Overview
BTC/ETH Options traders turn bullish for end-of-year.
Markets are quiet ahead of the FOMC announcement.
Midterm voters consider crypto when hitting the booth.
South African grocery giant Pick n Pay to accept Bitcoin.
Good morning Fam,
BTC and ETH option traders have been piling into call options for the end of the year after volatility decreased to one of its lowest levels in crypto history.
Volatility is one of the metrics used to calculate the cost of an options contract, so when the metric drops, the price of options contracts becomes cheaper.
With cheaper options comes increased speculation, and boy, have traders been eyeing calls in December 2022. The open interest for the Dec 2022 BTC and ETH strikes have exploded with $2.24 billion (chart below) and $2.9 billion, respectively, in notional value. For BTC, calls outnumber puts by more than two-to-one, and for ETH, it's a staggering five-to-one ratio.
Buying calls is considered a bullish bet, while buying puts is a bearish bet.
Source: Basemoney.io
The most popular strike prices for DEC 2022 BTC are from $30,000 to $45,000. These are the levels (plus the cost of the option) price needs to reach for a call option on the expiration date to break even. The put/call ratio of 0.43.
ETH’s most popular strike for DEC 2022 is $3,000, with open interest at more than two-to-one compared to any other strike (chart below). The put/call ratio is at 0.19.
Source: Basemoney.io
Needless to say, traders are taking bullish bets on the future price of both assets but hold a considerably strong stance on ETH reaching $3,000 by year's end.
Market update 🌍
BTC/USDT 1D
The markets appear at a standstill while awaiting the interest rate hike announcement by the Federal Reserve today. Meanwhile, BTC continues to straddle the $20k level in a day of low volatility. Its next move largely depends on Jerome Powell's rhetoric during the post-hike speech. BTC completed the daily candle down -0.45% to $20,481.
High-resolution chart.
10YR Bonds (US10) 1D
The 10Y bonds show signs of a turn-around after yields reached a high of 4.34%. Whether the price begins a sustained uptrend or if bonds are experiencing a relief rally remains to be seen. At a minimum, buyers are challenging the trend for the first time in months. The directions of bonds and the US Dollar Index (DXY) hold the utmost significance for crypto and US equities.
High-resolution chart.
Newswatch 📰
Death of MakerDAO co-founder. Nikolai Mushegian, one of the co-founders of MakerDAO, and heavy contributor to various crypto-based projects, was found dead near a Puerto Rican beach early Friday morning, according to local police. Mushegian was an important figure in the crypto space, having contributed to projects such as BitShares and Balancer.
Midterm voters take crypto into account. According to a survey initiated by Grayscale, 38% of US midterm election voters are considering crypto policy when hitting the booth on November the 8th. Furthermore, 57% of voters are more likely to vote for a candidate informed about cryptocurrencies, and 52% believe crypto is the future of finance.
Source: Grayscale
News Tidbits:
South African grocery giant Pick n Pay to accept Bitcoin in all its stores.
Galaxy Digital may cut 1/5th of its workforce after an 80% decline in stock price.
CoinFund VC firm looks to raise $250m fund.
MoneyGram launches in-app crypto-exchange.
NFT & metaverse update 🐵
NFT project Art Gobblers, co-created by Rick and Morty animators, jumps atop the OpenSea leaderboards with 15,000 ($22.5m) in ETH volume.
My five cents….
It's a big day for the markets today, with the Federal Reserve announcing the Federal Funds Rate adjustment for October's data. According to CME's FedWatch tool, the market is pricing an 83.5% probability for a 75-basis increase.
Source: FedWatch tool
Interestingly, a JPMorgan analyst went as far as to say the S&P 500 could rally as high as 10% in one day if a 50-basis points hike were to occur.
Traders will be particularly interested in Jerome Powell's post-adjustment speech, and with the US midterm elections beginning on November the 8th, there could be a few surprises. So expect high volatility as investors hang on every word by the Fed Chair in hopes of a dovish adjustment.
Gabriel
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