Market Pulse (26/09/2022)

ETH perps funding rates still negative. MicroStrategy buys more BTC. Fed hikes rates by 75 bps again.

Chart(s) of the Week: Hanging On To Their ETH Shorts

• ETH perpetual future funding rates have somewhat normalised post-Merge after falling precipitously to record negative levels (shorts pay longs) prior to the event. However, they still remain in the red, continuing a largely unbroken streak in negative territory since mid-August. Traders are perhaps still cautious as the short-tilt potentially implies hedge seeking and/or outright directional downside bets.

• Meanwhile, BTC perpetual futures funding rates have mostly been printing in positive (longs pay shorts) territory during September.

Fund Flow Tracker

• The aggregated exchange balance for ETH dropped sharply over the past week after marking a 6-month high recently. OTC desks balance of BTC has been drifting down and is now at a yearly low.

Derivatives Pulse

• Generally no major movements in implied vols over the past week. 1-month implied vol currently stands at 66.5% (vs. 63.9% a week ago) and 90.9% (vs. 92.3% a week ago) for BTC and ETH, respectively. Skews (puts minus calls) rose during the past week for both BTC and ETH.

• Leveraged traders’ net-short position and asset managers’ net-long position in CME Bitcoin futures continues to hover around YTD lows. 

• Leveraged traders are typically hedge funds and various types of money managers, including commodity trading advisors and commodity pool operators. The traders may be engaged in managing and conducting proprietary futures trading, and trading on behalf of speculative clients.
• The asset manager category consists of institutional investors, including pension funds, endowments, insurance companies, mutual funds, and those portfolio/investment managers whose clients are predominantly institutional.
• The dealer category consists of participants typically described as the “sell-side” of the market. These include large banks and dealers in securities, swaps, and other derivatives. The other reportable category consists of traders mostly using markets to hedge business risk, and includes amongst others corporate treasuries. 

Price Movements

News Highlights

• The U.S. Federal Reserve raised interest rates again by 75 bps and signalled that more hikes are coming, at a faster pace and to a higher level than expected. Monetary tightening will likely remain a significant headwind for risk assets, crypto included.
• Compute North, one of the largest operators of crypto-mining data centres, filed for bankruptcy amid a difficult environment for miners brought about by falling Bitcoin prices, rising energy costs, and record difficulty in mining Bitcoin. The company owed as much as US$500M to at least 200 creditors.
• Microstrategy bought 301 Bitcoins (BTC) at an average price of US$19,851, between 2 Aug and 19 Sep, bringing its holdings to almost 130K Bitcoins. 
• Wintermute, a leading crypto market maker, lost around US$160M due to a hack on its DeFi operations.
• Cardano (ADA) announced that its Vasil hard fork and upgrade went live, bringing “significant performance and capability” improvements to the Cardano blockchain.

Catalyst Calendar

Author

Research and Insights Team

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