US Colour

• We’ve been given good reasons to be bullish this week: Microstrategy buying 11,931 BTC (about $786M), Arthur Hayes’ bullish macro narrative, Michael Dell tweeting about BTC.
• Yet price action continues to be weak with BTC trading to 63.3k lows.

Why so weak?

• Miners have been under tremendous pressure to sell given higher breakeven prices post-halving. Miner BTC holdings have dropped to the lowest level we’ve seen in the past 14 years, with total reserves lower by 50,000 from the start of the year.
• The market has also been spooked by the emergence of a new large pool of supply. The German government allegedly sold around 3k BTC in the last few days with 47k more to go.

What is the Vol market whispering?

• Price is likely to be capped in the near-term but explosively bullish into year-end.
• Our desk has seen large selling of calls for expiries under 1-month and aggressive buying of calls for September into December.
• Vols are pricing a summer consolidation and fireworks into the US elections.
• ETH bullishness persists with ETH vols trading at an 18% premium to BTC in expectation of an imminent ETH spot ETF launch.

Trade Idea:
Monetize the premium in ETH vol to earn a high yield as ETH grinds higher over the summer.

ETH CFCC
Coupon payment: 55% pa every Friday as long as spot price is above 3,500
Expiry: 13-Sep, 3 months
Strike: 3,000
Protection: 2,500
At expiry, only if spot price is below 2,500, the USD deployed is converted to ETH at 3,000 price.
(spot ref: 3520)