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It feels like we’ve been hit by a perfect storm. The panic selling and liquidations over Asia morning have seen BTC and ETH trade to 49k and 2116 lows respectively.

The immediate trigger in crypto seems to have been aggressive ETH selling from Jump Trading and Paradigm VC. This move was likely exacerbated by market makers scrambling to cut short gamma as front-end ETH vols spiked more than 30% to 120%.

Macro sentiment has also worsened following poor US unemployment data last Friday. Additionally, huge unwinds across all assets has caused volatility to spike sharply. The VIX touched 50 (a level only surpassed during the Covid panic and the 2008 financial crisis), and USDJPY 1M at-the-money vols spiked to 16%. This is likely to cause further unwinds.

A global risk-off mood has also set in with Israel killing the Hamas leader over the weekend. Iran has vowed to take action, and the US has actually started deploying troops into the Middle East.

Trade Idea

Surprisingly, forward basis and funding rates have been holding up well despite the mayhem in markets. Zero-downside strategies take advantage of the yields to express trading views.

For example, if you anticipate a sharp bounce post-selloff, a bullish BTC Sharkfin offers a potential return of over 70% with no downside:

BTC SHARKFIN

  • Max Payout: 71.8% p.a.
  • Maturity: 27DEC24
  • Strike: 60,000 BTC/USD
  • Barrier: 77,000 BTC/USD

(Spot Ref: 51,400)

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Disclosure: The authors of this content and members of Nansen may be participating or invested in some of the protocols or tokens mentioned herein. The foregoing statement acts as a disclosure of potential conflicts of interest and is not a recommendation to purchase or invest in any token or participate in any protocol. Nansen does not recommend any particular course of action in relation to any token or protocol. The content herein is meant purely for educational and informational purposes only and should not be relied upon as financial, investment, legal, tax or any other professional or other advice. None of the content and information herein is presented to induce or to attempt to induce any reader or other person to buy, sell or hold any token or participate in any protocol or enter into, or offer to enter into, any agreement for or with a view to buying or selling any token or participating in any protocol. Statements made herein (including statements of opinion, if any) are wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader or any other person. Readers are strongly urged to exercise caution and have regard to their own personal needs and circumstances before making any decision to buy or sell any token or participate in any protocol. Observations and views expressed herein may be changed by Nansen at any time without notice. Nansen accepts no liability whatsoever for any losses or liabilities arising from the use of or reliance on any of this content.