Weekly crypto options and market review.

The Fed meeting provided a positive boost to the markets last week. At the time being, bidders are optimistic about the market outlook — the interest rate has been raised just as much as the market was waiting for. The predictability of the Fed’s policy provides a good starting point in the face of global volatility. However, such positivity is usually short-lived. For example, major cryptocurrencies corrected in price over the weekend after a synchronous rise. At the moment, Bitcoin is even down 1.32% below its early February level (Ethereum is still holding higher at 2.32%) and that may not be the limit.

Volatility has also declined following the spot price drop. The general trend for Bitcoin and Ethereum is similar — 7 and 30-day volatility declined after a spike ahead of the Fed meeting, as performed in the longer term. Differences are that Ethereum volatility has consolidated above initial levels — at around the same 65pt level for 7 days (+7 w/w), 30 days (+8w/w), and 60 days (+5 w/w). Such differences are due to Ethereum’s standalone news narrative — an important update to the network in mid-March that will allow participation in blockchain validation without a long-term liquidity freeze.

For Ethereum, the main near-term trader interest focused on the February 10 ($352m, +273% w/w), February 27 ($545m, +13% w/w), and March 31 ($2.48b$, 5.83% w/w) excipients. The most dynamic increase in open interest occurred in weekly and intra-weekly options (almost tripled). The volume of put and call options is approximately equal, which differs from the general trend of call options dominance ( the market average call/Put options ratio is 3.26).

The major expirations in the Bitcoin options market consolidated on March 31 (open interest $1.96B$ +3.74w/w) and February 24 ($1.24B$ +9.12% w/w). The difference from Ethereum options trading is also the increased volume attributable to put options with expiry on March 31 and April 28 — they traded at a significantly higher volume than call options. The largest weekly increase in the open-interest volume also occurred in April, indicating a mid-term overestimation of Bitcoin’s uptrend strength. The market average Call/Put options ratio is also lower than Ethereum at 2.42.

Based on the available data, we can conclude that the optimism of the uptrend in the crypto market has declined significantly. The spot price rally in January has run out of steam and requires new liquidity and more buying to continue. Bitcoin continues to be very susceptible to global liquidity flows and macro news, while Ethereum is starting to develop its medium-term momentum. The difference in volatility and market map between the leading cryptocurrencies could be an interesting opportunity for cross-arbitrage.

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