On Monday, the market continued to digest last week's speech from Powell. The probability of a 25 bps interest rate hike by the Fed in November was raised to 51%, leading to a 0.5-1% increase in the US stock market. Similarly, the situation in the cryptocurrency market was unremarkable. The price of BTC continued to fluctuate slightly around the technical level of 26,000, with no significant change in IV. ETH's price remained weakly correlated around 1,650, while the IV experienced a slight decline. The overall shape of the IV curve steepened, decreasing by 1.7% to 32.91% at the end of October, erasing the premium observed in the forward IV.
In terms of trading, the market continued yesterday's focus on bearish options trading. The hotspots in BTC/ETH block trading still revolve around buying Put Spreads for various September expirations. Additionally, a strategy was observed in BTC where investors sold an equal amount (1200 BTC Notional per leg) of the 32,000 Call to save nearly 80% of the cost for purchasing the 29th September 2023 22,000/23,000 Put Spread. This further reflects investors' pessimistic expectations for a strong rebound in BTC over the next month.
Furthermore, in the current subdued bullish sentiment, there has been a Short Risky strategy targeting the mid-term Skew on ETH. The 25-day Risk Reversal (25dRR) for ETH has been suppressed to historical lows over the past three months, falling below the 25th percentile.
