Over the last week, our clients looked to Genesis to help them execute billions of dollars in crypto transactions, and we responded. Find out more. link.genesistrading.com/3wpX…
1/ what's next for crypto mkts: contagion risk edition
today’s relief rally across risk assets saw equities regain the 4k level in S&P 500
VIX is showing a risk barometer reading of 29, down as much as 6 points from last wk, when SPX was 3% higher!
2/ we're seeing a somewhat orderly equity de-risking last 2 weeks and plenty of cash on sidelines waiting for liquidation to abate
crypto of course saw a lot more chaos with structural issues in the market and fear of contagion
4/ in crypto-native institutional world, we think the damage is concentrated in venture books with low cost bases
venture books have given up a lot of unrealized gains but this alone is unlikely to cause contagion
6/ one indicator that contagion fears are dissipating is how dramatically the vol curve reverted, with the front collapsing 20-30v on the day and the back dropping 5-10v
7/ the USDT peg has come back strong, now trading within 20bps of parity, after blowing out as wide as 13% on the Binance cross
mkt was very concerned about de-peg risk coming out of UST collapse and the flow of funds went UST > USDT > USDC which pressured the USDT peg
8/ fears have abated with reports of billions USD in redemptions being processed normally via the Tether window
if macro risk assets stabilize here, and the crypto mkt regains confidence in the USDT peg, we could see crypto rip higher into thin offers
9/ on the flip side, downside risk from DeFi liquidation levels remain
If the de-risking continues over the weekend and ETH flirts with liquidation levels around $1500, things could get March2020-esque quickly (h/t Nico)
Instead of selling Bitcoin to raise money, firms like Marathon Digital are selling Bitcoin call options to wring money out of their holdings trib.al/NjnGb4n
“Bitcoin miners are some of the most voracious yield seekers in the market today,” said @joshua_j_lim, Head of Derivatives at New York-based brokerage Genesis Global Trading.
Our Q1 Market Observations Report is out! Against a backdrop of a crypto market weighed down by macroeconomic concerns, Genesis achieved notable growth. For a breakdown of our lending, derivatives, spot and custody activities across Q1 2022, click here: link.genesistrading.com/38y3…