On the evening of September 24th, at 8 pm, Daniel, the head of asset management at Matrixport, analyzed the dynamics of the cryptocurrency market last week (September 16th to September 23rd) and particularly focused on the volatility structure and institutional behavior in the options market. He also interpreted the reasons behind the rebound in BTC and ETH prices and shared how to achieve lower-cost financing and risk hedging in a bullish market through lending strategies in the options market.
The live content is as follows:
As of September 24th, the global cryptocurrency market has remained strong amidst uncertainty, with the price of Bitcoin stabilizing above $62,000. Despite various pressures from the macroeconomy, investor sentiment is gradually turning optimistic.
Analysis of Market Volatility
Market Sentiment Changes and Rebound
Market Rebound from US Interest Rate Cuts: After the 50 basis point interest rate cut by the Federal Reserve, the cryptocurrency market reacted strongly. Previously, the market was influenced by selling pressure on BTC and negative sentiment on ETH, resulting in overall pessimism. Following the interest rate cut, market sentiment quickly reversed, leading to a rebound.
MicroStrategy's Increased Holdings: MicroStrategy's announcement of increased BTC holdings, combined with the Federal Reserve's interest rate cut, further boosted market sentiment, potentially driving BTC prices up to $60,000 to $63,600.
Outperformance of Mid-Cap Tokens over BTC: During the rebound, mid-cap tokens (altcoins) outperformed BTC, mainly benefiting from the overall rise in risk assets and increased market liquidity. Risk assets often perform better, especially mid-cap tokens showing good performance.
Shift from Pessimistic to Optimistic Market Sentiment: Various market indicators indicate a shift from previous pessimism to optimism, reflecting an improvement in risk sentiment. Multiple market indicators show that funds are starting to flow back into BTC, resulting in relatively small short-term market fluctuations, while the long-term trend for BTC remains optimistic.
Global Macroeconomic Conditions and Loose Liquidity
Stimulus Policies in China and Market Rebound: The People's Bank of China, the China Banking and Insurance Regulatory Commission, and the China Securities Regulatory Commission jointly announced multiple stimulus measures, including reserve requirement ratio cuts and adjustments to mortgage rates. This drove the rise in the Chinese stock market on that day and led to a slight rebound in the cryptocurrency market.
Loose Global Liquidity Cycle: Loose liquidity in major economies such as the United States and China has a positive impact on risk assets (such as cryptocurrencies). Gold has continued to rise due to geopolitical factors, and as BTC is considered "digital gold," it exhibits a certain correlation with gold performance, indicating that BTC is expected to perform well in the future.
BTC Chip Exchange and Technical Adjustments: Below $60,000, both long and short positions in BTC have undergone sufficient chip exchanges, increasing liquidity to support the market. As time passes, the market's pullback amplitude is relatively small, increasing the likelihood of further upward movement.
Changes in ETF Flows and Fund Inflows: BTC ETF inflows have slowed down, indicating some fluctuation in fund flows, but overall market sentiment remains positive. Short-term selling pressure has been relieved, and funds are flowing back into BTC, indicating a continued optimistic long-term trend.
Current Background of Options Market and Institutional Behavior
In the current context of loose liquidity, global economic stimulus, and increased macroeconomic uncertainty, the options market provides rich investment opportunities for institutional investors and individuals. While short-term volatility is low, the expected long-term volatility increase makes the options market an important tool for hedging and optimizing returns. This is because institutional investors prefer to express bullish views or hedge risks through the options market, and the approval of the US BTC ETF options has attracted more investors to participate in volatility trading, further driving the development of the options market.
According to the options market, the expiration date on September 27th may bring significant volatility, and the bullish market may use derivatives to drive up prices. By November, as the US presidential election approaches, concerns about geopolitical and economic uncertainty have led to a significant increase in volatility expectations. This provides trading opportunities in the options market for hedging funds. Institutional investors may enter the market early and hedge through options.
Focus on Investment Directions
Different Valuation Systems of BTC and ETH Provide Differentiated Investment Opportunities
The differences in valuation systems of BTC and ETH provide different investment strategies and opportunities in the options market. BTC is seen as "digital gold," and its valuation depends more on macroeconomic and global liquidity conditions. Therefore, BTC-related strategies in the options market are more based on macroeconomic factors, allowing investors to use options for long-term risk hedging. ETH is closer to "digital oil," and its valuation depends on on-chain activity and supply-demand relationships. Therefore, in the context of declining on-chain activity for ETH, investors can sell ETH options or construct bearish options to hedge the downside risk based on its fundamentals. The different valuation systems make BTC and ETH options strategies distinct. The long-term trend for BTC remains optimistic, suitable for bullish options strategies, while ETH exhibits greater short-term volatility, suitable for short to medium-term volatility trading.
Options Market Provides Important Tools for Hedging Funds
The options market provides important hedging tools for funds to mitigate risks associated with major events such as the US presidential election. As the US election approaches, volatility expectations in the options market increase, especially in November, with volatility significantly higher than the average level. This provides investors with the opportunity to manage risks in advance through options. Investors can lock in future upside potential by buying call options or hedge potential market volatility by buying put options. The use of these non-linear tools significantly enhances fund flexibility.
Application of Collar Options Strategy in Bullish Markets
The collar options strategy provided by Matrixport offers stable financing and risk hedging opportunities for investors in the current bullish market. For example, after pledging BTC or ETH, investors can sell call options and buy put options to form a "collar." This allows for hedging downside risk while offsetting some financing costs through the proceeds from selling call options.
This strategy is particularly suitable for miners and long-term BTC holders, helping them obtain financing without selling BTC. Unlike traditional collateralized lending, the collar strategy does not require additional margin and can achieve a higher loan-to-value ratio (LTV), up to 80%, with financing rates as low as 0%, effectively reducing financing costs and increasing fund flexibility.
The collar options strategy, through selling call options and buying put options, not only ensures downside risk hedging but also locks in profits when the upside space is limited. Matrixport has been committed to providing innovative financial products and solutions, such as the collar options strategy, which offers more flexible and secure choices for financing needs in the cryptocurrency market.
For more exciting content, you can view the YouTube replay: https://youtube.com/live/jphaj5e7SEM?feature=share
About Matrixport Weekly Market Insights
【Matrixport Weekly Market Insights】is a new interactive knowledge sharing program launched by Matrixport, broadcasted weekly on the Matrixport official YouTube channel. This program regularly invites industry experts, top analysts, and KOLs to discuss investment logic under different market conditions, share investment experiences, and help users achieve asset appreciation.
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Disclaimer: The above content does not constitute investment advice, sales offers, or purchase invitations for residents of the Hong Kong Special Administrative Region, the United States, Singapore, and other countries or regions where such offers or invitations may be prohibited by law. Digital asset trading may involve significant risks and instability. Investment decisions should be made after careful consideration of individual circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions based on the information provided in this content.
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