Monday Alpha #32

TL;DR: Santa Came Early

Author

Marty
December 02, 2024

Monday Alpha

Please note that Premia does not provide investment advice, and nothing herein should be construed as such. Anyone considering trading or holding derivatives or crypto assets should be aware that the risk of loss can be very high, and it is upon each individual to seek advice from an appropriate professional advisor.

TL;DR: This Time Actually Was Different

BTC ATM IV

  • 1W: 53.37%

  • 1M: 55.03%

  • 3M: 58.42%

  • 6M: 59.34%

  • Index Price: $96,857

  • DVOL: 57.19

ETH ATM IV

  • 1W: 70.32%

  • 1M: 70.83%

  • 3M: 72.16%

  • 6M: 74.27%

  • Index Price: $3,707

  • DVOL: 73.07

Trade Insights From Greekslive

We’re going to quickly cover the largest block trades taken through Greekslive the past 2 weeks. Majority of block trades coming through have been on BTC, not just on Greekslive, but on all trading platforms. Institutional guys are more focused on multi-leg structures to create the payoff they are looking for. The most interesting one that came through was number 3; they sold 82k calls, bot 88k and 90k, they used the premiums from the short call to cover some — if not all — of the costs of the long calls.

As always, we cannot see the whole book of these traders, we just get a glimpse of the largest trades by notional. As for an overall look into options market, Traders like round numbers, majority of activity is around 4k ETH and 100k BTC strikes.

BTC & ETH ATM Implied Volatility

BTC ATM IV slowly been trending downwards for the past 2 weeks. Elections have passed, event driven vol has passed, we await the next catalyst. A slight rotation seems to be happening while BTC stalled the last week. My eyes are on ETH staking approval for the ETFs.

BTC & ETH Implied Volatility Term Structures

Just to show and cover the whole term structure. Front-end finally has come back down to reality, though the rest of the curve is flat out to September 2025.

Crypto 1-Month Returns

From top to bottom we have large, mid, and smol market caps 1-month returns, with everything in the green. It seems that it is buy anything and watch it go up season. Even dino coins like EOS and XTZ have gained traction. There is not one red return in any of these baskets, my only advice is take some things off the table if you have made life changing money, the market is always here, but profits come and go.

XRP seems to be the standard. I guess it always was if you were a holder. There is some news around about Ripple getting approval from NY state for their stable coin. Not sure where it leads. The dino coin resurrected from the dead going from 50 cents to $2.50 in a few weeks… I will pull some altcoin options data for the next newsletter and see if anyone picked up some options early.

Total BTC & ETH ETF Flows and Returns

  • BTC ETF Flows: $30.75b

  • ETH ETF Flows: $580.2m

ETH inflows finally hitting the tape! Friday had some major inflows for ETH. ETH basis is over 20% currently, while BTC sits at 15%. While basis remains elevated, I would expect more and more inflows over the coming weeks. ETH inflows have huge catch up to play to match the king Bitcoin. TradFi will eat up any “free” money trades they can put on. In that context, basis is a great trade for people looking to put something on, while not having to actively manage it every second of the day.

Marty's Thoughts On The Future

Overnight the US stance on crypto has shifted, though Trump doesn’t take office for a month, and no new regulatory laws have changed (yet). We seem to be repricing the coins at a rapid pace, and preparing for whats to come. Pricing it in. Exchanges and prominent crypto folks are now starting to come out and put the US regulatory and Institutions (banks) on full blast. This is a total shift in tone, with now everyone being more and more vocal. I’m referring to putting the spotlight on people getting debanked, and exchanges getting told to delist tokens (which now are relisted). There is always KYC, AML, and regulatory mandates to follow, but it is clear the US regulatory bodies overstepped their boundaries and that crypto was under attack.

As a note to the above, I am not sure if US folks ever get access to high leverage perp products… I think with the basket of TradFi products… Spot ETF, options, and futures, this is more than enough and they already have access to leverage via margin. Regulatory bodies know these current products, and are comfortable with them. I’m not opposed to perps, I am just sharing my thoughts.

BTC and ETH are here to stay, as there are now TradFi tradable products for institutions and retail to trade. Their place is solidified currently. My concerns still lays with memecoins and with current market moves, you could have bought mostly ANYTHING recently and made money, this isn’t always the case, and at some point the music stops and so does the rodeo. Do not be stuck holding the bag. Even though things are up on the month, just the other day memecoins were down 30-50%, if you were on leverage there is no way you survived. Your only goal as a trader is to survive, and not blow up.

I mentioned last newsletter that I expect more crypto index type products, Bitwise and other providers are now starting to launch new baskets as we speak. I truly believe in the longevity of these types of products, and instead of picking single name coins, you as an investor get exposure to the whole basket.

I’m preparing for more and more ETH inflows as basis is juiced. I also would expect some more ETF to get approved as time goes on, maybe a SOL or similar ETF. The future looks more than bright for the US and its crypto stance. We have yet to see how they treat it, and if laws really do change, but assuming its move favorable for our burger friends than before.

Thanks for reading pimps, see you this Wednesday on the Premia x Marty show, and Mon/Wed/Fri on the Eden show with the guys. We will take a slight break for holiday times, we will update, but YES there is a Marty Show this week.

Recap:

  • Everything is green, careful which ones you pick

  • ETH ETF inflows starting

  • Basis is juiced

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