Back Once Again

In the face of a second week of potentially scary macro data releases, and despite FUD caused by speculation of the U.S.’s selling of $6.5B worth of bitcoins, BTC spot bounced decisively from $90K levels to trade closer to $97K this morning. Derivatives markets remain supportive of the move: futures yields are positive and trending higher, with short tenors rallying harder to invert the term structure.

Perpetual swap funding rates have spiked higher, after never trading below zero throughout last week's move lower. Short tenor volatility smiles are the exception, lifting only slightly from their skew towards OTM puts to trade neutral. However, short tenor volatility smiles are priced very differently to the back end of the curve, with a higher level of at-the-money implied volatility inverting the term structure and a persistently bullish skew towards OTM calls over the long term.

The negative macro backdrop over the last week has certainly been reflected in Spot BTC ETF outflows which, since last Tuesday’s JOLTS report, have seen three consecutive days of net outflows – the most recent was yesterday with outflows of $284.1M – significantly higher than the average net outflow of $160.9M since their launch. Spot ETH ETFs haven’t fared any better either as they continue a four day consecutive run of outflows. MicroStrategy’s accumulation spree remains undeterred, as they (finally) bought the dip after a long-held tradition of buying the top. However, this was a far smaller purchase than their previous billion-dollar acquisition announcements.

The institutional bitcoin bug is spreading too – in the name of diversification, Ming Shing Group, a Hong Kong-based construction firm, has announced a $47 million investment into Bitcoin, averaging 500 coins at approximately $94,375 each. Branding it a “short-term investment”, the group praised BTC’s “highly liquid” market incorporating into their business plan as a way to raise capital to support their business if required.