SignalPlus

Key metrics: (5Jan 4pm HK -> 12Jan 4pm HK)
BTC/USD -1.0% ($92,600-> $91,700), ETH/USD -0.5% ($3,165 -> $3,150)

The BTC spot market continues the sideways motion it has exhibited since November end, frustrating both the bulls and bears with its falling realised vol. We can visualise the price action in a wedge which does lean slightly more probabilistically towards a final move lower (and ultimate reversal) but given the decent support seen over the last 2 months there is a good chance that this is part of a complex corrective movement higher (eventually). For now, the jury is out, but we hold the general view that the downside from here will be limited in both quantum of move and its volatility, whereas the topside has much more potential in terms of terminal movement, though again we don’t expect explosive price action or volatility here. Below $89k or above $95k are likely to catalyse a shift away from this holding period/wedge and we advocate patience while the market attempts to resolve its next move
Market Themes
First full trading week of 2026 and ultimately price action across asset classes was broadly muted as ‘full liquidity’ returned to the market and some of the extreme daily moves over the illiquid holiday period (in precious metals for example) began to normalise. The broad backdrop remains risk supportive and SPX printed a new all-time high, falling just short of the psychological $7k level and closing out the week around $6966. While geopolitical noise continues in the background (Venezuela, Iran, Greenland), the themes are untraceable on a day-to-day basis and market participants are looking to position themselves more structurally for the year ahead, looking through short term noiseCrypto once again lagged the move in the broad risk complex, after an encouraging start to the year lost momentum ahead of key resistance at $94–94.5k in BTC. ETF flows reversed to outflows for most of last week, leaving the net flows effectively flat on the year despite $1bn of net inflows after the first 2 days of the year. From a portfolio allocation perspective, it seems the market remains far more comfortable allocating to gold even at these levels for a currency (USD) debasement play, and for equity/risk-on the market still prefers to allocate directly to equities. Until we see a material shift in momentum/evidence of some upside vol, or a structural catalyst shift (e.g. US buying BTC for reserves), crypto may continue to be overlooked in favour of other assets in the current regime
BTC$ ATM implied vols

Implied vols broadly trended lower last week as realised remained contained in a 30–35vol range, and the initial surge of topside buying to start the year faded (in fact flows turned to sellers/unwinds of topside after the failed break of $94k)The term structure of implied vols began to steepen up as daily vols in short-dates priced down to the mid 30 region, converging to recent realised performance. This inevitably weighed on expiries out to end January, where daily vols were being priced in the mid-high 40s, leading to the steepening effect. While we remain in this $88–94k range the market will likely roll-down the front-end quite quickly and as such we could continue to see pressure on the front-end, while further out the curve the market is more cautious about structurally selling volatility at these levels after the bout of high volatility we saw in Q4 last year
BTC$ Skew/Convexity

Skew prices moved further for puts over the course of the week as the initial upside momentum from the start of the year faded and some supply of topside vol hit the market. Realised volatility was muted on the move higher in spot, while it accelerated on the pullbacks in spot, suggesting quite a clear local spot-realised vol correlation. However given positioning is much cleaner and the macro backdrop remains supportive of risk, the market does not seem concerned about an extended volatile move lower at this juncture and this is keeping risk reversal prices relatively containedConvexity prices have been broadly sideways as spot finds a footing in the broad $88–94k range. Directional plays either side of this range have been in call-spread or put-spread format supplying more wings to the market, with limited expectation of a material break of this range anytime soon
Good luck for the week ahead!

Key metrics: (17Nov 4pm HK -> 1Dec 4pm HK)
BTC/USD -9.6% ($95,600-> $86,400), ETH/USD -11.9% ($3,200 -> $2,820)After a plunge down towards key support at $80k two Fridays ago, last week was categorised as a corrective climb back from the lows as the market in thin Thanksgiving liquidity attempted to regain a solid footing ahead of an anticipated “Santa” rally. This week began with a reality check: the overhang of longs still out there, and the pivot level of $89k triggered some heavy selling over the Asian session. While we do expect the market to engineer a ‘Santa rally’ later in the month (especially in light of Fed expected to cut rates), we initially (continue) to expect that the most likely path forward is a re-testing of the lows from here, but that low will be a longer term buying opportunity. Participants that didn’t sell the bounce-back last week might be panicking a little, especially if we don’t see a quick recovery/climb back towards the resistance lvls ($88.5–90k) and that would catalyse the move lowerThere are a few alternative “counts” and possible price paths out there — more so than usual owing to the complications of the Oct flash crash — so there is a non-trivial probability that this is simply a correction of an overshoot higher on thin liqudiity and that the longer term move higher is already in play. A final alternative is this is still part of the corrective move before the last leg lower (this will be evident if we reclaim > $90k but fail at $100k) but odds are on more downside price action from here this week. We suggest scaling into longer term longs from here ($85.5–86.5k lvl) and again closer to $80–81k and for the daring, more $78–80k (big secular support comes in below that). Key pivots to the top side include > $89k and through $94.25k, with $100k the key pivot to open us back up to $125–130k region (our target for wave B, which comes after this move is done)
Market Themes
Volatile couple of weeks across markets as the FOMC pricing pendulum swung from 90% odd of a December cut down to 30% and back up to 90%. High-beta tech/AI names and crypto suffered the most, while VIX briefly re-visited the local highs of 25–26 that we have seen on a few occasions this year (excluding the March-April tariff highs >40), though once again this level capped pricing as the fundamental macro backdrop remains broadly risk supportive in the absence of any material change to the Fed’s rate path. The market’s capacity to sustain risk-off for an extended period of time remains limited as positioning lightened up into Thanksgiving and we saw a broad relief in risk assetsAfter leading the move down in the high-beta risk complex, crypto was not spared from an extension of the move lower, with BTC cracking key support at $85k and triggering a fast move down to test strong support at $80k two Fridays ago. From there we have seen a corrective bounce in thin liquidity and selling exhaustion set in and broad risk sentiment bounced, with the market attempting to call the bottom. Unfortunately it seems that sentiment/market structure has been fundamentally weakened following the events of 10th-11th October and so this cycle ‘might be different’ in the sense that buying appetite and fresh liquidity may not be plentiful enough to drive a material surge back through $100k. IBIT outflows have picked up but nothing near the extent of the months of continuous inflows we saw since the summer and the trend of flows there will be key to monitor going forward. Interestingly alt coins have held up relatively better which is very unusual for ‘bear markets’ in crypto, which is suggestive of much deeper de-leveraging (again related to the effects of 10th-11th October) and with alt coin positioning broadly much cleaner (outside of the DAT holdings, though Tom Lee shows no signs of slowing purchases of ETH… yet!)
BTC$ ATM implied vols

Implied vols exhibited a big range in the past 2 weeks as <2m contracts exploded higher as spot tested down to $80k before having a sharp sell-off last week as spot exhibited a low realised corrective grind higher, before picking up again with the fresh sell-off from $90.5–85.5k in Asia. Realised performance has actually remained healthy in the high 40s/low 50s, so the sell-off in implied vols can only be attributed to position reduction into year end, with dealers looking to recycle any selling flows from unwinds of directional plays.The term structure of implied vols has flattened up broadly as some supply of back-end vols has left >3m expiries a little heavy, while front-dated contracts remain supported due to elevated realised
BTC$ Skew/Convexity

Skew prices have broadly been tracking the directionality of spot, and the realised spot-vol correlational (both realised and implied vol) has been incredibly strong. From a supply-demand dynamic the market has started to see overlay supply of calls again even at these spot levels and this should continue to keep skew prices bid deeply for putsConvexity prices have been broadly sideways as spot finds a footing in the broad $80-94k range. Directional plays either side of this range have been in call-spread or put-spread format supplying more wings to the market, with limited expectation of a material break of this range anytime soon. Also with local gamma realising healthily this has also created more appetite for local strikes over wings
Good luck for the week ahead!

Well that was fast. After a strong risk-on rally to close the week, crypto prices cratered hard to start December, with BTC sliding below $87k on yet another stop-loss run being driven during the thin Asia morning session.

While it’s hard to blame a specific trigger, overall risk appetite remains feeble after the Oct-Nov washout, and worsened by a number of negative headlines that have surfaced over the past few sessions. With yet another DeFi hack on a OG protocol (Yearn staking), a DEX terminal abandoning its much anticipated launch over tough market conditions (Terminal Finance), OG Arthur Hayes openly ‘FUD’ing the recent Monad ICO (99% downside), a S&P ratings downgrade of USDT to ‘weak’ (poor disclosures), and the PBoC reiterating its cautious stance on crypto trading & stablecoins, it’s probably fair to say that we remain firmly in bear market territory until further notice.

Over in equities, the SPX rallied by 3.7% last week led by semis (+5.4%) and retail (+4.7%), with retail favourite stocks making a strong week on week come back despite an overall drop in retail trading volumes.

Furthermore, early indications of Black Friday sales suggest that we’ve hit another record, with online sales hitting a record of nearly $12bln (+9% YoY), and Cyber Monday projected to bring in another $14bln in revenues. US consumption appears to remain robust as of now.

Outside of holiday sales, we’ll have a decently busy economic calendar with ISM, ADP, Claims, PMIs, and UMich confidence on deck this week. Despite all the noise, PMIs have been grinding at a healthy expansion range of 50–55 since 2022, while Atlanta Fed’s GDPNow continues to call for an above Wall-Street growth rate as the economy remains in good shape.

The most important econ dates for the rest of the year will be over the next 2 weeks, with FOMC on the 10th, followed by the delayed NFP on the 16th and CPI on the 18th. Furthermore, it’s worth nothing that there’s basically no tier-1 economic data that will be released between here and the FOMC date, so the ~100% chance of a Fed cut is basically baked in, as the Fed is not prone to surprise market odds, and focus will be on the guiding language for the 2026 trajectory, rather than the rate decision itself.
Specifically, we’ll look for the Fed to comment on their increasing confidence in receding inflation pressures versus weakening labour markets and tightening market conditions to justify a ‘dovish cut’, and vice versa the other way. There will also be scrutiny on the minutes on ‘how many’ participants preferred to keep rates unchanged as a dissent, especially in light of the yet-to-be-released NFP and CPI reports, and how Powell responds to the inflation gap vs unemployment gap questions during the Q&A. We’ll cover more on the Fed meeting later as we get closer to the event.

Good luck & good trading!

Key metrics: (10Nov 4pm HK -> 17Nov 4pm HK)
BTC/USD -10.0% ($106,200-> $95,600), ETH/USD -11.6% ($3,620 -> $3,200)

The rally on the US government reopening news was short lived and the market turned, retesting and breaking the $98–100k support zone. This resulted in a move down to test the support at $93–94k which so far has managed to absorb supply and hold. At this point the breakdown from $112.5–115k post the October flash crash looks to be mostly played out and while it is hard to call the exact lows, we consider dips below here to provide good buying opportunities. More broadly the ABC move from $123k → $107k → $126k → current/$93k looks almost completely played out, however we could see market re-testing the $93–94k, looking for a print down towards $90k, given the growing bearish sentimentPositioning seems lighter out there and CTAs are likely short here, so we think the risk-reward of further downside in spot is shifting here. Below $93k, expect strong support at $89–90.5k. Should that break, there’s isn’t much strong support until we reach $79k (some limited support $83–85k) since <$90k area was a very choppy “pivot” level back in March/April this year. On the top side resistance comes in around $98–101k initially and then again at $104–107k. We think that in general realised volatility will remain elevated whether spot is going up or down, though market will likely try to sell down implied vols initially on the relief in spot (especially if we get back above $107k)
Market Themes
Extension of risk-off sentiment particularly in US Tech/AI names this week, as the end of the government shutdown proved to be a ‘buy the rumour sell the fact’ event for markets, with the initial relief rally in risk last week fading very quickly. Concerns around AI valuations and spending/investment arose once more while Fedspeak was broadly on the more hawkish side as the market continued to walk back pricing of the December rate cut, from over 90% priced a month ago to a coin-toss 50%/50% as per current pricing. Interestingly though, the pick-up in VIX was fairly muted compared to e.g October, as US equities indexes broadly held in fairly well, with most of the pain felt in AI names specificallyCrypto was not spared from the sell-off in risk assets as BTC plunged back below $100k and took out key support at $98k, trading down to a low of $92.9k over the weekend before finding some temporary equilibrium closer to $95k. ETH also traded down to test $3k again though found some good support again ahead of that level, gravitating back towards the $3.2k that seems to have been a more stable equilibrium for it in the past few sessions. Overall after this latest sell-off, the risk-reward dynamics for accumulating crypto at these levels seems relatively more attractive and we would expect to see a bit more 2-way in the absence of a more protracted sell-off in broader risk assets (or a more material spike in VIX). However native sentiment seems noticeably poor so it will be the resolve of IBIT holders/buyers that will be tested most closely in the coming sessions
BTC$ ATM implied vols

Implied vols rallied in line with the recent spot-vol correlation of higher volatility on lower spot, as we plunged back below $100k and took out key support of $98k. Realised volatility continued to remain high both on a high frequency basis but also on a fix-to-fix, with an 90+ vol observation between Thursday and Friday expiry on fix-to-fix. This extended period of high realised volatility is causing some stress in the market and driving a natural reflation of volatility further out the curve, as the market begins to price a higher structural vol base for the asset after an abnormally low period of realised vol over the recent summer monthsThe term structure of implied vols has flattened up driven by higher front-ends as gamma performance remains elevated. The curve moves have been relatively weighted in fashion (i.e. back end vols have still repriced higher but just by a lower beta vs front-end) as the market continues to feel relatively short vol overall. There has been decent demand observed for January/March/June strangles in the past week as the market looks to cover some legacy short vol positions that were put on when the term structure was much steeper
BTC$ Skew/Convexity

Skew prices broadly moved deeper for puts on the break of $100k and remains fairly bid for puts in gamma tenors as the downside remains the more vulnerable side of the distribution for now. However the market is cognisant of more 2-way risks from this level of spot, particularly on a slightly longer term basis, and this is keeping skew prices fairly stable in tenors further out, as we have begun to see some demand for topside for year-end and out at this lower spot entry levelConvexity prices moved lower as local gamma performed admirably in the past few sessions, while the market is starting to discount the extreme wing observations here as positioning seems to be cleaner and many feel we are coming to the last leg of the sell-off. Directional demand for an extension lower has been seen the in the form of put spreads (e.g. year-end 90k/70k put spreads) while topside plays also seem to be in call-spread format (e.g $110k/125k call spreads) — again adding further supply of convexity to the market. Overall at these levels and given the high vol-of-vol that we have witnessed we think flies are approaching value zone
Good luck for the week ahead!

Key metrics: (3Nov 4pm HK -> 10Nov 4pm HK)
BTC/USD -1.0% ($107,200-> $106,200), ETH/USD -1.9% ($3,690 -> $3,620)

After finally breaching the psychological level of $100k last week, positive news out of Washington over the weekend drove a relief rally to start the week and the market traded up to test the previous support (now resistance) level/region of $104–107k. Through $107–108k we expect the market to see some top side acceleration given the pivotal/choppy zone of $108–114kA break higher would suggest this part of the correction might be completed and the market could be gearing up for a fast and choppy test of the ATHs. We ultimately think that this would give way to a larger and more sustained correction since we see the larger-cycle as corrective (albeit flat corrective) for the coming monthsIf we fail to break $107k that would suggest the market wants to retest the $100k support and we have a more “pure” break down target closer to $95k, but given lows have printed on a $98k handle already we have been within a whisker of that level already. We would think that re-tests at or below $100k from here are opportunities to buy delta into, carefully and calmly in a fashion that gives plenty of room in case the downside runs on stops / liquidations before the bigger turn comes in
Market Themes
Wobbly week for risk assets as the US government shutdown extended, with fears of the extended impact on the US economy. On top of this, despite a fairly solid round of US corporate earnings, concerns began to arise around the stretched levels of AI valuations, particularly given the heavy spend and investment being made by some of these companies to continue the development and integration of AI e.g. Meta … what if at the end of all this spending the technology doesn’t produce the revenues priced in? Ultimately so far the investments have been paying dividends, so partly this aspect of the price action felt like narrative chasing on what was probably just a healthy correction given the extended rallies some of these names have had so far this yearCrypto has been underperforming risky assets (and Gold) all year and found itself in a vulnerable position with the broader turn in risk assets. BTC finally plunged through $100k, though selling flows were well absorbed in the $98–100k range, while ETH tested down towards $3k before also finding some support. The end of the Government shutdown and the likelihood of another Fed cut in December (especially given the impact on US economy from the recent shutdown) should ultimately support risk assets from here into year end and this may bring a relief rally, but after a challenging year and high opportunity cost in the space, it still feels like a ‘high risk low reward’ asset in the absence of any crypto-specific catalyst, and therefore may find itself vulnerable should an unexpected turn in risk assets occur once more before year end
BTC$ ATM implied vols

Implied vols broadly traded sideways this week as realised volatility remained in the low-mid 40s (on a high frequency basis), justifying this newer implied vol base that we have reset to. Implied vols initially dipped early in the week before finding some support as spot broke $100k. However with no follow through below that key level, implies drifted lower into the weekend before finding support again into the new week as spot had a quick rally off the lowsThe term structure of implied vols has begun to steepen out as the short-term realised begins to wane with spot establishing itself in a range and no immediate catalysts to trigger a change. Directional players (looking at topside) have shifted positioning to December onwards expiries to allow more time for the market to digest the recent price action
BTC$ Skew/Convexity

Skew prices broadly moved deeper for puts on the break of $100k but having found decent support there and then exhibiting a quick relief rally on the US govt shutdown lifting over the weekend, skew prices began to move less deep for puts as tactical call buyers emerged. Structurally the spot-vol correlation remains clear (higher implied/realised vol on lower spot) as BTC becomes more correlated with traditional equity/risky assets in this behaviourConvexity prices moved lower as spot retraced into the broad $104–112k range, after a brief visit below $100k. Vol of vol remains high but ultimately the market seems to be finding equilibrium at this newer price range for now having tested and found strong support at $98–100k, any material break of $98–117k broad range will trigger some repricing of risk reversals structurally and bring convexity back into play
Good luck for the week ahead!

Key metrics: (27Oct 4pm HK -> 3Nov 4pm HK)
BTC/USD -7.3% ($115,600-> $107,200), ETH/USD -12.1% ($4,200 -> $3,690)

Market continues to chop in the $104/105-$115/116k range here with realised volatility remaining elevated even as the absolute ranges compress — this suggests market is struggling to find an equilibrium here, perplexed by the disconnect between Crypto vs Tech/high beta Single Stocks and worried about the possibility of Gold/precious having a more material correction lower from here. Technically we expect another leg lower from here to give a completion of this flat corrective leg (first of a potential 3-legged flat multi-month (year?) correction) but we could see the range chopping back and forth for a few more sessions / weeks ahead
Market Themes
Focus on FOMC, US earnings and Trump-Xi this past week. Ultimately all three events helped to keep the risk supportive backdrop in tact: the Fed delivered the anticipated/needed 25bp cut and while Powell attempted to walk back pricing of a Dec cut (‘by no means a foregone conclusion’), this proved to be merely a blip; US earnings were broadly very solid despite fears of slowdown in the ‘real economy’; and Trump-Xi finally had a breakthrough with tariff rates lowered and some concessions made as the path to a deal looks almost certain nowDespite all this, Crypto once again struggled for footing, as OG whales continue to unload their holdings with both BTC and ETH struggling for momentum above $115k and $4k respectively. With SPX/NASDAQ and high-beta AI stocks continuing to make new highs, the opportunity cost of holding crypto continues to be punitive, and the USD-leg of the equation has also had a relief rally with Gold pulling back below $4000 and the USD rallying broadly against G10 FX as the pricing for a Dec 25bp rate cut moved from 90% to almost 50% at one point. The NAV of many of these DAT companies has compressed to (or below) 1.0x as well as that story loses momentum
BTC$ ATM implied vols

Implied vols broadly traded sideways this week as realised volatility remained in the low 40s (on a high frequency basis), justifying this newer implied vol base that we have reset to. Having said that, a lot of this realised volatility was driven by the reaction to events last week (FOMC then Trump-Xi meeting), and on a lower frequency basis the realised volatility has been dampening down as we compress in a tighter $106–112k range broadly. This led to some short-term pressure on gamma tenors into the weekend though this was undone with Monday’s move back to $107k as the orderbook liquidity still remains thinner than beforeThe term structure of implied vols has remained broadly unchanged with some steepness justified by the macro dynamics, as November is broadly a quiet month on the US data front (with no FOMC either), though December is shaping up to be an action packed end to the year
BTC$ Skew/Convexity

Skew prices broadly moved deeper for puts last week as realised volatility on the topside remained muted with plenty of offers found between $112–116k, while downside moves continue to exhibit high realised volatility. The market seems to have some quite sharp derive below $106k that saw risks briefly plunge to very deep levels on Thursday, though ultimately it is hard to sustain those unless we see a material break of the rangeConvexity prices moved lower as spot began to establish a broad $106–112k range last week, with liquidity well supported both sides of this range (i.e. no explosive moves seen as we approached the extremes). Directional plays continue to be expressed through put spreads or call spreads which also net supply some convexity to the market. Vol of vol remains locally a bit high but not as extreme as in the past few weeks and this is also helping keep a dampener on implied convexity pricing for now
Good luck for the week ahead!

Key metrics: (6Oct 4pm HK -> 27Oct 4pm HK)
BTC/USD -6.4% ($123,450-> $115,600), ETH/USD -7.5% ($4,540 -> $4,200)

The market has given us a pretty clear and evident wave B high around $126k, and since then has spent the better part of the last 2 weeks testing the supports from $109–104k, though is now back up testing resistance at $114.5–117.5k level. Our view is that this is likely wave 2 of 5 of a bigger progression down to below $95k but, given the difficulties of factoring in the 11Oct flash-crash, there is a risk we have moved into a more extended correction that might re-test the wave B highs again (before correcting lower). Support down to $109k here and then again at $107k and $105–104.5k, while on the topside initial key resistance at $117.5k before $121–125k heavier resistance
Market Themes
It’s been an eventful few weeks for crypto (and broader equity markets) as an initial surge in risk assets at the start of October (‘Uptober’) faced a reality check when Trump upped the rhetoric ahead of talks with China, threatening the re-imposition of 155% tariff rates on 1Nov without any progress on a deal. This triggered some significant de-risking in early October with crypto falling victim to an aggressive liquidation event in the illiquid hours of 11Oct morning HK time, with Binance at the epicentre of the event. BTC flashed down to a low of $102k (from as high as $123 earlier that day), while the moves in some Alts were far more extreme. Orderbook liquidity thinned out significantly for the ensuing days/week triggering some elevated realised volatility, before eventually liquidity returned to the market as the risk backdrop broadly stabilisedLooking ahead, Trump and Xi are finally due to meet in person on 30Oct in Korea, and with a framework for a deal already established by key negotiators on both parts, it seems the market is gearing up for a deal as risk assets have opened the week strongly, with BTC reclaiming $115k in sympathy with the move. The FOMC meeting on Weds 29Oct is also expected to deliver another 25bp cut, with last Friday’s CPI on the softer side, giving the committee no reason to deviate from their dot-plot of the previous meeting. With the end of Quantitative Tightening also expected soon (JPM calling this week), a combination of this and a trade deal could set the stage for a rally in risk assets in the coming weeks, especially with the market’s positioning feeling lighter after de-risking this month
BTC$ ATM implied vols

Implied vols have exhibited a large range in the past few weeks as we bounced aggressively off the lows on the 11Oct liquidation event, with realised pushing up from the mid-20s to 50 and then sustaining in the mid 40s in the following 10 days as order-book liquidity remained thin. However with spot ultimately respecting the broader $100–125k range that has broadly bound the asset since May, demand for optionality was quite muted and as such implied volatility levels didn’t really ‘overshoot’ versus realised in a manner we have seen previously on such episodesThe term structure of implied vols initially flattened as front-end expiries led the move higher, with demand for gamma due to the higher realised performance, but as order-book liquidity started to rebuild and spot reclaimed above $110–112k, we’ve seen renewed pressure on the front-end of the curve, while some term premium remains with longer dated vols still higher than before this whole episode i.e. a natural steepening move
BTC$ Skew/Convexity

Skew prices retraced from their deep pricing for puts as fears of a plunge through $100k abated with the positive risk sentiment over US-China over this weekend helping support spot back above $115k. Having said this, ultimately the skew dynamics have performed incredibly strongly with both implied and realised volatility much high on lower spot, and both implied and realised volatility beginning to stall as we grind back higher. As such risk reversal pricing favour puts should structurally remain in tact, though short term dislocations around that ‘fair level’ are possibleConvexity prices moved higher in longer dated tenors as the market prices the addition ‘vol-of-vol’ dynamics that the asset has exhibited once more (with a sharp snap from the low vol 25–30 realised to 50 that we just witnessed). Moreover, there has been some interest in wing topside in case of a big eventual break higher from here, while wing downside remains supported given the market’s clear stress on the previous episodes of spot lower
Good luck for the week ahead!

US equities blew out to another record high on Monday, led by the Nasdaq with a +1.6% gain and SPX rallying by 1%. Optimism over another supposedly China-US trade deal, bullish positioning into Mag-7 earnings, and expectations of another dovish Fed meeting propelled risk sentiment higher.
Cross-asset vols have also collapsed back close to record lows as investors piled back into risk-on positions, while global equities might also be making significant upside breaks with the Shanghai Composite appearing to break out of a 10yr downward trendline.

Markets are fully pricing in a 25bp cut in this month and December’s FOMC meeting, and traders are expecting more dovish language from the Fed Chair despite US macro basically in a govt data vacuum for nearly a month now. We expect Powell to suggest that policymaking is becoming trickier without timely economic data, hence justifying the Fed’s earlier base-case of another cut this month, and the prolonged government shut down to bring further downside risks to labour markets.
We don’t expect a lot of new policy guidance to be offered given the data blackout, and the focus to be on how quickly they will end QT (balance sheet reduction) as system reserves have returned to ‘ample’ levels. Market base-case would suggest QT to end in 1Q2026, with risks of a dovish surprise should Powell announce an earlier end to the balance sheet reduction.

BTC has rebounded back to the $115K area, albeit with noticeably weaker momentum than equities, with prices basically having treaded water both on a monthly and quarterly basis. BTC implied vol has resumed its downwards trajectory as prices have stabilized, though vol skews are starting to be more balanced with some buyers looking to add top-side given the sizeable amount of long liquidation in recent months.

We don’t see a lot of near-term catalysts for crypto prices here with DATs remaining on the back-foot, while ETF inflows have steadied after multi-quarter inflows. A resurgence in upcoming crypto-related IPOs before year-end might bring some FOMO energy back to the market, with price action likely to be sub-dued given the significant PNL damage suffered from the altcoin wipe out earlier this month.
In the meantime, position adoption momentum continues in stablecoins, with payment transaction volumes breaking de-correlating against spot trading volume, suggesting that there’s more capital being brought on-chain without purely going into speculative purposes.

Will a dovish Fed and teflon-stocks save us from an otherwise disappointing Uptober? Hope springs eternal…!

Macro ended a tumultuous week on a strong note, with yet another ‘TACO’ from President as he publicly admitted that high tariffs on China are not “sustainable” and that he will indeed meet President Xi in two weeks as telegraphed by Treasury Bessent and his team.
Furthermore, yet another quarter of stronger than expected results for bank earnings helped calm some of the private credit worries from the First Brands bankruptcy and the subprime auto lender write off (Tricolor, $170M charge-off), even despite Jamie Dimon ominiously stating that “And I probably shouldn’t say this, but when you see one cockroach, there are probably more. And so we should — everyone should be forewarned on this one.”, with regards to more credit defaults down the line.

On the flip-side, high velocity credit card data was actually better in Q3 based on Wall Street reports, with analysts reporting a further acceleration in Q3 consumer spending based JPM data reporting +9%, Citi at +4%, and Wells Faro at +6.3%, all above their Q2 pace.

Furthermore, recently released data shows retail buyers being extremely aggressive in buying the equity dip from two Friday ago, as option volumes exploded to the highest levels in 2 years with traders betting on a USA-China descalation, which has worked brilliantly against for the 2nd time in a row. Will we get a 3rd crack on the TACO trade?

While equities and credit markets largely calmed down on Friday, precious metals fell by the most in 6 months (Silver -5%), showing the 1st signs of weakness after a record setting run. Significant profit-taking and VaR de-risking flows likely drove some of the selling flow, with traders likely focusing on PNL protection as geopolitical headline risks continue to add volatility to safe-haven assets.

Crypto certainly has seen better weeks, with prices suffering yet another drawdown last week after the altcoin flash crash from the week before. Bloomberg reports that retail investors have lost $17bln across BTC DATs after the recent crash, with BTC ETFs seeing the 2nd worst weekly outflows YTD (-1.2bln) while DAT premium continued to crater to record lows.
DAT company owners have done well through this process, as they monetized their shares at a significant NAV premium to buy extra Bitcoin holdings, but that’s of little consolation to shareholders who have suffered a cumulative loss of $55b+ in equity premium since the early summer.

As we have long feared, this generation’s altcoins might not see much of a recovery, with the industry’s focus shifting back to TradFi’s centralised model (DAT, ETFs, private chains), and AUM/TVL continuing to shrink as ‘degen losses’ mount without a new FOMO narrative. The loss of a core Ethereum Foundation researcher (Dankrad Feist) to Stripe-owned Tempo is another sign of the seismic change in ecosystem values, while the recently announced halt of stablecoin plans out of China offers a reality check against immediate, mainstream integration.

Finally, one of the few crypto-related proxies that have done well is with the public miners, who are increasingly shifting to a hybrid model to deploy their powerful hardware into AI and high performance computing (HPC) to benefit from the booming AI wave. The pivot towards AI appears to come in the wake of last year’s BTC halving, which has squeezed profit margins and forcing miners to pivot towards other economic models. Will the industry’s sustained lower hashrates help to limit supply and propel BTC prices upwards again in the medium term? Only time will tell.

Finally, the economic data calendar remains in a semi-blackout with the US government shut-down for a record 3 week period now… We might soon run out of macro things to talk about if this were to continue!
Good luck & good trading everyone.

Worst liquidation day since FTX.. $19bln (or much more) in PNL wiped out from ADL (auto-deleveraging) algorithms across CEXs… altcoins touching zero as market-maker support evaporated… There’s probably no need for us to regurgitate on what was a brutal Friday close for crypto traders and macro investors alike.

The China-US trade truce came to a sudden end as President Trump unended the calm with an exasperated response to the Chinese renewed export controls, which is unprecedented in its complexity and comprehensiveness. A US/Japan long-holiday weekend provided unfortunate timing as markets flash crashed into the Friday close, leading to a -4% drop in the Nasdaq and an instant wipeout across many altcoins.

In response, the crypto community was quickly introduced to the ‘ADL’ mechanism, aka Auto Deleveraging or ‘maintenance margin’ in the TradFi world. While logical in theory, auto stop-losses do not work well in gap-down markets when liquidity becomes discontinuous and prices ‘gap down to zero’ in an order-book vacuum. Traders often forget that market makers disappear in one-way markets as price discovery evaporates, and the auto-develeveraging ends up ‘hitting the first’ bid regardless of how low it is, creating negative “reflexivity” (or convexity) as prices accelerate to the downside.

To make matters worse, a significant jump in data traffic overloaded exchange infrastructure, which further confounded the auto-liquidation mechanisms with delayed data feeds and congested orders. However, this problem wasn’t limited to just the major CEXs, but was also seen in leading DEXs such as Hyperliquid, which ‘led’ the liquidation leaderboard with over $10bln of capital wiped out on-chain on a 24-hour basis. Liquidity vacuums are agnostic to whether your capital is on-chain or not, unfortunately.

In the TradFi world, this is mitigated somewhat by the presence of circuit breakers, which would have shifted some of the pain buy asset holders onto the exchange operators, which would require a reserve / insurance fund similar to FDIC for banks. However, that would lead to less leverage available to CEX traders as costs of trading increases (which is one reason why crypto exchanges can offer more trading leverage than say, CME), and also goes against the ‘24/7’ continuous markets that crypto traders value highly.
As with all things though, all decisions come with a trade-off, but we imagine that this wipe-out will lead to a lot of renewed discussions on infrastructure investments if crypto were to continue to be institutionalized.

Looking ahead, markets have bounced a bit on Monday due to a lack of further escalation from both the US and China sides, and also due to long-weekend holidays in Japan and US markets. While the overriding view is that the recent escalation is a mere bargaining chip ahead of the Trump-Xi meeting (now in question), we believe that the longer term impact is for the macro decoupling theme to have massively accelerated. The enhanced rare metals ban is a non-trivial escalation, and highlights the declining effectiveness of any US tariff retaliation.
In the short-run, the consensus view is for both sides to dial down the temperature (as they have over the weekend), and asset prices to see a short-term repreieve. Nevertheless, we are concerned over any significant altcoin recoveries this time around, given the deep critical PNL damage, and BTC-focused rally YTD which has left many native investors behind.

With the US government still shut and US economic data in a semi-blackout phase, markets are expected to remain extremely choppy this week with views subject to change on a whim. With systematic and momentum funds still highly invested, we would keep an eye out on any sustained rise in IVs to drive derisking flows from that community. Of course, any sudden tweets or announcements from either administration could turn the situation 180 at any time, so it’s probably best to keep risk as light as possible over the next few days.
Stay safe everyone.

True to years past, markets enjoyed an explosive start to Uptober with BTC and equities rallying to new ATHs, with US stocks powered by yet another multi-billion OpenAI/AMD deal, while Japanese stocks surged 5% (JPY FX -2%) on Takaichi-san’s surprised leadership win as fiscal dove.

Despite the data blackout due to the government shutdown, the equity rally powered on led by Semi Conductors (+4.4%), Biotech (+10%) and Consumer Durables (+3.6%) leading the way last week. The few data pieces that have come in continue to show a robust US economy, with surprises coming in at YTD highs against lowered expectations. US GDP is widely expected to trough in Q4 before making significant rebounds into 2026 and thanks to ample system liquidity and a resilient US consumer.

The biggest losers last week were with global bonds, where we are seeing renewed stress on higher yields on the back of the aggressive fiscal spending plans out of US, China, and now possibly Japan, all of which are happening with risk assets at ATHs and inflation pressures still on everyone’s top of mind. A sudden political crisis emerging out of France (PM Lecornu’s resignation) has added to the bond market’s woes, but to the benefit of gold, which has strung together its best winning record since the early 1980s.

The current ‘fiat debasement’ theme continues unabated, with most measures of M2 liquidity, loan supply, and other credit availability pointing to record levels of money-easiness, leading to cash allocations beign at their lowest level in history based on JPM estimates.

Once again, retail traders have benefitted from the rally as they have been a major participant of the current move, consisting of over 12% of single stock volumes with SPX option volumes re-approaching April highs. It would seem that President Trump’s efforts to ‘monetize’ the US economy with positive wealth effects are working as intended.

Not to be outdone, BTC staged its own rebound to new ATHs ($126k) on renewed ETF buying, which saw US investors pouring over $3.2bln of inflows into BTC ETFs last year, good for the 2nd largest week in history. Open interest on Blackrock’s IBIT ETF also rose to a record $49.8bln on Friday, and is now the single largest ETF revenue generator for the mega asset manager, an absolutely incredible feat for a newly launched product.

BTC ETFs now own over 1.47M BTC (~90% USA dominance), followed by DATs at 1M BTC (MSTR at 0.63M), and miners at only 93K. It’s probably not unreasonable to say that the Wall Street takeover of crypto is complete, at least in terms of driving the day-to-day price action.

Given the US government shutdown, there’s not a lot of data to look forward to in the near-term, with things looking to heat up in late October over FOMC and the Mag-7 earnings. Options markets are pricing in a feral 5% chance for another 10% rally in the SPX into year-end, and it’s increasingly difficult to find a negative catalyst to counteract that view at the current juncture.

In crypto, we saw little shorts liquidation on the recent gap up (ETF buying), suggesting that participants are underweight with minimal risk exposures. BTV IV remains very low (and a record gap vs ETH IV) with skews barely positive, suggesting that the path of resistance in the meantime may be higher as Uptober lives true to its name.

In any case, equity risk sentiment shall continue to be the key driver over the following weeks. Good luck & Happy Golden Week to our friends in the region!

According to Bloomberg, for just the 26th time over the past 100 years, the S&P 500, Nasdaq, the Dow Jones Average, and the Russell 2000 all set new record highs over the same week as the melt-up sentiment continued unabated. At the same time, investment-grade credit spreads hit record tights since 1998, with the index coming in at a mere 0.72% over equivalent treasuries, offering next to zero protection buffer if the economy were to really worsen.

On the geopolitical side, there has been a notable improvement in the US-China narrative with a tetative TikTok deal, with the Trump-Xi phone call affirming continued progress being made on trade talks. The leaders have also promised an in-person meeting during the APEC Summit in South Korea next month, which would be their first face-to-face meeting since the G20 back in 2019. All of this has buoyed risk sentiment, particularly in EM stocks, with the BoJ even signalling plans to (slowly) divest out of their ETF holdings with the TOPIX hitting record highs.

Risk sentiment barometers remain in extreme territory, but have eased off a bit since late summer, albeit without impacting equity prices much. Risk appetite remains driven by loose-money conditions, which remain at some of the easiest levels in history, thanks in large to the Fed’s recent dovish policy pivot.

This week will be quieter on the data side, with focus shifting to the Fed speakers, with 17 speaking events planned for the week, headlined by Powell on Tuesday. Recently appointed Fed Governor Miran came out swinging, doubling down on his dovish dissent by claiming that he doesn’t “see any material inflation from tariffs… with no discernible core good inflation in US vs elsewhere… and that the Fed Rate is quite far from neutral”…

While it’s not the first time that stocks & bonds have told a different story — with equity pricing implying next to zero chance of a recession, while fixed income is pricing close to 50% — it’s helpful to revisit how they have respectively traded into and out of a Fed easing cycle.

Assuming the Fed is successful in generating a soft-landing, US stocks have generally done well into AND out of the first rate cut, while outperforming global stocks at the same time. On the other hand, bonds have experienced quite the opposite, with performance being front-loaded and yields tending to re-drift higher as the economy stabilizes. For the US dollar, there doesn’t appear to be a clear pattern, as FX movements are more susceptible to the confounding influence of both capital and current account flows, though it’s probably fair to say that the Trump administration is more explicit about wanting a weaker dollar this time around.

Not a lot to look forward to this week, with macro assets successfully bucking the negative Sep/Oct seasonals thus far, and US household allocation to equity closing in on an incredible 50% as the financialization of the US economy continues. Volatility remains low and hedges remain cheap, with no obvious catalysts suggesting otherwise in the meantime.

Crypto prices had a flattish week, with nearly all major tokens in the red last week, with the notable exception of Binance’s BNB, which hit a new record high with a handful of successful token launches (eg. $ASTER). On the other hand, the Dogecoin ETF (DOJE) was successfully launched last Thursday, opening the door to a likely flood of memecoin-themed ETFs to be listed in the months’ head.

BTC/ETH ETFs saw modest inflows, but it was otherwise another uneventful week with both outright volatility and momentum trading extremely heavy. DAT premium rebounded slightly but lingers at near the lowest levels in a year. We expect markets to stay range bound in the foreseeable future, but would expect crypto to lag any further rallies in gold and equities in the meantime. Good luck & good trading.

Key metrics: (1Sep 4pm HK -> 8Sep 4pm HK)
BTC/USD +1.6% ($109,600 -> $111,300), ETH/USD -4.0% ($4,470 -> $4,290)

The BTC Spot market has been a little less clear in the past couple of months, having given us a high just below our long term target range ($125–135k) in August, but not in the most satisfying form and this has left us carefully evaluating the subsequent price action. This technical set up we’ve witnessed, with a re-test of the key $125k level and the subsequent rejection (double-top), suggests that we might be going into a flat corrective pattern, which could culminate with one final re-test and rejection of the highs before we experience a more material corrective move lowerShort term resistance lies at $112k and then above that at $117k and finally $125–126k. On the downside there is support at and through $109k and then again at $100–101k. We think that such price action is likely to accompany higher realised volatility over the coming couple of months
Market Themes
First full week back after summer and the market struggled to grapple with the conflicting forces at play in the market. On the one hand, the macro backdrop remains supportive of risk assets, with the US data this week confirming the slowdown that justifies the pricing of a 25bp rate cut at the upcoming FOMC meeting on 17Sep — this encouraged ETF inflows to continue in earnest. On the other hand, there is clearly a strong selling bias from the crypto native community, with a lack of fresh retail buying also noted (exchange deposits reportedly down significantly from the peak). This is keeping the market broadly trapped in a $109–114k range for now, though with the timing of these offsetting flows not synchronised the market remains volatile within. A break of this range will likely trigger some volatility as one side gains the upper hand — if the selling flows pause or are chewed through by strong buying we could see an extension given the market clearly isn’t positioned for a move higher locally (also reflected in BTC skew). On the other hand, should the external backdrop turn and the ETF inflows subside (or worse, turn to outflows), then the selling flows can likely mount quickly and put pressure on spot for a quick plunge towards $100k
BTC$ ATM implied vols

Realised volatility has shown signs of sustaining around the 35–38vol level in the past couple of weeks, particularly on a high frequency basis as the market struggles to find an equilibrium given the murky technical picture and the risk-positive macro backdrop/ETF inflows offsetting what seems to be continued selling from OG crypto nativesDespite this, appetite for optionality remains fairly muted, with the only real buying interest in the past week being in short dated downside hedges over NFP, which were subsequently unwound after the event. The market remains reluctant to price in a significantly higher vol regime further down the line given the absence of vol buying flows, with the implied vol for end-Sep and October contracts already reaching the level of recent realised (35–36vols)
BTC$ Skew/Convexity

Skew prices remain priced fairly deeply for puts in the current regime, with the lacklustre price action despite the risk-friendly NFP print and quick reversal from $113k to $110k keeping the market nervous about a larger correction to the downside. Structural participation for topside remains muted with the market looking for tactical call-spreads over data only, while the market also seems fairly uninterested in owning vol further out the curve for <$100k strikes, resulting in skew prices for longer-dates remaining closer to parConvexity prices moved lower this week in general, as the market continues to price out variance for a big tail move either side of spot in the current regime. While vol-of-vol has broadly been muted in the past few weeks, the regime can shift very quickly as we have seen historically in BTC and associated liquidity likewise can evaporate in both spot and options on any large move, and therefore flies should offer some value in the current market state
Good luck for the week ahead!

We ended a choppy but ultimately range-bound week with the latest inflation measures parting ways, with the July PPI showing an unwelcome spike to the upside (+0.9% MoM vs +0.2 expected, led by a jump in professional services) following the benign CPI from the week prior.

To make matters worse, the UMich inflation sentiment came in similarly high, with both the 1yr and 5–10y price expectations coming in significantly above estimates (1y: 4.4% vs 4.9% and 5y-10y: 3.4% vs 3.9%, respectively). Despite the disappointing inflation prints, Treasury Secretary Bessent continued his dovish cheerleading by stating that the neutral rate should be 150bp lower based on their economic ‘models’, no doubt motivated asomewhat by President Trump’s ongoing policy agenda to keep interest rates easy.

Despite the bravado, markets naturally drew their own conclusions, as the hotter inflation price suggested that tariff-driven might be passing through to the consumer faster than expected, which led to a rebound in the USD / treasury yields and lower gold prices. Any hopes of a 50bp cut at the September meeting were quickly dashed, with ~90% of a single cut being priced as of Friday’s close, though markets are still expecting just over 2 cuts before year-end.

Crypto prices treaded water over the past week as macro factors added near-term headwinds. Secretary Bessent disappointed markets by announcing that the US government BTC holdings were closer to $15–20B, instead of $23B+ as earlier hoped. More importantly, he further disappointed observers by stating that the government is not going to purchase any more BTC for its Strategic Bitcoin Reserve, nor does he expect the government to revalue (valued at $42.22 per ounce) or sell its gold holdings to swap into Bitcoin.

On the other hand, ETF inflows remained very strong with Bloomberg reporting that BTC & ETH ETFs saw the largest weekly inflow since inception, putting the pair in the ranks of a Top 5 ETF across the equity space. Much of the move was led by a spike in ETF inflows, bringing in weekly volume of $17bln and shattering previous records.

Looking ahead, focus will be on Jackson Hole later this week, where Powell’s speech will be heavily scrutinized by the macro observers for setting the policy tone for the rest of the year. However, we are not looking for a lot of new dovish surprises given the inflation backdrop, and it would take a very negative September NFP to move the needle for a 50bp cut to be priced in.
On the sentiment side, we do caution that things do feel a bit overly frothy at the current levels, with US consumer sentiment diverging against their own income outlook to an unprecedented level, while fund manager cash levels have retreated to cycle lows as we head into the historically volatile Sep-Oct periods.

Good luck & good trading!