Steadfastness and Breakthrough in a Volatility Markert: Bitcoin Trends and Innovative Financing Strategies | Weekly Market Insights Recap

Matrixport
6 min readSep 26, 2024

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During the official YouTube livestream at 8 PM on Sept 24th, Daniel Yu, Head of Asset Management at Matrixport, analyzed the dynamics of the crypto market over the past week (September 16th-September 23rd). He focused on the volatility structure in the options market and institutional behavior analysis, explaining the reasons behind the rebound in BTC and ETH prices. He also shared how to achieve lower-cost financing and risk hedging in a bull market through collar loan strategies in the options market.

Key takeaways from the livestream:

As of September 24th, the global crypto market has remained resilient amid uncertainty, with Bitcoin prices stabilizing above $62,000. Despite ongoing macroeconomic pressures, investor sentiment is gradually turning optimistic.

Analysis of Market Volatility Causes

Changes in Market Sentiment and Price Rebound

  • Market Rebound Due to U.S. Interest Rate Cut: The crypto market reacted strongly to the Federal Reserve’s 50 bp rate cut. Previously, the market was weighed down by BTC selling pressure and negative sentiment towards ETH, leading to overall pessimism. After the rate cut, market sentiment quickly reversed, forming a rebound.
  • MicroStrategy’s BTC Purchase: MicroStrategy’s announcement of increasing its BTC holdings, coupled with the Fed’s rate cut, further boosted market sentiment, potentially pushing BTC prices to $60,000-$63,600.
  • Mid-to-Small-Cap Tokens Outperform BTC: During the rebound, mid-to-small-cap tokens (altcoins) outperformed BTC, mainly due to the general rise in risk assets and increased market liquidity. Risk assets tend to perform better, especially mid-cap tokens.
  • Shift from Pessimistic to Optimistic: Overall market sentiment indicators have gradually shifted from pessimistic to optimistic, reflecting improved risk sentiment. Multiple market indicators show that funds are starting to flow back into BTC, with short-term market volatility remaining low and BTC’s long-term trend remaining optimistic.

Macroeconomics Impact and Global Liquidity Easing Cycle

  • China’s Policy Stimulus and Market Rebound: The People’s Bank of China, the China Banking Regulatory Commission, and the China Securities Regulatory Commission jointly issued several policy stimulus measures, including reserve requirement ratio cuts and adjustments to mortgage rates. This boosted the Chinese stock market on the day and led to a slight rebound in the crypto market.
  • Global Liquidity Easing Cycle: The liquidity easing in major economies such as the U.S. and China positively impacts risk assets (like cryptocurrencies). Gold continues to rise due to geopolitical factors, and BTC, as “digital gold,” shows some correlation with gold’s performance, expected to perform well in the future.
  • BTC Chip Exchange and Technical Adjustments: Below $60,000, BTC saw sufficient chip exchange between bulls and bears, with increased liquidity providing market support. Over time, the market’s pullback has been minimal, increasing the likelihood of further upward movement.
  • ETF Flow Changes and Fund Inflows: BTC ETF inflows have slowed, indicating some volatility in fund flows, but overall market sentiment remains positive. Short-term selling pressure has been completed, with funds flowing back into BTC, indicating a positive long-term trend.

Options Market and Institutional Behavior in the Current Environment

The current options market, amid liquidity easing, global economic stimulus, and increased macroeconomic uncertainty, offers ample investment opportunities for institutional and individual investors. Short-term volatility is low, but long-term volatility expectations are rising, making the options market an important tool for hedging and optimizing returns. This is because institutional investors prefer expressing bullish or hedging views through the options market, and the approval of U.S. BTC ETF options has brought more investors into volatility trading, further driving the development of the options market.

According to the options market, the options expiration date on September 27th may bring significant volatility, with bulls potentially using derivatives to push prices higher. By November, as the U.S. election approaches, concerns about geopolitical and economic uncertainty are expected to increase volatility expectations, providing trading opportunities in the options market for hedging funds. Institutional investors may enter the market early to hedge through options.

Investment Directions to Consider

Different Valuation Systems for BTC and ETH Provide Differentiated Investment Opportunities

The differences in valuation systems for BTC and ETH offer different investment strategies and opportunities in the options market. BTC is seen as “digital gold,” with its valuation more dependent on macroeconomic and global liquidity environments. Therefore, BTC-related strategies in the options market are more based on macroeconomic fluctuations, allowing investors to hedge long-term risks through options. ETH, on the other hand, is akin to “digital oil,” with its valuation dependent on on-chain activity and supply-demand relationships. In the context of declining on-chain activity for ETH, investors can hedge the risk of fundamental decline by selling ETH options or constructing bearish options. The different valuation systems make BTC and ETH options strategies focus on different aspects. BTC’s long-term trend remains optimistic, suitable for bullish options strategies, while ETH’s short-term volatility is higher, suitable for medium-to-short-term volatility trading.

Options Market as an Important Tool for Hedging Funds

The options market provides an important hedging tool for funds to avoid risks from major events such as U.S. elections. As the U.S. election approaches, volatility in the options market is expected to rise, especially in November, where volatility is significantly higher than average. This provides investors with opportunities to manage risks in advance through options. Investors can lock in future upside potential by buying call options or hedge potential market volatility by buying put options, significantly enhancing fund flexibility through the use of these non-linear tools.

Application of Collar Options Strategy in a Bull Market

Matrixport’s collar options strategy provides investors with stable financing and risk hedging opportunities in the current bull market. For example, investors can stake BTC or ETH, sell call options, and buy put options to form a “collar.” This can protect against downside risk while offsetting part of the financing cost through the income from selling call options.

This strategy is particularly suitable for miners and long-term BTC holders, helping them obtain financing without selling BTC. Unlike traditional collateralized loans, the collar strategy does not require additional margin and can achieve a higher loan-to-value ratio (LTV) of up to 80%, with financing rates as low as 0%, effectively reducing financing costs and increasing fund flexibility.

The collar options strategy through selling call options and buying put options to ensure downside risk hedging while locking in returns when the upside is limited. Matrixport is committed to developing creative and cost-effective financial products and solutions, and the launch of innovative products such as the collar options strategy provides more flexible and safer choices for financing needs in the crypto market.

Check out the recording of our YouTube livestream for more details: https://www.youtube.com/watch?v=jphaj5e7SEM

About Matrixport Weekly Market Insight

[Matrixport Weekly Market Insight] is an interactive knowledge-sharing column newly launched by Matrixport, and will be livestreamed each week on the Matrixport official YouTube Channel. We will invite industry-leading product managers, top analysts, and KOLs to discuss investment strategies under different market situations and share their investment experiences.

Subscribe to the Matrixport YouTube Channel for the latest market developments.

Disclaimer: The above content is for informational purposes and reference only. The content does not constitute investment advice. Digital asset transactions can be precarious and volatile. Investment decisions should be made after carefully considering individual circumstances and consulting financial professionals. Matrixport is not responsible for any investment decisions based on the information provided in this content.

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Matrixport

Asia's largest digital assets ecosystem, providing one-stop crypto financial services to meet the emerging needs in crypto asset management, trading and custody