TI Weekly Option Market:Resilience in Pressure

TI Research

In the first week of October, the crypto currency market performed relatively steadily. Bitcoin and Ethereum showed a certain degree of resilience under the pressure market at the end of September. As the market adapts to the regulatory environment, Bitcoin has once again returned to the $50,000 range. At the same time, GameFi seems to have once again attracted the attention of investors. After entering October, the number of users of Axie infinity has reappeared on an upward trend. Some investors have begun to discuss that GameFi may take over NFT to open the October market.

Summarizing the data of the last cycle right market, we find that:

  • Transaction focus on options with the delivery date at the end of the year (Dec-31) and next year (Mar-22); 
  • Bitcoin call option premium is gradually being repaired; 
  • 42% of fund managers believe that Ethereum is the most competitive crypto currency with great development potential;

Bitcoin

The current market is not strong. According to Gvol's data, the transaction focus on options with the delivery date at the end of the year (Dec-31) and next year (Mar-22). Combining with the market continued to maintain low volatility, it is reasonable for investors to have limited participation in near-month contracts. In contract terms, some investors have allocated call options with a strike price of $54,000 in recent months.

From the perspective of option market data, the implied volatility remains at a low level. The current low-volatility market is expected to be very stable. For Long-Volatility-Strategy, it's difficult to have a great performance in the current market. At the same time, the skew continues to rise close to zero. The call option premium is gradually being repaired. In the face of regulatory pressure, the spot price of Bitcoin has not fallen sharply, and the cryptocurrency market has shown its resilience.

Ethereum

In the past week, the spot price of Ethereum has slowly risen from $2,800 to $3,400. After the NFT fever subsided, Opensea's trading volume stabilized, and the burned Ethereum returned to a normal level. Due to slow market conditions, the volume of Ethereum options has dropped rapidly. From the perspective of the premium, the contraction of options transactions is even more obvious.

Observing the implied volatility surface in recent months, the implied volatility surface of Ethereum remains flat. Investors are not particularly appetite in buying out-of-the-money call options. At the same time, a certain degree of warping appears on the left side of the image. That shows that investors prefer to buy an out-of-the-money put option.

Axie Infinity has performed well recently, with a significant increase in its number of users and transaction volume. According to tokeninsight's research, due to sensitive news, the price of Axie Infinity's token (AXS) has soared all the way. Its spot price rises to $130, meantime AXS has doubled in October. Considering that the current price increase is more driven by information not intrinsic value, investors should be more cautious when they want to participate.

Coinshares released a survey of fund managers in the field of cryptocurrency this week. The main contents of the survey results are the first. 42% of investors believe that Ethereum is the most competitive cryptocurrency with great development potential; the second. The purpose of fundholding cryptocurrency is mainly speculation, followed by diversified investment; the last: 58% of investors believe that current policies and regulations are the biggest risks in holding cryptocurrency.

Week Conclusion

Alongside this uncertainty, the current market performance is completely different from 2017. The spot prices of Bitcoin and Ethereum have shown their full resilience. Judging from the US dollar net inflow data, in the past six weeks, cryptocurrency funds have continuously shown net inflows. Now, the cryptocurrency is moving more stable, it‘s good news for anyone in this market.

Options

TI Research

TokenInsight is a data and research organization for the digital asset market. TI provides comprehensive asset-related data and comprehensive and timely information and research services for digital assets.

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