issuing a BTC ETF, has appointed a crypto friendly CEO, Salim Ramji. Joining from BlackRock, Ramji was part of the IBIT effort. Does this mean that Vanguard will also issue a BTC spot ETF soon? If so, would this open up a new pool of demand?
- BTC price remains stuck in a 60-63.5k range in spite of high PPI numbers and a somewhat dovish Powell speech where he ruled out a rate hike.
- Perhaps US CPI numbers tonight will see BTC break out of the range.
Trade Idea:
The market is expecting a lower CPI reading which will be bullish for risk assets. We also think that any dips will continue to be bought up because:
a. the market continues to be fixated on rate cuts
b. liquidity inflow from global rate cuts and continued high fiscal spending
c. increasing sovereign acceptance of bitcoin
Keep buying BTC at discount with Accumulators
(spot ref: 62.5k)
1. 12 weeks (2-Aug expiry)
Buy BTC at 56.5k every week as long as BTC spot price is under 70k.
2. 20 weeks (27-Sep expiry)
Buy BTC at 56k every week as long as BTC spot price is under 80k.
- Two significant headlines broke overnight:
1. The State of Wisconsin has bought $100m worth of Blackrock's BTC spot ETF. We are watching to see if other state institutions or pension funds will follow suit.
2. Vanguard, the second largest US asset manager, who have so far avoided issuing a BTC ETF, has appointed a crypto friendly CEO, Salim Ramji. Joining from BlackRock, Ramji was part of the IBIT effort. Does this mean that Vanguard will also issue a BTC spot ETF soon? If so, would this open up a new pool of demand?
- BTC price remains stuck in a 60-63.5k range in spite of high PPI numbers and a somewhat dovish Powell speech where he ruled out a rate hike.
- Perhaps US CPI numbers tonight will see BTC break out of the range.
Trade Idea:
The market is expecting a lower CPI reading which will be bullish for risk assets. We also think that any dips will continue to be bought up because:
a. the market continues to be fixated on rate cuts
b. liquidity inflow from global rate cuts and continued high fiscal spending
c. increasing sovereign acceptance of bitcoin
Keep buying BTC at discount with Accumulators
(spot ref: 62.5k)
1. 12 weeks (2-Aug expiry)
Buy BTC at 56.5k every week as long as BTC spot price is under 70k.
2. 20 weeks (27-Sep expiry)
Buy BTC at 56k every week as long as BTC spot price is under 80k.
❤4🎉1
QCP Asia Colour - 16 May 24
- US CPI numbers triggered a break out of the range across risk assets. BTC has since traded back above 66k.
- We expect bullish momentum here that could take us back to the highs of 74k.
- The desk saw sizeable buyers of 100-120k BTC Calls for Dec 2024 on this move higher in spot.
- Institutional demand for the BTC continues to grow with large asset managers Millennium and Schonfeld investing approximately 3% and 2% of their AUM into the BTC spot ETF.
- The stars seems to be aligning on this breakout with significant sovereign and institutional adoption, abating inflation and upcoming US elections. Is this the resumption of the bull market?
Trade ideas:
If this is indeed the start of the bull trend again, then this move could take us past all-time highs. Bullish ERKO Seagulls will allow you to capture upside on such a move at zero cost.
(BTC Spot Ref: 66,000)
1. June Seagull
Expiry: 27-Jun
Strikes: Sell 60k Put + Buy 70k Call (88k Knock-out)
Cost: ZERO
Max payout: $18,000 per BTC or 249% pa if BTC spot price is just under 88k at expiry.
[Downside]: At expiry, if BTC spot price is under 60k level, USD deployed is converted to BTC at 60k price.
2. August Seagull
Expiry: 30-Aug
Strikes: Sell 58k Put + Buy 70k Call (100k Knock-out)
Cost: ZERO
Max payout: $30,000 per BTC or 176% pa if BTC spot price is just under 100k at expiry.
[Downside]: At expiry, if BTC spot price is under 58k level, USD deployed is converted to BTC at 58k price.
- US CPI numbers triggered a break out of the range across risk assets. BTC has since traded back above 66k.
- We expect bullish momentum here that could take us back to the highs of 74k.
- The desk saw sizeable buyers of 100-120k BTC Calls for Dec 2024 on this move higher in spot.
- Institutional demand for the BTC continues to grow with large asset managers Millennium and Schonfeld investing approximately 3% and 2% of their AUM into the BTC spot ETF.
- The stars seems to be aligning on this breakout with significant sovereign and institutional adoption, abating inflation and upcoming US elections. Is this the resumption of the bull market?
Trade ideas:
If this is indeed the start of the bull trend again, then this move could take us past all-time highs. Bullish ERKO Seagulls will allow you to capture upside on such a move at zero cost.
(BTC Spot Ref: 66,000)
1. June Seagull
Expiry: 27-Jun
Strikes: Sell 60k Put + Buy 70k Call (88k Knock-out)
Cost: ZERO
Max payout: $18,000 per BTC or 249% pa if BTC spot price is just under 88k at expiry.
[Downside]: At expiry, if BTC spot price is under 60k level, USD deployed is converted to BTC at 60k price.
2. August Seagull
Expiry: 30-Aug
Strikes: Sell 58k Put + Buy 70k Call (100k Knock-out)
Cost: ZERO
Max payout: $30,000 per BTC or 176% pa if BTC spot price is just under 100k at expiry.
[Downside]: At expiry, if BTC spot price is under 58k level, USD deployed is converted to BTC at 58k price.
❤18🏆3👍2🔥2👌1
QCP Asia/London Colour – 17 May 24
- Overnight, BTC struggled to break above the 67k resistance for the third time over the last month.
- Will spot prices get stuck in a range again and we see vols drop to 40% level?
- We don’t think so. Our view is that prices break out of this range. These are our reasons:
1. BTC led the rally on unleveraged spot demand as the funding rate was relatively flat.
2. We are starting to see genuine institutional and sovereign adoption.
3. It is now 28 days past the BTC halving and post-halving dip might be done.
4) Huge demand for December call options indicating significant bullishness into year-end.
The Trade:
We had multiple sharp v-shape recoveries whenever Bitcoin dipped under 60k, which clearly makes it a buy-the-dip zone. Accumulators allow you to buy BTC below 60k support and it is an ideal time to deploy with back-end BTC vols significantly higher.
(BTC Spot Ref: 65,300)
BTC Accumulator (32 weeks, 27Dec24)
Buy BTC spot at 18% discount (53.5k) every week as long as spot price is under 75k.
- Overnight, BTC struggled to break above the 67k resistance for the third time over the last month.
- Will spot prices get stuck in a range again and we see vols drop to 40% level?
- We don’t think so. Our view is that prices break out of this range. These are our reasons:
1. BTC led the rally on unleveraged spot demand as the funding rate was relatively flat.
2. We are starting to see genuine institutional and sovereign adoption.
3. It is now 28 days past the BTC halving and post-halving dip might be done.
4) Huge demand for December call options indicating significant bullishness into year-end.
The Trade:
We had multiple sharp v-shape recoveries whenever Bitcoin dipped under 60k, which clearly makes it a buy-the-dip zone. Accumulators allow you to buy BTC below 60k support and it is an ideal time to deploy with back-end BTC vols significantly higher.
(BTC Spot Ref: 65,300)
BTC Accumulator (32 weeks, 27Dec24)
Buy BTC spot at 18% discount (53.5k) every week as long as spot price is under 75k.
🔥13❤7👍3❤🔥1🫡1
QCP Spot ETH ETF Deadline Week - 20 May 24
- First round of the Spot ETH ETF deadlines are approaching this week
23-May: VanEck
24-May: Ark Invest/21Shares
- ETHBTC reaching Feb 2021 levels last Friday coupled with the lacklustre interest in the options market, hints that the market is anticipating a rejection and a non-event.
- ETH has successfully defended the 2900 levels multiple times this year and has formed a strong support
- Given ETH's duality of a store of value and a layer 1 Blockchain network. An approval would likely result in ETH outperforming the price action of BTC upon it's approval.
- Given the resounding lack of interest in the market, the risk is to the topside with a surprise approval catching everyone off guard, triggering a short squeeze taking us easily back to recent highs
Trade Idea
Spot Ref: 3,100 ETHUSD
ETH Accumulator (32 weeks, 27-Dec 24)
Buy ETH at 21% discount (2,450) every Friday if spot is below 3,500
ETH ETF Surprise Approval Ticket
Payout: 14.28x
Expiry: 31-May 2024
At expiry, If ETH is above 4k, you get 14.28x the prems paid
- First round of the Spot ETH ETF deadlines are approaching this week
23-May: VanEck
24-May: Ark Invest/21Shares
- ETHBTC reaching Feb 2021 levels last Friday coupled with the lacklustre interest in the options market, hints that the market is anticipating a rejection and a non-event.
- ETH has successfully defended the 2900 levels multiple times this year and has formed a strong support
- Given ETH's duality of a store of value and a layer 1 Blockchain network. An approval would likely result in ETH outperforming the price action of BTC upon it's approval.
- Given the resounding lack of interest in the market, the risk is to the topside with a surprise approval catching everyone off guard, triggering a short squeeze taking us easily back to recent highs
Trade Idea
Spot Ref: 3,100 ETHUSD
ETH Accumulator (32 weeks, 27-Dec 24)
Buy ETH at 21% discount (2,450) every Friday if spot is below 3,500
ETH ETF Surprise Approval Ticket
Payout: 14.28x
Expiry: 31-May 2024
At expiry, If ETH is above 4k, you get 14.28x the prems paid
🫡13❤9👍4
QCP Market Alert - 21 May 24
- Unconfirmed rumours of SEC doing a flip, has seen Bloomberg commentators increasing the odds of approval this week to 75%.
- Exchanges are being asked to update 19b-4 filings on an accelerated basis suggesting approval is imminent.
- ETH spot has rallied over 10% to 3440 with new leveraged longs.
- Our view is that it is unlikely that spot can settle here, with approval taking us closer to 4k and denial back to 3k.
- Unconfirmed rumours of SEC doing a flip, has seen Bloomberg commentators increasing the odds of approval this week to 75%.
- Exchanges are being asked to update 19b-4 filings on an accelerated basis suggesting approval is imminent.
- ETH spot has rallied over 10% to 3440 with new leveraged longs.
- Our view is that it is unlikely that spot can settle here, with approval taking us closer to 4k and denial back to 3k.
🔥17👍4🤯2
QCP Asia/London Colour – 21 May 24
- Overnight news (see above) took a complacent market by surprise (at least those that didn’t read the QCP broadcast yesterday)
- If approved, this move is far from over with ETH at 4k as a natural short term target and at 5k for later in the year
- If not approved, we could expect an ugly move back to 3k
- This uncertainty has resulted in higher volatility, but the better trade might be spot-futures basis which is now yielding above 10% again
Trade Idea:
1. Sell Spot-Forward Basis
The market has given us another chance to lock in double digit annualized yields from June onwards.
BTC:
ETH:
- Overnight news (see above) took a complacent market by surprise (at least those that didn’t read the QCP broadcast yesterday)
- If approved, this move is far from over with ETH at 4k as a natural short term target and at 5k for later in the year
- If not approved, we could expect an ugly move back to 3k
- This uncertainty has resulted in higher volatility, but the better trade might be spot-futures basis which is now yielding above 10% again
Trade Idea:
1. Sell Spot-Forward Basis
The market has given us another chance to lock in double digit annualized yields from June onwards.
BTC:
| index | AnnRate(%) |
|:-------:|-------------:|
| 27SEP24 | 11.98 |
| 27DEC24 | 12.12 |
| 28MAR25 | 11.61 |
ETH:
| index | AnnRate(%) |
|:--------|-------------:|
| 28JUN24 | 10.32 |
❤8👍2🥰1🤯1
QCP Asia/London Colour – 22 May 24
- ETH 24-May contracts at 105 vols signal anticipation for a big move by the application deadline.
- ETH Perp funding went from 50% to flat in 12 hours, with Jun forwards still yielding 15%, possibly reflecting diminished short-term speculation but sustained medium-term bullishness.
- ETH 24 and 31 May risk reversals at -7 suggest lingering market fear of short-term downside volatility, potentially prompting tactical hedging of long ETH positions.
- Spot BTC ETF sees a 7-day inflow streak totalling nearly 1.5bn.
- Growing narrative around crypto in US elections gains traction, especially following SEC's recent shift in their stance.
Trade Idea
If you missed your chance to buy ETH below 3,000, fret not!
Our accumulator product enables you to buy ETH at 2900 😏
ETH Accumulator (32 weeks, 27-Dec 24)
Buy ETH at 22% discount (2,900) every Friday if spot is below 4,300
- ETH 24-May contracts at 105 vols signal anticipation for a big move by the application deadline.
- ETH Perp funding went from 50% to flat in 12 hours, with Jun forwards still yielding 15%, possibly reflecting diminished short-term speculation but sustained medium-term bullishness.
- ETH 24 and 31 May risk reversals at -7 suggest lingering market fear of short-term downside volatility, potentially prompting tactical hedging of long ETH positions.
- Spot BTC ETF sees a 7-day inflow streak totalling nearly 1.5bn.
- Growing narrative around crypto in US elections gains traction, especially following SEC's recent shift in their stance.
Trade Idea
If you missed your chance to buy ETH below 3,000, fret not!
Our accumulator product enables you to buy ETH at 2900 😏
ETH Accumulator (32 weeks, 27-Dec 24)
Buy ETH at 22% discount (2,900) every Friday if spot is below 4,300
❤10👍3🔥1🤯1🐳1
QCP Asia Colour – 23 May 24
• All eyes are on the ETH ETF deadline later today
• With Friday implied volatility above 100%, the market is expecting fireworks
• BlackRock and five other issuers have amended their ETF filings with the SEC and VanEck’s ETF has been listed by the DTCC. We think an approval is now highly likely with trading expected as early as next week
Trade Idea:
ETH ETF a done deal? If the BTC ETF approval was any indication, we could see a similar 60% rally from here.
ETH Enhanced Sharkfin (Principal Protected)
Spot Ref: 3740 ETHUSD
Maturity: 27SEP24
Base Coupon: 3% p.a.
Strike: 4500
Knockout: 6000
Max Payout: 98% p.a.
Get paid up to 98% p.a. if ETH expires just below 6000 on expiry. Even if ETH dips below 4500, you still get paid a 3% p.a. coupon.
• All eyes are on the ETH ETF deadline later today
• With Friday implied volatility above 100%, the market is expecting fireworks
• BlackRock and five other issuers have amended their ETF filings with the SEC and VanEck’s ETF has been listed by the DTCC. We think an approval is now highly likely with trading expected as early as next week
Trade Idea:
ETH ETF a done deal? If the BTC ETF approval was any indication, we could see a similar 60% rally from here.
ETH Enhanced Sharkfin (Principal Protected)
Spot Ref: 3740 ETHUSD
Maturity: 27SEP24
Base Coupon: 3% p.a.
Strike: 4500
Knockout: 6000
Max Payout: 98% p.a.
Get paid up to 98% p.a. if ETH expires just below 6000 on expiry. Even if ETH dips below 4500, you still get paid a 3% p.a. coupon.
❤16👍4🔥2🎉1
QCP US Colour - 24 May 24
What has happened with the ETH spot ETF?
- Yesterday, the SEC approved Form 19b-4 for eight spot ETH ETF issuers including Blackrock and Fidelity but trading cannot begin until S-1 forms are approved.
- The market was expecting a big bang this week, with options trading up to 185 vols!
- However, price action has been truly disappointing and has caused front-end vols to collapse below 60.
What now?
- While the trading of the ETH spot ETFs is now a matter of time, it could take awhile.
- The desk has been seeing consistent demand for long dated ETH calls as investors take the opportunity to build more ETH longs.
The Trade:
Use this window to accumulate ETH spot before the ETFs go live. Elevated backend make Accumulators an optimal strategy.
(Spot ref 3735 ETHUSD)
ETH Accumulator (20 weeks, 11Oct24)
Buy ETH spot at 15% discount (3200) every week as long as spot price is under 4500.
What has happened with the ETH spot ETF?
- Yesterday, the SEC approved Form 19b-4 for eight spot ETH ETF issuers including Blackrock and Fidelity but trading cannot begin until S-1 forms are approved.
- The market was expecting a big bang this week, with options trading up to 185 vols!
- However, price action has been truly disappointing and has caused front-end vols to collapse below 60.
What now?
- While the trading of the ETH spot ETFs is now a matter of time, it could take awhile.
- The desk has been seeing consistent demand for long dated ETH calls as investors take the opportunity to build more ETH longs.
The Trade:
Use this window to accumulate ETH spot before the ETFs go live. Elevated backend make Accumulators an optimal strategy.
(Spot ref 3735 ETHUSD)
ETH Accumulator (20 weeks, 11Oct24)
Buy ETH spot at 15% discount (3200) every week as long as spot price is under 4500.
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QCP Asia Colour – 27 May 24
- ETH rallied from 3810 to 3940 during Asia open, likely from Trump's pro-crypto comments over the weekend.
- From today's price action, it seems that market participants are expressing their bullishness in ETH rather than BTC, especially with the potential institutional demand once the ETH spot ETF starts trading.
- While we are structurally positive ETH, we don't see a major breakout until we have more clarity on the S-1 approvals and get some inflow data, which should only be a matter of time.
- Until then, ETH frontend vols could remain 15-20 vols above BTC and ETH skew is likely to remain in favour of Calls.
Trade Idea:
With crypto becoming a trump card for the upcoming US elections and with potential institutional interest once the spot ETF debuts, 3k remains as strong support for ETH. Earn 37% p.a. weekly as long as ETH fixes above 3k with the CFCC (Conditional Fixed Coupon Convertibles)
(spot ref: 3900)
ETH CFCC (23-AUG 12 weeks. USD deployment)
Cost: ZERO
Payout: 37% pa every Friday as long as spot price is above 3k (threshold level)
At expiry, only if spot price is below 2900 protection level, USD will be converted to ETH at 3400 strike.
As long as spot price is above 2900 at expiry, 100% of the USD principal is returned.
- ETH rallied from 3810 to 3940 during Asia open, likely from Trump's pro-crypto comments over the weekend.
- From today's price action, it seems that market participants are expressing their bullishness in ETH rather than BTC, especially with the potential institutional demand once the ETH spot ETF starts trading.
- While we are structurally positive ETH, we don't see a major breakout until we have more clarity on the S-1 approvals and get some inflow data, which should only be a matter of time.
- Until then, ETH frontend vols could remain 15-20 vols above BTC and ETH skew is likely to remain in favour of Calls.
Trade Idea:
With crypto becoming a trump card for the upcoming US elections and with potential institutional interest once the spot ETF debuts, 3k remains as strong support for ETH. Earn 37% p.a. weekly as long as ETH fixes above 3k with the CFCC (Conditional Fixed Coupon Convertibles)
(spot ref: 3900)
ETH CFCC (23-AUG 12 weeks. USD deployment)
Cost: ZERO
Payout: 37% pa every Friday as long as spot price is above 3k (threshold level)
At expiry, only if spot price is below 2900 protection level, USD will be converted to ETH at 3400 strike.
As long as spot price is above 2900 at expiry, 100% of the USD principal is returned.
❤17👍5🤯2
QCP London / New York Colour – 28 May 24
- Movement of BTC from a Mt. Gox cold wallet this morning triggered a sell off below 68k.
- However, these bouts of supply anxiety are likely to be blips in a broader trend higher into the end of the year.
- 3 bullish reasons:
a. Stronger equity markets led by counters like Nvidia should pull crypto prices higher as well
b. Crypto is seeing unprecedented political support in the US (Bill passed to create regulatory clarity for digital currencies, positive turn by the SEC on the ETH spot ETF, Trump's overt support with Biden likely to follow suit)
c. We expect strong demand for the ETH spot ETF once it begins trading, brining in a fresh capital into crypto
Trade Ideas:
1. BTC Spot-Forward Basis remains elevated despite the selloff today. Lock in 11-12% pa with zero downside held to end-Dec.
2. ETH Accumulator to increase ETH longs towards the S-1 approval.
Buy ETH spot at 12% discount (3400) every week as long as spot price is under 4900.
Maturity: 11OCT24 (20 weeks)
Strike: 3,400 (-12.4%)
Upper Barrier: 4,900 (+26.3%)
Observation Frequency: Weekly
(Spot Ref: 3,880 ETHUSD)
- Movement of BTC from a Mt. Gox cold wallet this morning triggered a sell off below 68k.
- However, these bouts of supply anxiety are likely to be blips in a broader trend higher into the end of the year.
- 3 bullish reasons:
a. Stronger equity markets led by counters like Nvidia should pull crypto prices higher as well
b. Crypto is seeing unprecedented political support in the US (Bill passed to create regulatory clarity for digital currencies, positive turn by the SEC on the ETH spot ETF, Trump's overt support with Biden likely to follow suit)
c. We expect strong demand for the ETH spot ETF once it begins trading, brining in a fresh capital into crypto
Trade Ideas:
1. BTC Spot-Forward Basis remains elevated despite the selloff today. Lock in 11-12% pa with zero downside held to end-Dec.
2. ETH Accumulator to increase ETH longs towards the S-1 approval.
Buy ETH spot at 12% discount (3400) every week as long as spot price is under 4900.
Maturity: 11OCT24 (20 weeks)
Strike: 3,400 (-12.4%)
Upper Barrier: 4,900 (+26.3%)
Observation Frequency: Weekly
(Spot Ref: 3,880 ETHUSD)
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QCP Asia Colour - 29 May 24
- Markets are quiet with BTC having achieved equilibrium once more, trading in a 60-70k range while ETH awaits the next stage of spot ETF approval.
- The market brushed off (maybe too quickly) confirmation that the Mt.Gox wallet move was in preparation for distribution.
- The only thing to upset this state of zen is the persistently high spot-forward basis and perp funding suggesting there is still strong positioning and hence possible risk to the downside.
Trade Ideas:
We continue to favour longer term ETH bullish trades as well as the zen maximising spot-forward basis.
1. ETH Dec ERKO Seagull
Buy 27DEC24 4,000 CALL with ERKO above 6,800
Sell 27DEC24 3,000 PUT
Cost: ZERO
Max payout: 2,799 USD per ETH if ETH spot expires just below 6,800.
Downside: At expiry, if spot is below 3,000 then put is exercised and you buy ETH at 3,000.
2. BTC Spot-Forward Basis remains elevated despite the selloff today. Lock in 12% pa with zero downside held to end-Dec.
- Markets are quiet with BTC having achieved equilibrium once more, trading in a 60-70k range while ETH awaits the next stage of spot ETF approval.
- The market brushed off (maybe too quickly) confirmation that the Mt.Gox wallet move was in preparation for distribution.
- The only thing to upset this state of zen is the persistently high spot-forward basis and perp funding suggesting there is still strong positioning and hence possible risk to the downside.
Trade Ideas:
We continue to favour longer term ETH bullish trades as well as the zen maximising spot-forward basis.
1. ETH Dec ERKO Seagull
Buy 27DEC24 4,000 CALL with ERKO above 6,800
Sell 27DEC24 3,000 PUT
Cost: ZERO
Max payout: 2,799 USD per ETH if ETH spot expires just below 6,800.
Downside: At expiry, if spot is below 3,000 then put is exercised and you buy ETH at 3,000.
2. BTC Spot-Forward Basis remains elevated despite the selloff today. Lock in 12% pa with zero downside held to end-Dec.
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For those holding onto BTC (or ETH) longs and are looking to generate a meaningful yield, the deck below contains some possible strategies:
https://docsend.com/view/dckhau98kegtwnf4
https://docsend.com/view/dckhau98kegtwnf4
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QCP Asia Colour - 30 May 24
- BTC defended the 67.1k level for the fourth time in 2 weeks, continuing its consolidation within the range.
- Uncertainty about potential Mt Gox BTC supply hitting the market by October could hinder BTC, potentially benefiting ETH upon the launch of the ETH spot ETF.
- The desk observes bullishness in ETH, with sizeable buyers of 4k/5k ETH call spreads for end-June 2024.
- Traders are shifting focus to higher beta meme tokens like Shiba Inu (SHIBA), Dogecoin (DOGE), and Pepe (PEPE), which have seen double-digit gains (10-20%) and are polling in the top 10 for Open Interest.
- BlackRock filed amended S-1 forms overnight, with other issuers likely to follow soon. Approval may come by early July.
Trade Ideas:
With the market consolidating in the range and eagerly awaiting the ETH Spot ETF launch, accumulators continue to be attractive allowing you to consistently accumulate ETH at a discount!
ETH Accumulator (Indicative)
Spot Ref: 3,700 ETHUSD
Maturity: 11OCT24 (20 weeks)
Strike: 3,200 (-13.5%)
Upper Barrier: 4,400 (+18.9%)
Observation Frequency: Weekly
Buy ETH spot at 13.5% discount (3200) every week as long as spot price is under 4400. Any collateral not used to accumulate ETH for that week will be returned.
For BTC and ETH holders, we have developed some thoughts around strategies for earning yield on your coin holdings. (See above)
- BTC defended the 67.1k level for the fourth time in 2 weeks, continuing its consolidation within the range.
- Uncertainty about potential Mt Gox BTC supply hitting the market by October could hinder BTC, potentially benefiting ETH upon the launch of the ETH spot ETF.
- The desk observes bullishness in ETH, with sizeable buyers of 4k/5k ETH call spreads for end-June 2024.
- Traders are shifting focus to higher beta meme tokens like Shiba Inu (SHIBA), Dogecoin (DOGE), and Pepe (PEPE), which have seen double-digit gains (10-20%) and are polling in the top 10 for Open Interest.
- BlackRock filed amended S-1 forms overnight, with other issuers likely to follow soon. Approval may come by early July.
Trade Ideas:
With the market consolidating in the range and eagerly awaiting the ETH Spot ETF launch, accumulators continue to be attractive allowing you to consistently accumulate ETH at a discount!
ETH Accumulator (Indicative)
Spot Ref: 3,700 ETHUSD
Maturity: 11OCT24 (20 weeks)
Strike: 3,200 (-13.5%)
Upper Barrier: 4,400 (+18.9%)
Observation Frequency: Weekly
Buy ETH spot at 13.5% discount (3200) every week as long as spot price is under 4400. Any collateral not used to accumulate ETH for that week will be returned.
For BTC and ETH holders, we have developed some thoughts around strategies for earning yield on your coin holdings. (See above)
👍10❤6🔥2💯2
QCP Weekend Note – 1 Jun 24
- Vols have been absolutely crushed after ETH spot ETF approval this week in spite of prevailing catalysts:
1. Bearish BTC - potential supply from Mt. Gox distribution (~$9.6b) and also from DMM hack (~$305m)
2. Bullish ETH - ETH spot ETFs could start trading earlier than expected in June with the SEC urging applicants to submit S-1 forms by 31 May
- A sleepy market may get caught offside and our bet is on the bullish side, particularly for ETH.
Trade Ideas:
ETH Sep KIKOs (Knock-In, Knock-Out)
Sell 3000 Put w 2500 Knock-in (protection)
Buy 4500 Call w 6200 Knock-out
Cost: ZERO
Max payout: 175% pa or $1,700 USD per ETH if spot expires just below 6200)
Downside: At expiry, if spot is below 2,500, you buy ETH at 3,000.
(Spot ref: 3780 )
- Vols have been absolutely crushed after ETH spot ETF approval this week in spite of prevailing catalysts:
1. Bearish BTC - potential supply from Mt. Gox distribution (~$9.6b) and also from DMM hack (~$305m)
2. Bullish ETH - ETH spot ETFs could start trading earlier than expected in June with the SEC urging applicants to submit S-1 forms by 31 May
- A sleepy market may get caught offside and our bet is on the bullish side, particularly for ETH.
Trade Ideas:
ETH Sep KIKOs (Knock-In, Knock-Out)
Sell 3000 Put w 2500 Knock-in (protection)
Buy 4500 Call w 6200 Knock-out
Cost: ZERO
Max payout: 175% pa or $1,700 USD per ETH if spot expires just below 6200)
Downside: At expiry, if spot is below 2,500, you buy ETH at 3,000.
(Spot ref: 3780 )
👍9❤5🤯4👌2
QCP Asia and London Colour – 3 Jun 24
- The market remains stubbornly bullish in spite of negative headlines about Mt. Gox and the DMM hack last week, BTC rallied confidently above 69k today in Asia.
- Alts especially have benefited from bullish speculation, perhaps stoked by the surge in GameStop (GME) following the reappearance of Roaring Kitty revealing a massive $200m long position in GME. The GameStop memecoin rallied 300% on this!
- This bullishness is likely to continue as the market waits for the ETH spot ETF to usher in new demand. The options market certainly reflects this with ETH vols still trading 15% over BTC vols.
- Another reason for persistent bullishness is speculators increasing long positions in other crypto majors in anticipation of additional spot ETF approvals in the near future.
Trade Idea:
If you are moderately bullish (ie not looking to chase the market) and you are looking for rich yield, ZCCs generate a high upfront payment with some protection on the downside.
ETH ZCC (Zero Coupon Convertible)
Upfront payment: 26% pa ($251 per ETH)
Expiry: 27-Sep
At expiry, if spot is below 2,500, you buy ETH at 3,000.
(ETH spot ref: 3800)
- The market remains stubbornly bullish in spite of negative headlines about Mt. Gox and the DMM hack last week, BTC rallied confidently above 69k today in Asia.
- Alts especially have benefited from bullish speculation, perhaps stoked by the surge in GameStop (GME) following the reappearance of Roaring Kitty revealing a massive $200m long position in GME. The GameStop memecoin rallied 300% on this!
- This bullishness is likely to continue as the market waits for the ETH spot ETF to usher in new demand. The options market certainly reflects this with ETH vols still trading 15% over BTC vols.
- Another reason for persistent bullishness is speculators increasing long positions in other crypto majors in anticipation of additional spot ETF approvals in the near future.
Trade Idea:
If you are moderately bullish (ie not looking to chase the market) and you are looking for rich yield, ZCCs generate a high upfront payment with some protection on the downside.
ETH ZCC (Zero Coupon Convertible)
Upfront payment: 26% pa ($251 per ETH)
Expiry: 27-Sep
At expiry, if spot is below 2,500, you buy ETH at 3,000.
(ETH spot ref: 3800)
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