On the evening of October 10th at 8 pm, during the live broadcast on the official Matrixport YouTube channel, the head of asset management at Matrixport analyzed the reasons behind the significant fluctuations in the prices of BTC and ETH last week (October 1st - October 9th) under the influence of global macroeconomic conditions, changes in liquidity, and market sentiment. He also discussed the behavior of institutional investors in the current options market, providing investors with investment directions and strategy recommendations to focus on in the future.
The live broadcast content is as follows:
In the first week of October, the price of BTC fell back from $61,000 to below $60,000. The underlying reason was the increased uncertainty in the global macroeconomic environment, which put pressure on the cryptocurrency market from multiple fronts. The capital outflow caused by changes in Chinese policies also increased market pressure and weighed on the short-term rebound of BTC.
Analysis of the reasons for market volatility
Fluctuations in macroeconomic conditions and market sentiment
Recently, the performance of global stock markets has also had a significant impact on the cryptocurrency market. The A-shares in China experienced a slight rebound due to the central bank's reserve requirement ratio cut and adjustments to mortgage interest rates, but this did not provide strong support for the cryptocurrency market. Instead, the trend of capital flowing back to the traditional financial market has increased the downward pressure on cryptocurrency assets, as capital is returning to the traditional market.
Correlation between US stocks and the cryptocurrency market
The better-than-expected US non-farm payroll data drove a rebound in US stocks, which in turn led to a short-term rise in the price of BTC, which is highly correlated with US stocks. However, unlike gold as a safe-haven asset, BTC has more characteristics of a risk asset. Against the backdrop of heightened global geopolitical risks, gold prices have risen due to tensions in the Middle East, but BTC has not shown safe-haven properties and has fallen in sync with the US stock market correction, indicating that the market views it as a high-risk investment rather than a safe-haven tool.
In this rebound, the performance of low-market-cap Tokens (Altcoins) was better than that of BTC, indicating that risk assets performed better during the capital inflow period. This also shows that the speculative nature of the cryptocurrency market is still relatively strong, and market liquidity is more concentrated on high-volatility low-market-cap assets.
Impact of technical factors and market selling pressure
From a technical perspective, BTC is fluctuating around $60,000 and has not effectively broken through the resistance between the 50-day and 200-day moving averages. Each time the market rebounds to above $61,000, it is accompanied by relatively strong selling pressure. This indicates that the market is still digesting large-scale selling pressure and has not yet formed a stable upward trend.
As for ETH, after a significant decline in the previous period, the price fell below $2,000, and market demand remains weak. Although the decentralized applications of ETH have strong fundamental support, the current reduction in on-chain activity and the sluggish demand in the DeFi sector have weighed on the price performance of ETH. Its price performance is far inferior to that of BTC, indicating that ETH is still under short-term downward pressure.
The options market and institutional behavior in the current context
Volatility in the options market and institutional behavior
With the increase in global macroeconomic uncertainty, the volatility in the options market has also risen significantly. Particularly in the context of the upcoming US presidential election in November, the expected volatility in the options market has become more pronounced, and institutional investors are using the options market to hedge against future market volatility risks.
Options market data shows that short-term volatility remains relatively low, but the expected volatility in November has increased significantly, especially around the time of the election, reaching the highest level of the year. This indicates that the market is highly focused on the impact of political events, and institutional investors are pre-positioning through the options market to mitigate the risk of severe market fluctuations. For example, some large institutions have increased the scale of options trading around option expiration dates (such as the end of September and the beginning of October) and adopted a "dual-buy strategy" of buying call options and put options to hedge against future price fluctuations.
This "dual-buy strategy" can allow institutions to profit regardless of whether the market experiences a significant upward or downward movement. At the same time, the launch of Bitcoin ETFs in the US has also attracted more traditional financial institutions to participate in the cryptocurrency options trading, driving an increase in the activity of the options market.
Changes in funding rates and market sentiment
From the perspective of funding rates, the arbitrage opportunities in the cryptocurrency market are gradually decreasing. The high arbitrage returns at the beginning of the year have now declined to around 8%, not much different from the yield on US Treasuries. This indicates that the risk-free arbitrage space is shrinking, and with changes in the global interest rate environment, capital is more inclined to flow into the traditional financial market, further exacerbating the capital flow pressure in the cryptocurrency market.
This phenomenon suggests that the liquidity in the cryptocurrency market is relatively tight in the short term, and the market volatility has increased, while institutional investors are more inclined to use the options market to conduct volatility trading to obtain relatively stable returns.
Investment directions to focus on
Volatility advantage strategy: an effective tool to deal with market volatility
The current market's volatility expectations are increasing, especially as the US election approaches, volatility will further rise. This provides investors with opportunities to optimize returns through volatility trading. During October and November, the volatility curve in the options market indicates that the market's expectations for uncertain events have increased, particularly the surging demand for hedging political risks.
In the current environment, the volatility advantage strategy is an effective risk management tool. By purchasing a combination of call options and put options, investors can profit in a highly volatile market, regardless of whether the market rises or falls.
Passive strategy: the advantages of the M-BTC covered call strategy
Faced with the current frequent market fluctuations, the M-BTC covered call strategy launched by Matrixport is an effective and stable income tool, designed for long-term BTC holders. This strategy allows investors to obtain stable option premium income by holding BTC spot and selling BTC call options.
One of the main advantages of this strategy is its high transparency and low risk. The covered call strategy is particularly suitable for investors who are unwilling to take on the risks of high-frequency trading. Through this strategy, investors can obtain stable passive income in a volatile market, and compared to simply holding BTC, this strategy can effectively reduce losses due to significant market fluctuations.
For example, during market volatility, BTC spot holders can sell call options every two weeks to generate option premium income. If the BTC price rises above the strike price, the investor may lose some of the upside gains, but the overall return will still be stable and attractive. This strategy is particularly suitable for situations where market volatility is high and investor expectations are uncertain.
Furthermore, compared to traditional collateralized lending, the covered call strategy does not require additional margin calls, and the financing cost is relatively low, making it an efficient financing and income management tool.
Summary
Against the backdrop of increasing global macroeconomic uncertainty, investors should pay more attention to risk management and stable income strategies. The long-term trends of BTC and ETH remain attractive, but the short-term market volatility is high, and investors need to flexibly use option strategies to mitigate risks and enhance returns.
Matrixport will continue to launch more innovative financial products to help investors steadily increase the value of their assets in the current complex market environment. Through passive strategies like the M-BTC covered call, investors can ensure stable returns in a volatile market without losing potential growth opportunities.
More exciting content can be found in the YouTube live replay:https://youtube.com/live/FyUF_2mnT84?feature=share
About Matrixport's Weekly Market Insights
【Matrixport Weekly Market Insights】is a new interactive knowledge-sharing column launched by Matrixport, which is live-streamed every week on theMatrixport Official YouTube Channel. This column regularly invites industry leaders, top analysts, and KOLs to discuss investment logic under different market conditions and share investment insights, helping users achieve asset appreciation.
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Disclaimer: The above content does not constitute investment advice, sales offer or purchase offer invitation to residents of Hong Kong Special Administrative Region, the United States, Singapore, and other countries or regions where such offers or offer invitations may be prohibited by law. Digital asset trading may involve great risks and volatility. Investment decisions should be made after carefully considering personal circumstances and consulting financial professionals. Matrixport is not responsible for any investment decisions based on the information provided in this content.
