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QCP Weekend Brief
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BTC price is almost exactly where we started a week ago, hovering above 60k. Truly an unbelievable and swift recovery, after getting hammered to 49k lows on Monday which was the worst single-day drawdown we’ve seen in years.

Heading into a surprisingly tranquil weekend, we have two observations/thoughts to share:

  1. There has been a fundamental shift in the liquidity profile of ETH relative to BTC.

    While BTC is becoming increasingly integrated into the mainstream macro capital markets, ETH is becoming increasingly sidelined. This development likely stems from the distinct lack of interest in the ETH spot ETFs relative to the BTC spot ETF.

    BTC as digital gold is a compelling narrative to investors while ETH is lacking one. This liquidity shift was made painfully obvious on Monday when ETH plummeted 22% compared to BTC’s 16%.

    However, this is not necessarily negative for ETH price. As a more speculative and more volatile asset, the propensity for exponential price gains comes along with the potential for larger drawdowns. 

    Before the ETH spot ETF, the difference in implied volatility between BTC and ETH was closer to 5%. Right now, it has expanded towards 20% and could be even higher. Perhaps the strategy here is to sell BTC volatility and buy ETH volatility.

  2. Bullishness in BTC is significant and structural.

    Throughout the week (and in spite of the crazy volatility), there was consistent demand for BTC calls expiring in 2025 with strikes closer to 100k. This is evidence of the digital gold narrative capturing the imagination of institutional investors.

Trade Idea

After the leverage wash-out this week we are back on track towards a bullish year-end.

BTC Zero-Cost ERKO Seagull 

  • Sell 50k Put to buy 75k Call with 120k Knock-out
  • Max Return: 236.3% p.a. or $45,000 per BTC if spot price is just below 120k level at expiry. 
  • Expiry: 27Dec24

Spot Ref: 60,600 BTCUSD

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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.