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BTC continues to soar to record highs! Despite making new highs, vols have not reacted much as a result of large profit taking on long Calls. This means that the market was well positioned for this rally.

With BTC’s break of key resistance and it’s multi-month range, the market is certainly in a state of euphoria. Perp funding is very elevated and basis yields are at 7-month highs. While we remain structurally bullish, we are cautious of any pullbacks especially from leveraged washouts. Historically, such spikes in basis yields have not lasted very long either.

In the near term, we expect spot to chop around these levels and vols to soften even as we anticipate this week’s macro events. Key events this week are: US CPI (Wed), US PPI (Thu) and Powell speech (Fri) where we’ll get more clarity on the expected 25bps rate cut in December.

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