Weekly Crypto Market Update - June 12, 2023

Last Week’s Recap:

• SEC filed 13 charges against Binance and CZ including operating unregistered exchanges, broker-dealers, and clearing agencies; misrepresenting trading controls and oversight on the Binance.US platform; and the unregistered offer and sale of securities.
• SEC filed charges against Coinbase including operating as an unregistered securities exchange, broker, and clearing agency, and unregistered offer & sale of securities in connection with its staking-as-a-service program.
• Cathie Wood’s ARK funds added 419,324 shares of Coinbase stock (~$21.64M) after SEC charges.
• Robinhood will end support for Cardano (ADA), Polygon (MATIC), and Solana (SOL) on June 27th.
• TUSD mints via Prime Trusts are paused, for further notification.
• ParaFi, Framework Ventures, and 1kx sued Curve founder Michael Egorov for fraud.

Legacy Markets – DXY

DXY is still within the larger range. With CPI and FOMC this week we have a clear catalyst for a bigger move. With how far some equities have run and SP500 running into some larger volume areas there’s a good chance that DXY might test the 106 resistance and put some pressure on the market.

Legacy Markets – VIX

VIX is at its lowest level since 2019/2020 right before the COVID pump(!). If it consolidates here, we’ll likely start seeing catchup moves on the broader stock market to AAPL, NVDA, etc.If not, and it reverses to the upside, the market will likely experience some type of broader correction. It aligns with CPI and FOMC, so those will probably be clear catalysts for this week.

BTC Weekly View

BTC is still in the range. Over the weekend, crypto experienced quite a drop in altcoins. However, BTC barely moved and is still looking quite good. Given all the SEC news we expect ETH and BTC to stay the market leaders for now.

ETH Weekly View

ETH is still holding the 2021 support. Together with BTC, it barely dropped while most alts went down double-digit percentages. We think ETH is still good as long as it holds within the 2021 support area. This means it has to have a weekly closing basis price above 1680.

ETH/BTC

ETH/BTC is still trading quite sluggish. With the sharp drop over the weekend, ETH gave up some strength relative to BTC. At the time of writing, nothing really was of significance. And ETH/BTC is still not ready to take the lead, as the 2-year range continues.

TOTAL3 – USD Market Strength

TOTAL3 (Total market excluding BTC and ETH), had quite the wipeout after failing to regain the 2021 support. It’s quite a tough time for most alts which are still full of unlocks from investors and there’s just not enough liquidity for big exits. That tied together with the SEC ruling, plus Robinhood delisting & notice, they’ll market sell anything that isn’t sold by then, which put quite a pressure on a couple of majors e.g. SOL, MATIC, etc. However, alts are at range lows, so it’s a good R: R to trade here on the stronger ones.

TOTAL3/BTC – BTC Market Strength

TOTAL3/BTC is also at a large support zone, so it’s likely that the higher “quality” altcoins overshoot the down move. We might see some mean reversion this week, relative to BTC and ETH if those don’t start moving.

Summary

• Crypto, due to idiosyncratic reasons (SEC news), is still lagging equities.
• With the news being tied to SEC the market will be looking for positive signals coming out of the XRP lawsuit with the SEC.
• Crypto at this point, either needs a fresh narrative, something like DEFI summer in 2020 - or a significant move in high caps (mainly BTC and ETH), to attract retail interest back to the market.
• We expect some relative upside mean reversion from crypto, once most of the bad news is cleared. The danger is more in equities already having run up so far.
• Crypto options update:
  • ETH 30-day 25 delta R/R (P-C) range bound since 1 May 23 around the neutral level (-2/+6).
  • ETH 30-day ATM vol continued suppression keeping us on the sidelines for DOV-related trades.
  • Some low IV fills in ETH Jun30 call expiries, took earlier partial profits on crypto pop-off US debt ceiling developments.
  • This week US CPI (13 June), FOMC rate decision (14 June) & ECB rate decision (15 June) are positioned to take further PNL on the expected vol uptick.

DISCLAIMER:

The information in this report is for information purposes only and is not to be construed as investment or financial advice. All information contained herein is not a solicitation or recommendation to buy or sell any digital assets or other financial products

This post is prepared by Kairon Labs Traders: Joshua van de Kerckhove, Charles Belford, and Patrick LiEdited by:Rizza Carla Ramos