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Risk sentiment made a 180 degree turn on Friday as macro assets sold off across the board, led by significant weakness in tech stocks with a bear steepening in the yield curve. Concerns over Oracle and Broadcom earnings dragged overall risk complex lower, while year-end profit-taking and sector rotation dragged Nasdaq lower by -2% intraday at one point.

Furthermore, the Supreme Court is set to rule on President Trump’s tariff authority as early as this week, and a negative ruling would mean that the US government could owe ~$200b in refunds to importers over the next year. That would need to be funded out of further bond issuance, along with significant impact on the future government budget as tariffs were earmarked as a major revenue source. As a result, 10y yields tested and are looking to breach the multi-month ceiling at ~4.20%, with the 2/10s yield curve also steepening by ~15bp over the past 2 weeks alone.

Furthermore, long-end yields are facing upward pressure from Hasset’s likely nomination as Fed chair, given his proclivity to easing polices, offsetting the dovish impact of the FOMC’s recent emphasis on downside employment risks. While the unemployment rate is likely to rise in this weeks’ NFP report, January cutting odds are at just ~25% at the moment, with the market still pricing in just over 2 cuts for all of 2026 at the moment.

Crypto continued its recent streak of weakness as prices tumbled both on Friday and Monday on extremely thin liquidity conditions. Rumors of a large market-maker selling of inventory didn’t help matters, as the fallout from 10/10 continuing to rear its ugly head. As liquidity and trading volumes have dwindled noticeably in recent weeks, particularly in the OTC market, and BTC/ETH will be increasingly used as the hedging proxy as they are the only major tokens with any sort of institutional-sized liquidity.

With global markets about to enter holiday mode, the 24/7 nature of crypto could be a detriment heading into year-end, with price movements likely to be exacerbated, particularly on further risk-offs and de-risking moves. ETF inflows made a tiny rebound last week following weeks of outflow, with December MTD numbers coming in at +0.2B vs -3.5B last month.

Technically speaking, price action still looks ominous, with a break of the current channel possibly putting ~70k prices back in play. Our bias remains negative, and would suggest extreme caution heading into CPI/NFP this week, especially amidst anemic holiday trading conditions.
Good trading & good luck!

While risk sentiment steadied last week, G7 fixed income had a rough go as a number of Tier-1, non-US economic indicators surprised to the upside. Australia CPI came in at 3.8% vs 3.6% expected, triggering a 15bp gap up in their 5yr yield and AUDUSD +2.5% higher on the month. Canada’s job report was up next with an extremely strong upside beat (unemployment at 6.5% vs 7.0% expected), which triggered the sharpest daily move in the Canadian 5yr bond since 2022 (+20bp), and the CAD soaring by 2%. Over in Japan, despite weak capex spending, the market is pricing in a 90% chance of a BOJ hike this month, making the dovish Fed the odd one out of the G7.

The market widely expects a 25bp in the FOMC this week, with an addition 2 more priced in for all of 2026. Despite stubborn inflation, the Fed has hinted that they will lean on the softness in the unemployment rate (~4.5%) to justify the final cut of the year. Furthermore, with 2 more jobs reports between the Dec and Jan FOMC, we expect Chairman Powell to keep his options open for another rate cut in January or March, with the 2026 ‘dot plot’ similar to before.

Unsurprisingly, the Fed dovishness is starting to meet some market resistance, with market participants starting to price in the chance of a ‘hawkish cut’ through Powell’s Q&A guidance or a change in SEP forecasts. In order to make that happen, the Fed would need to be rather explicit in his forward guidance, such as by shifting the 2026 rate cuts expectations to 1 or less, which we think has a low probability of happening.
On the other hand, with President Trump strongly hinting at Kevin Hasset being the next chair, that’s likely going to be the market’s modal outcome, which implies a more ‘easier’ Fed Chair taking the helm starting next June. As such, the medium views of 1) weaker USD, 2) higher inflation, 3) Treasury curve steepeners and 4) higher asset prices are likely to stay without a meaningful change in realized macro conditions.

All that hasn’t meant a lot of crypto, which saw BTC prices rebound to the 86–92k price range after a quiet week of trading. Unfortunately, underlying sentiment appears to have turned for the worst as Blackrock’s IBIT has suffered its longest streak of weekly outflows since inception, with nearly $2.9bln of cumulative outflows over the past 6 consecutive weeks.

The structural mood change can be seen from BTC’s recent correlation (or lack off), as it has dramatically underperformed the rest of the high-beta, risk-on complex over the past 8 weeks. The asset decoupling is happening at a time when the investor mindshare has fully pivoted to AI and related stocks, with global retail traders flocking back to day trading stocks (and prediction) markets, while gold and silver are still within a stone’s throw from ATHs.

From a production perspective, BTC continues to cover below most measure of product costs. Hash rate has fallen precipiously given China’s recent regulatory turn against crypto activities, as well as miners having shifted its compute resources towards AI and downsizing on their pure mining activities. A protracted stay underneath the product cost shall put additional pressures on miners which could lead to a further retreat in the hash rate and mining difficulty, leading to a more negatively reflexive loop of lower BTC prices in the medium term.

To make matters trickier, the collapse in global DATs has brought a lot of negative attention to supply overhang and possible forced selling should these listed equity prices trade significantly beneath their BTC treasury values. MSTR has been under the most pressure, with the company’s combined debt + equity values now barely trading at a premium to its BTC holdings. When pressed against the uncomfortable question of what happens if the ratio was to dip below 1, Saylor worrisomely said:
“When our equity is trading above the net asset value of the bitcoin, we just sell the equity it creates shareholder value and when the equity is trading below the (net asset) value of the bitcoin, we would either sell bitcoin derivatives or we would just sell the bitcoin.” — Michael Saylor at Binance Blockchain Week, December 3rd
Let’s hope that MSTR’s $1.4bln reserve fund will be able to keep them from force liquidating its BTC reserves in the foreseeable future.

Looking ahead, pretty much the same playbook as before — equities are likely to hold up heading into year-end, with fixed income underlying a near-term adjustment as yields trend higher with global central banks turning more neutral/hawkish outside of the Fed. We fear that crypto remains in a near-term bear market until proven otherwise, and is reflected in the vol market where traders continue to pay-up for protection against lower prices. It would likely take a very dovish cut (or a surprise SPX index inclusion decision) to reverse the near-term trend, so we expect more of the same grind lower in interest and sentiment heading into the new year.
Good luck & good trading.

Key metrics: (17Nov 4pm HK -> 1Dec 4pm HK)
BTC/USD -9.6% ($95,600-> $86,400), ETH/USD -11.9% ($3,200 -> $2,820)After a plunge down towards key support at $80k two Fridays ago, last week was categorised as a corrective climb back from the lows as the market in thin Thanksgiving liquidity attempted to regain a solid footing ahead of an anticipated “Santa” rally. This week began with a reality check: the overhang of longs still out there, and the pivot level of $89k triggered some heavy selling over the Asian session. While we do expect the market to engineer a ‘Santa rally’ later in the month (especially in light of Fed expected to cut rates), we initially (continue) to expect that the most likely path forward is a re-testing of the lows from here, but that low will be a longer term buying opportunity. Participants that didn’t sell the bounce-back last week might be panicking a little, especially if we don’t see a quick recovery/climb back towards the resistance lvls ($88.5–90k) and that would catalyse the move lowerThere are a few alternative “counts” and possible price paths out there — more so than usual owing to the complications of the Oct flash crash — so there is a non-trivial probability that this is simply a correction of an overshoot higher on thin liqudiity and that the longer term move higher is already in play. A final alternative is this is still part of the corrective move before the last leg lower (this will be evident if we reclaim > $90k but fail at $100k) but odds are on more downside price action from here this week. We suggest scaling into longer term longs from here ($85.5–86.5k lvl) and again closer to $80–81k and for the daring, more $78–80k (big secular support comes in below that). Key pivots to the top side include > $89k and through $94.25k, with $100k the key pivot to open us back up to $125–130k region (our target for wave B, which comes after this move is done)
Market Themes
Volatile couple of weeks across markets as the FOMC pricing pendulum swung from 90% odd of a December cut down to 30% and back up to 90%. High-beta tech/AI names and crypto suffered the most, while VIX briefly re-visited the local highs of 25–26 that we have seen on a few occasions this year (excluding the March-April tariff highs >40), though once again this level capped pricing as the fundamental macro backdrop remains broadly risk supportive in the absence of any material change to the Fed’s rate path. The market’s capacity to sustain risk-off for an extended period of time remains limited as positioning lightened up into Thanksgiving and we saw a broad relief in risk assetsAfter leading the move down in the high-beta risk complex, crypto was not spared from an extension of the move lower, with BTC cracking key support at $85k and triggering a fast move down to test strong support at $80k two Fridays ago. From there we have seen a corrective bounce in thin liquidity and selling exhaustion set in and broad risk sentiment bounced, with the market attempting to call the bottom. Unfortunately it seems that sentiment/market structure has been fundamentally weakened following the events of 10th-11th October and so this cycle ‘might be different’ in the sense that buying appetite and fresh liquidity may not be plentiful enough to drive a material surge back through $100k. IBIT outflows have picked up but nothing near the extent of the months of continuous inflows we saw since the summer and the trend of flows there will be key to monitor going forward. Interestingly alt coins have held up relatively better which is very unusual for ‘bear markets’ in crypto, which is suggestive of much deeper de-leveraging (again related to the effects of 10th-11th October) and with alt coin positioning broadly much cleaner (outside of the DAT holdings, though Tom Lee shows no signs of slowing purchases of ETH… yet!)
BTC$ ATM implied vols

Implied vols exhibited a big range in the past 2 weeks as <2m contracts exploded higher as spot tested down to $80k before having a sharp sell-off last week as spot exhibited a low realised corrective grind higher, before picking up again with the fresh sell-off from $90.5–85.5k in Asia. Realised performance has actually remained healthy in the high 40s/low 50s, so the sell-off in implied vols can only be attributed to position reduction into year end, with dealers looking to recycle any selling flows from unwinds of directional plays.The term structure of implied vols has flattened up broadly as some supply of back-end vols has left >3m expiries a little heavy, while front-dated contracts remain supported due to elevated realised
BTC$ Skew/Convexity

Skew prices have broadly been tracking the directionality of spot, and the realised spot-vol correlational (both realised and implied vol) has been incredibly strong. From a supply-demand dynamic the market has started to see overlay supply of calls again even at these spot levels and this should continue to keep skew prices bid deeply for putsConvexity prices have been broadly sideways as spot finds a footing in the broad $80-94k range. Directional plays either side of this range have been in call-spread or put-spread format supplying more wings to the market, with limited expectation of a material break of this range anytime soon. Also with local gamma realising healthily this has also created more appetite for local strikes over wings
Good luck for the week ahead!

Well that was fast. After a strong risk-on rally to close the week, crypto prices cratered hard to start December, with BTC sliding below $87k on yet another stop-loss run being driven during the thin Asia morning session.

While it’s hard to blame a specific trigger, overall risk appetite remains feeble after the Oct-Nov washout, and worsened by a number of negative headlines that have surfaced over the past few sessions. With yet another DeFi hack on a OG protocol (Yearn staking), a DEX terminal abandoning its much anticipated launch over tough market conditions (Terminal Finance), OG Arthur Hayes openly ‘FUD’ing the recent Monad ICO (99% downside), a S&P ratings downgrade of USDT to ‘weak’ (poor disclosures), and the PBoC reiterating its cautious stance on crypto trading & stablecoins, it’s probably fair to say that we remain firmly in bear market territory until further notice.

Over in equities, the SPX rallied by 3.7% last week led by semis (+5.4%) and retail (+4.7%), with retail favourite stocks making a strong week on week come back despite an overall drop in retail trading volumes.

Furthermore, early indications of Black Friday sales suggest that we’ve hit another record, with online sales hitting a record of nearly $12bln (+9% YoY), and Cyber Monday projected to bring in another $14bln in revenues. US consumption appears to remain robust as of now.

Outside of holiday sales, we’ll have a decently busy economic calendar with ISM, ADP, Claims, PMIs, and UMich confidence on deck this week. Despite all the noise, PMIs have been grinding at a healthy expansion range of 50–55 since 2022, while Atlanta Fed’s GDPNow continues to call for an above Wall-Street growth rate as the economy remains in good shape.

The most important econ dates for the rest of the year will be over the next 2 weeks, with FOMC on the 10th, followed by the delayed NFP on the 16th and CPI on the 18th. Furthermore, it’s worth nothing that there’s basically no tier-1 economic data that will be released between here and the FOMC date, so the ~100% chance of a Fed cut is basically baked in, as the Fed is not prone to surprise market odds, and focus will be on the guiding language for the 2026 trajectory, rather than the rate decision itself.
Specifically, we’ll look for the Fed to comment on their increasing confidence in receding inflation pressures versus weakening labour markets and tightening market conditions to justify a ‘dovish cut’, and vice versa the other way. There will also be scrutiny on the minutes on ‘how many’ participants preferred to keep rates unchanged as a dissent, especially in light of the yet-to-be-released NFP and CPI reports, and how Powell responds to the inflation gap vs unemployment gap questions during the Q&A. We’ll cover more on the Fed meeting later as we get closer to the event.

Good luck & good trading!

Crypto showed tentative signs of stabilization following past week’s dramatic sell off. Prices have bounced off the low 80k to trade close to 88k in early Monday, as the market heads into the Thanksgiving holiday week with some cautious optimism as Fed President Williams revived expectations for a December rate cut. A strong equity rally (SPX +1.5%, Nasdaq +2.7%) ahead of the early month-end rebalancing flows also helped to bolster risk sentiment

Risk sentiment improved broadly, with open interest in BTC options turning slightly positive with a put-call ratio of ~0.67 for EoM expiry. Large put strikes are seen at around 80k as put skews remain aggressively bid with upside calls heavily for sale. Markets certainly feel better hedged against further downsides at this juncture, allowing markets to enjoy a reprieve bounce against the 82k support level.

With BTC and ETH underperforming gold and equities by anywhere between 30–60% YTD, ETF flows have turned negative with November registering the worst MTD outflows at ~5bln between BTC and ETH. Contrast that against equities, which saw over $96bln of ETF inflows MTD, and it’s interesting to see that retail investors are starting to differentiate between crypto & equity risks, with a selling of the former converting into buying of the latter.

To make matters worse, there has been increasing chatter that Bitcoin mining has turned unprofitable at the current level, with existing miners turning into more aggressive sellers and pivoting some of their capacity into AI (like everyone else). That has added to concerns that there are committed sellers coming from miners, OG whales, underwater market makers, protocol over-valuation, etc., making the current FUD sentiment as negative as it’s ever been.

With that being said, markets are currently so oversold from both sentiment and technical perspectives (eg. Bollinger bands), and prices are likely to have seen local lows for now absent any new exogenous factors (eg. DAT forced selling), and we expect prices to range between 82–92k from here. Next significant price support comes at around the 78k area, and a sustained break below would open up further significant downside, but is not the base case scenario for now.

Looking ahead, we’ll have a very busy week of data, but they are unlikely to change the near-term risk sentiment materially with the Fed having telegraphed their easing intentions already. US equities remain in an upward train, with positive seasonality working to its benefit into year-end.
Crypto markets have hopefully seen its local lows for now, but we’ll need a firm break of the 92k to repair some of the recent technical damages and signal a further rebound higher.
Good luck & good trading.

Key metrics: (10Nov 4pm HK -> 17Nov 4pm HK)
BTC/USD -10.0% ($106,200-> $95,600), ETH/USD -11.6% ($3,620 -> $3,200)

The rally on the US government reopening news was short lived and the market turned, retesting and breaking the $98–100k support zone. This resulted in a move down to test the support at $93–94k which so far has managed to absorb supply and hold. At this point the breakdown from $112.5–115k post the October flash crash looks to be mostly played out and while it is hard to call the exact lows, we consider dips below here to provide good buying opportunities. More broadly the ABC move from $123k → $107k → $126k → current/$93k looks almost completely played out, however we could see market re-testing the $93–94k, looking for a print down towards $90k, given the growing bearish sentimentPositioning seems lighter out there and CTAs are likely short here, so we think the risk-reward of further downside in spot is shifting here. Below $93k, expect strong support at $89–90.5k. Should that break, there’s isn’t much strong support until we reach $79k (some limited support $83–85k) since <$90k area was a very choppy “pivot” level back in March/April this year. On the top side resistance comes in around $98–101k initially and then again at $104–107k. We think that in general realised volatility will remain elevated whether spot is going up or down, though market will likely try to sell down implied vols initially on the relief in spot (especially if we get back above $107k)
Market Themes
Extension of risk-off sentiment particularly in US Tech/AI names this week, as the end of the government shutdown proved to be a ‘buy the rumour sell the fact’ event for markets, with the initial relief rally in risk last week fading very quickly. Concerns around AI valuations and spending/investment arose once more while Fedspeak was broadly on the more hawkish side as the market continued to walk back pricing of the December rate cut, from over 90% priced a month ago to a coin-toss 50%/50% as per current pricing. Interestingly though, the pick-up in VIX was fairly muted compared to e.g October, as US equities indexes broadly held in fairly well, with most of the pain felt in AI names specificallyCrypto was not spared from the sell-off in risk assets as BTC plunged back below $100k and took out key support at $98k, trading down to a low of $92.9k over the weekend before finding some temporary equilibrium closer to $95k. ETH also traded down to test $3k again though found some good support again ahead of that level, gravitating back towards the $3.2k that seems to have been a more stable equilibrium for it in the past few sessions. Overall after this latest sell-off, the risk-reward dynamics for accumulating crypto at these levels seems relatively more attractive and we would expect to see a bit more 2-way in the absence of a more protracted sell-off in broader risk assets (or a more material spike in VIX). However native sentiment seems noticeably poor so it will be the resolve of IBIT holders/buyers that will be tested most closely in the coming sessions
BTC$ ATM implied vols

Implied vols rallied in line with the recent spot-vol correlation of higher volatility on lower spot, as we plunged back below $100k and took out key support of $98k. Realised volatility continued to remain high both on a high frequency basis but also on a fix-to-fix, with an 90+ vol observation between Thursday and Friday expiry on fix-to-fix. This extended period of high realised volatility is causing some stress in the market and driving a natural reflation of volatility further out the curve, as the market begins to price a higher structural vol base for the asset after an abnormally low period of realised vol over the recent summer monthsThe term structure of implied vols has flattened up driven by higher front-ends as gamma performance remains elevated. The curve moves have been relatively weighted in fashion (i.e. back end vols have still repriced higher but just by a lower beta vs front-end) as the market continues to feel relatively short vol overall. There has been decent demand observed for January/March/June strangles in the past week as the market looks to cover some legacy short vol positions that were put on when the term structure was much steeper
BTC$ Skew/Convexity

Skew prices broadly moved deeper for puts on the break of $100k and remains fairly bid for puts in gamma tenors as the downside remains the more vulnerable side of the distribution for now. However the market is cognisant of more 2-way risks from this level of spot, particularly on a slightly longer term basis, and this is keeping skew prices fairly stable in tenors further out, as we have begun to see some demand for topside for year-end and out at this lower spot entry levelConvexity prices moved lower as local gamma performed admirably in the past few sessions, while the market is starting to discount the extreme wing observations here as positioning seems to be cleaner and many feel we are coming to the last leg of the sell-off. Directional demand for an extension lower has been seen the in the form of put spreads (e.g. year-end 90k/70k put spreads) while topside plays also seem to be in call-spread format (e.g $110k/125k call spreads) — again adding further supply of convexity to the market. Overall at these levels and given the high vol-of-vol that we have witnessed we think flies are approaching value zone
Good luck for the week ahead!

Crypto prices faltered again the past week with BTC touching $94k on the back of a thin Monday selloff, with the majors selling off another 10–20% on a week-on-week basis, and native sentiment as pessimistic as it’s ever been, including the prior bear markets. While macro headwinds could be excused for driving part of the sell-off, crypto has legitimately underperformed most other asset classes, including levered tech stocks, which they have been most tightly correlated with.

Furthermore, post the October meltdown, persistent rumors of significant market maker losses have led to a significant drop in order book liquidity, exacerbating market moves and particularly to the downside.

Unsurprisingly, we’ve seen rapid deleveraging and real money outflows across the entire crypto complex. Significant CEX futures liquidations are followed by YTD highs in ETF outflows and DAT sales, with Blackrock’s IBIT seeing a single day record of -$463M in sales and DATs also seeing the first weekly outflows since inception.

The persistent sales have led to a collapse in DAT premium to negative territory, sparking concerns of treasury sales as companies dispose of assets to support the falling equity market cap. MSTR is obviously the elephant in the room, though Saylor was quick to publicly deny any sale shennigans, but the final verdict might be yet to be seen.

After a long period of doldrum, both realized and implied volatility have perked up as prices crashed through bull cycle ranges. In particular, put skews remain bid especially for ETH, where real money support less supportive than BTC, opening concerns for sharper downsides.

Amidst all the doom and gloom, have there been any good news out of the space as of late? Outside of the recent Square announcement that they have recently started to accept Bitcoin payments for their merchants, the latest 13F filings have also shown that the Harvard Endowment ($57B AUM) now has a $443M position in IBIT, their largest single equity holding in the portfolio. But before everyone gets too excited, it is unclear that if the position is an outright long or as a spread/arbitrage trade vs DATs or other crypto proxy. We lean towards the latter, but it’s still good to see that TradFi real money accounts are at least becoming more active participants in this space, even if it’s not just a pure long exposure.

Back on macro, US stocks shook off a shaky start despite a -3.8% sell off in the KOSPI and an early -2% swoon in the Nasdaq to close positive on the session while holding its 55d moving average support. Fixed income has also been under stress with Japan, Korea, and UK bonds all under pressure due to brewing fiscal / political concerns, with US treasuries facing similar headwinds as yields have reversed higher.

Over in the US, December rate cut odds have fallen towards 40% as Fed officials have been coming out in force to manage down easing spectations, with the US economy still largely holding in despite some concerns over the labour market. The biggest worry remains with inflation, where President Trump has recently suffered a significant setback in polls given high inflation and rising cost of living concerns, with former Treasury Secretary and Fed Chair Yellen declaring that the US is “in danger of becoming a banana republic”.
Fed Officials have Been Explicit in Managing Down Easing Expectations, with Former Chair Yellen Proclaiming the US Being in Danger of Being a “Banana Republic”
“It’s not obvious that monetary policy should be doing more right now,” — Cleveland Fed President Hammack
“As I look to the December meeting, I think it would be hard to support another rate cut unless we were to get convincing evidence that inflation is really coming down faster than my expectations or that we were seeing more than the gradual cooling that we’ve been seeing in the labor market.” — Dallas Fed President Logan
“I do not think further cuts in interest rates will do much to patch over any cracks in the labor market — stresses that more likely than not arise from structural changes in technology and immigration policy,” — Kanas City Fed President Schmid

Looking ahead, we’ll be keeping an eye out on a few things.
1.Deluge of Make-Up Data Releases Following Government Reopening
We expect rate cut expectations to be volatile over the next couple of weeks analysts begin to sift through a backlogged economic dataset

2. A Return of Macro Factors to Drive Near Term Asset Moves as Asset Vol have Picked Up
Cross-asset volatility has picked up as investors are focusing back economic growth with early stages of a labour slowdown against stubborn inflation

3. US Equities Remain Rangebound for Now, But Could See an Acceleration on a Sustained Break >7000 or <6500 on the SPX as the Gamma Profile Flips Negative

4. We Remain Cautiously Optimistic on US Equities on (Still) Rising Earnings Growth and Strong Retail Demand
While valuations are expensive, US corporate earnings growth remain at some of the highest levels in recent years

The retail bid in US equities has shown no signs of subsiding, and should be respected until the trend changes

5. Technical Picture on Crypto is Less Supportive, But Could Offer Decent Long-Term Entry Points
We continue to expect the fallout from the October collapse to drag-on as more victims surface, and more protocols to shut as more native participants exit on further dillusionmentDAT sales are a real risk and present a significant overhang on sentiment until further notice.Further sell-offs would present long-term attractive entry points given the continued and accelerating adoption of BTC in the US financial system.

Key metrics: (3Nov 4pm HK -> 10Nov 4pm HK)
BTC/USD -1.0% ($107,200-> $106,200), ETH/USD -1.9% ($3,690 -> $3,620)

After finally breaching the psychological level of $100k last week, positive news out of Washington over the weekend drove a relief rally to start the week and the market traded up to test the previous support (now resistance) level/region of $104–107k. Through $107–108k we expect the market to see some top side acceleration given the pivotal/choppy zone of $108–114kA break higher would suggest this part of the correction might be completed and the market could be gearing up for a fast and choppy test of the ATHs. We ultimately think that this would give way to a larger and more sustained correction since we see the larger-cycle as corrective (albeit flat corrective) for the coming monthsIf we fail to break $107k that would suggest the market wants to retest the $100k support and we have a more “pure” break down target closer to $95k, but given lows have printed on a $98k handle already we have been within a whisker of that level already. We would think that re-tests at or below $100k from here are opportunities to buy delta into, carefully and calmly in a fashion that gives plenty of room in case the downside runs on stops / liquidations before the bigger turn comes in
Market Themes
Wobbly week for risk assets as the US government shutdown extended, with fears of the extended impact on the US economy. On top of this, despite a fairly solid round of US corporate earnings, concerns began to arise around the stretched levels of AI valuations, particularly given the heavy spend and investment being made by some of these companies to continue the development and integration of AI e.g. Meta … what if at the end of all this spending the technology doesn’t produce the revenues priced in? Ultimately so far the investments have been paying dividends, so partly this aspect of the price action felt like narrative chasing on what was probably just a healthy correction given the extended rallies some of these names have had so far this yearCrypto has been underperforming risky assets (and Gold) all year and found itself in a vulnerable position with the broader turn in risk assets. BTC finally plunged through $100k, though selling flows were well absorbed in the $98–100k range, while ETH tested down towards $3k before also finding some support. The end of the Government shutdown and the likelihood of another Fed cut in December (especially given the impact on US economy from the recent shutdown) should ultimately support risk assets from here into year end and this may bring a relief rally, but after a challenging year and high opportunity cost in the space, it still feels like a ‘high risk low reward’ asset in the absence of any crypto-specific catalyst, and therefore may find itself vulnerable should an unexpected turn in risk assets occur once more before year end
BTC$ ATM implied vols

Implied vols broadly traded sideways this week as realised volatility remained in the low-mid 40s (on a high frequency basis), justifying this newer implied vol base that we have reset to. Implied vols initially dipped early in the week before finding some support as spot broke $100k. However with no follow through below that key level, implies drifted lower into the weekend before finding support again into the new week as spot had a quick rally off the lowsThe term structure of implied vols has begun to steepen out as the short-term realised begins to wane with spot establishing itself in a range and no immediate catalysts to trigger a change. Directional players (looking at topside) have shifted positioning to December onwards expiries to allow more time for the market to digest the recent price action
BTC$ Skew/Convexity

Skew prices broadly moved deeper for puts on the break of $100k but having found decent support there and then exhibiting a quick relief rally on the US govt shutdown lifting over the weekend, skew prices began to move less deep for puts as tactical call buyers emerged. Structurally the spot-vol correlation remains clear (higher implied/realised vol on lower spot) as BTC becomes more correlated with traditional equity/risky assets in this behaviourConvexity prices moved lower as spot retraced into the broad $104–112k range, after a brief visit below $100k. Vol of vol remains high but ultimately the market seems to be finding equilibrium at this newer price range for now having tested and found strong support at $98–100k, any material break of $98–117k broad range will trigger some repricing of risk reversals structurally and bring convexity back into play
Good luck for the week ahead!

Macro assets had a tough run last week, with Nasdaq suffering its worst weekly loss since Liberation Day in April, dragged down by concerns over a deflating AI bubble and disappointing economic data.

Despite being a ‘2nd-tier’ data release, last Wednesday’s Challenger layoff report shocked market participants with the largest Oct monthly spike since 2003 (+153k, 99k MoM increase), with layoffs driven largely by the private sector. Details showed over 30% of cuts were in warehousing, followed by 22% in tech. While the data can be noisy and not (yet) collaborated by more official payroll figures due to govt shut down, smoothed out averages do show a passing correlation with claims, with markets likely to start assigning more focus on labour data in the coming weeks given the apparent slowdown.

Furthermore, no doubt related to the length of the government shutdown, UMich consumer sentiment fell to the lowest levels since June 2022 (50.3 vs 53 consensus), with short-term inflation expectations sticky at around 3.9%. However, with the shutdown making positive steps to be resolved this week, markets will be hopeful for a sentiment bounce next month to suggest that this was just a temporary lull.

Early headlines this morning suggest that Senate Democrats have voted with Republicans (60–40 count) to overcome the filibuster and move forward with a proposed package that would finally reopen the federal government. The bill still needs to pass the House vote, which could take until Wed or Thursday, which means that might not make the critical CPI release on time.

The apparent deal is coming at a time with President Trump and the Republican party has taken a number of recent losses, starting with the ‘blue-sweep’ mid-term elections and the Supreme Court’s rulings against the President’s tariffs as being unconstitutional. Possible refunds of IEEPA tariffs might be necessary in the case of a negative ruling, which would unwind a fair chunk of budget deficit improvements this year, creating renewed uncertainties on the fiscal and debt issuance path from 2026 onwards.

Perhaps in response to these recent losses, President Trump floated a new stimulus check in the form of a $2000 tariff dividend directly to the American populace, in addition to a new 50-year mortgage to improve housing affordability.
The ‘tariff-dividends’ are reminiscent of the covid stimulus checks that were a direct and effective money-printing stimulus, while the ultra-long duration mortgages will provide additional leverage to the system. Both of these should be viewed as new forms of liquidity easing.

While TradFi assets were closed on the weekend when the news broke, BTC rose roughly 2–3% on this news with the government fully committed to their ‘easy-money’ ways. The Nasdaq also managed to hold its 50d MA last week through the sell-off, just as BTC has managed to hold the $100k support thus far.

Equity flow seasonals are also entering its most positive month in December, so it might be time to start preparing for a Xmas rally as most of the known risk factors might be behind us for now.

Crypto assets traded on the back-foot for much of the entire week, with BTC holding the $100k battle-line the best it can, following a string of perpetual liquidations, ETF outflows, and OG Whale selling.

Moreover, as more victims of the 10/10 collapse continue to surface, we are seeing increasing TVL outflows and stables de-peggings across a number of DeFi yield-bearing protocols, following the unfortunate developments in Stream Finance.

Meanwhile, while the majors and top altcoins are getting punished, old privacy coins (such as Zcash) have been gapping higher with the sector gaining ~100% over the past month. There’s a bit of a resurging narrative of the need for privacy given the increasing heavy entrenchment of TradFi control, though it’s not yet clear to us on whether that’s a sustainable theme, especially given the legislative environment.
Regardless, it’s nice to see at least some sectors doing well in this downturn, and we are feeling cautiously constructive that BTC has held the lows so far. With positions as clean as they have been for a long time, we would lean on the side of optimism as we head into year-end, especially in light of the improving macro catalysts as mentioned above.
Good luck & good trading.

With the US govt still under lockdown, last week’s main event was with the FOMC, where they disappointed market doves as Powell pushed back against the fully priced December cut as being “far from” a “foregone conclusion”. Despite the 25bp rate cut, Powell indicated that there are “strongly differing views” amongst the committee, with roughly half the committee supporting the cumulative 75bp cut in Q4, and the other half dissenting. Furthermore, the govt shutdown made economic forecasting even more difficult than usual, and the Fed went as far as suggesting that they could be “cautious” by waiting out the December meeting to see if a further cut was warranted.
With regards to the economy, Powell views the labour market to have been relatively stable in recent weeks, while inflation is expected to remain close to target despite tariff pressures. The much anticipated end to QT will take place around December 1st, close to market expectations, followed by a pause before expanding again after 1H2026.
In continuing the moderate tone, Chicago Fed President Goolsbee stated on Monday that he has “not decided” about the December rate decision, citing nervousness about the “inflation side of the ledger”, while SF Fed Daly has also stated that she will only “keep an open mind” about a December rate cut.
Given the elevated pricing levels, risk assets were disappointed with the lack of immediate easing, US equities have traded off 1–2% from the ATH since the meeting, December rate cut odds have fallen to just around 70% following a near-certain ~95% probability heading into the meeting.

Despite the small setback, overall sentiment remain buoyant heading into earnings with EM stocks in Korea and Japan leading the charge on Nvidia and semiconductor performance. ‘Mag-7’ stocks continue to lead the field with a 70% outperformance versus the benchmark on a 2-yr basis, with the ‘retail-favourite’ basket also outperforming nearly every strategy YTD.
Naturally, Nvidia earnings (Nov 20th) is being priced as the biggest equity market moving event over the upcoming month with a daily SPX breakeven move of +/- 1%, even above the December NFP.

Meanwhile, the economy continues to hum along with Atlanta FedGDP hinting at a 4% growth for Q3, well above any Wall Street estimates, and consistent with the recent pickup in data momentum. Does the Fed really need to cut against this growth backdrop?

Now for the bad news.
Unlike stocks which have effectively been locked in ‘up-only’ mode, crypto prices have been battered and sentiment has dipped to new lows. Community buying power and optimism has cratered through the recent price drops, with the full repercussions still unclear, and we were ill-prepared for another confidence-zapping move with Balancer hacked for over $130M overnight. Ethereum cratered nearly 10% on the move, with faith in DeFi more shaken than ever given Balancer’s ‘OG’ status as one of the secure protocols in the system. Furthermore, this is happening on the back of swirling rumors that there could be regulatory actions being taken following the ‘Oct-10’ crash between some of the largest players in the market, which has added to the overall woes and taken BTC dangerously close to the $105k area.

Following the sell-off, TOTAL3 (ex BTC/ETH) market cap is now back to flat YTD despite high double digit gains in other major macro asset classes. Total market cap (with BTC) has also underperformed every major equity index YTD, including China, which is really hurting sentiment across the board with traders who were hoping for an altcoin revival.

Finally, on-chain activity shows net long-term holders turning net sellers pretty consistently since early summer, which tends to depress price action for the next few months as we have seen currently. Furthermore, based on analysis from Glassnode, high transfer volume from long-term wallets to CEX also suggest preparatory actions preparing for sales, with the recent averages seeing a decent spike and collaborating with more profit-taking activities from long-term holders.

Put-skews have re-richened across BTC & ETH as traders prepare for another leg lower in the near-term. We share the same caution as well and wouldn’t be surprised to see BTC test $100k to the downside again (many tokens have already traded through their Oct-10 lows), driven perhaps by any weakness in US equities or negative headline risks.
Good luck & stay safe. It might be a tricky ride before we can hope for a Santa-rally.

Key metrics: (27Oct 4pm HK -> 3Nov 4pm HK)
BTC/USD -7.3% ($115,600-> $107,200), ETH/USD -12.1% ($4,200 -> $3,690)

Market continues to chop in the $104/105-$115/116k range here with realised volatility remaining elevated even as the absolute ranges compress — this suggests market is struggling to find an equilibrium here, perplexed by the disconnect between Crypto vs Tech/high beta Single Stocks and worried about the possibility of Gold/precious having a more material correction lower from here. Technically we expect another leg lower from here to give a completion of this flat corrective leg (first of a potential 3-legged flat multi-month (year?) correction) but we could see the range chopping back and forth for a few more sessions / weeks ahead
Market Themes
Focus on FOMC, US earnings and Trump-Xi this past week. Ultimately all three events helped to keep the risk supportive backdrop in tact: the Fed delivered the anticipated/needed 25bp cut and while Powell attempted to walk back pricing of a Dec cut (‘by no means a foregone conclusion’), this proved to be merely a blip; US earnings were broadly very solid despite fears of slowdown in the ‘real economy’; and Trump-Xi finally had a breakthrough with tariff rates lowered and some concessions made as the path to a deal looks almost certain nowDespite all this, Crypto once again struggled for footing, as OG whales continue to unload their holdings with both BTC and ETH struggling for momentum above $115k and $4k respectively. With SPX/NASDAQ and high-beta AI stocks continuing to make new highs, the opportunity cost of holding crypto continues to be punitive, and the USD-leg of the equation has also had a relief rally with Gold pulling back below $4000 and the USD rallying broadly against G10 FX as the pricing for a Dec 25bp rate cut moved from 90% to almost 50% at one point. The NAV of many of these DAT companies has compressed to (or below) 1.0x as well as that story loses momentum
BTC$ ATM implied vols

Implied vols broadly traded sideways this week as realised volatility remained in the low 40s (on a high frequency basis), justifying this newer implied vol base that we have reset to. Having said that, a lot of this realised volatility was driven by the reaction to events last week (FOMC then Trump-Xi meeting), and on a lower frequency basis the realised volatility has been dampening down as we compress in a tighter $106–112k range broadly. This led to some short-term pressure on gamma tenors into the weekend though this was undone with Monday’s move back to $107k as the orderbook liquidity still remains thinner than beforeThe term structure of implied vols has remained broadly unchanged with some steepness justified by the macro dynamics, as November is broadly a quiet month on the US data front (with no FOMC either), though December is shaping up to be an action packed end to the year
BTC$ Skew/Convexity

Skew prices broadly moved deeper for puts last week as realised volatility on the topside remained muted with plenty of offers found between $112–116k, while downside moves continue to exhibit high realised volatility. The market seems to have some quite sharp derive below $106k that saw risks briefly plunge to very deep levels on Thursday, though ultimately it is hard to sustain those unless we see a material break of the rangeConvexity prices moved lower as spot began to establish a broad $106–112k range last week, with liquidity well supported both sides of this range (i.e. no explosive moves seen as we approached the extremes). Directional plays continue to be expressed through put spreads or call spreads which also net supply some convexity to the market. Vol of vol remains locally a bit high but not as extreme as in the past few weeks and this is also helping keep a dampener on implied convexity pricing for now
Good luck for the week ahead!

Key metrics: (6Oct 4pm HK -> 27Oct 4pm HK)
BTC/USD -6.4% ($123,450-> $115,600), ETH/USD -7.5% ($4,540 -> $4,200)

The market has given us a pretty clear and evident wave B high around $126k, and since then has spent the better part of the last 2 weeks testing the supports from $109–104k, though is now back up testing resistance at $114.5–117.5k level. Our view is that this is likely wave 2 of 5 of a bigger progression down to below $95k but, given the difficulties of factoring in the 11Oct flash-crash, there is a risk we have moved into a more extended correction that might re-test the wave B highs again (before correcting lower). Support down to $109k here and then again at $107k and $105–104.5k, while on the topside initial key resistance at $117.5k before $121–125k heavier resistance
Market Themes
It’s been an eventful few weeks for crypto (and broader equity markets) as an initial surge in risk assets at the start of October (‘Uptober’) faced a reality check when Trump upped the rhetoric ahead of talks with China, threatening the re-imposition of 155% tariff rates on 1Nov without any progress on a deal. This triggered some significant de-risking in early October with crypto falling victim to an aggressive liquidation event in the illiquid hours of 11Oct morning HK time, with Binance at the epicentre of the event. BTC flashed down to a low of $102k (from as high as $123 earlier that day), while the moves in some Alts were far more extreme. Orderbook liquidity thinned out significantly for the ensuing days/week triggering some elevated realised volatility, before eventually liquidity returned to the market as the risk backdrop broadly stabilisedLooking ahead, Trump and Xi are finally due to meet in person on 30Oct in Korea, and with a framework for a deal already established by key negotiators on both parts, it seems the market is gearing up for a deal as risk assets have opened the week strongly, with BTC reclaiming $115k in sympathy with the move. The FOMC meeting on Weds 29Oct is also expected to deliver another 25bp cut, with last Friday’s CPI on the softer side, giving the committee no reason to deviate from their dot-plot of the previous meeting. With the end of Quantitative Tightening also expected soon (JPM calling this week), a combination of this and a trade deal could set the stage for a rally in risk assets in the coming weeks, especially with the market’s positioning feeling lighter after de-risking this month
BTC$ ATM implied vols

Implied vols have exhibited a large range in the past few weeks as we bounced aggressively off the lows on the 11Oct liquidation event, with realised pushing up from the mid-20s to 50 and then sustaining in the mid 40s in the following 10 days as order-book liquidity remained thin. However with spot ultimately respecting the broader $100–125k range that has broadly bound the asset since May, demand for optionality was quite muted and as such implied volatility levels didn’t really ‘overshoot’ versus realised in a manner we have seen previously on such episodesThe term structure of implied vols initially flattened as front-end expiries led the move higher, with demand for gamma due to the higher realised performance, but as order-book liquidity started to rebuild and spot reclaimed above $110–112k, we’ve seen renewed pressure on the front-end of the curve, while some term premium remains with longer dated vols still higher than before this whole episode i.e. a natural steepening move
BTC$ Skew/Convexity

Skew prices retraced from their deep pricing for puts as fears of a plunge through $100k abated with the positive risk sentiment over US-China over this weekend helping support spot back above $115k. Having said this, ultimately the skew dynamics have performed incredibly strongly with both implied and realised volatility much high on lower spot, and both implied and realised volatility beginning to stall as we grind back higher. As such risk reversal pricing favour puts should structurally remain in tact, though short term dislocations around that ‘fair level’ are possibleConvexity prices moved higher in longer dated tenors as the market prices the addition ‘vol-of-vol’ dynamics that the asset has exhibited once more (with a sharp snap from the low vol 25–30 realised to 50 that we just witnessed). Moreover, there has been some interest in wing topside in case of a big eventual break higher from here, while wing downside remains supported given the market’s clear stress on the previous episodes of spot lower
Good luck for the week ahead!

US equities blew out to another record high on Monday, led by the Nasdaq with a +1.6% gain and SPX rallying by 1%. Optimism over another supposedly China-US trade deal, bullish positioning into Mag-7 earnings, and expectations of another dovish Fed meeting propelled risk sentiment higher.
Cross-asset vols have also collapsed back close to record lows as investors piled back into risk-on positions, while global equities might also be making significant upside breaks with the Shanghai Composite appearing to break out of a 10yr downward trendline.

Markets are fully pricing in a 25bp cut in this month and December’s FOMC meeting, and traders are expecting more dovish language from the Fed Chair despite US macro basically in a govt data vacuum for nearly a month now. We expect Powell to suggest that policymaking is becoming trickier without timely economic data, hence justifying the Fed’s earlier base-case of another cut this month, and the prolonged government shut down to bring further downside risks to labour markets.
We don’t expect a lot of new policy guidance to be offered given the data blackout, and the focus to be on how quickly they will end QT (balance sheet reduction) as system reserves have returned to ‘ample’ levels. Market base-case would suggest QT to end in 1Q2026, with risks of a dovish surprise should Powell announce an earlier end to the balance sheet reduction.

BTC has rebounded back to the $115K area, albeit with noticeably weaker momentum than equities, with prices basically having treaded water both on a monthly and quarterly basis. BTC implied vol has resumed its downwards trajectory as prices have stabilized, though vol skews are starting to be more balanced with some buyers looking to add top-side given the sizeable amount of long liquidation in recent months.

We don’t see a lot of near-term catalysts for crypto prices here with DATs remaining on the back-foot, while ETF inflows have steadied after multi-quarter inflows. A resurgence in upcoming crypto-related IPOs before year-end might bring some FOMO energy back to the market, with price action likely to be sub-dued given the significant PNL damage suffered from the altcoin wipe out earlier this month.
In the meantime, position adoption momentum continues in stablecoins, with payment transaction volumes breaking de-correlating against spot trading volume, suggesting that there’s more capital being brought on-chain without purely going into speculative purposes.

Will a dovish Fed and teflon-stocks save us from an otherwise disappointing Uptober? Hope springs eternal…!

Macro ended a tumultuous week on a strong note, with yet another ‘TACO’ from President as he publicly admitted that high tariffs on China are not “sustainable” and that he will indeed meet President Xi in two weeks as telegraphed by Treasury Bessent and his team.
Furthermore, yet another quarter of stronger than expected results for bank earnings helped calm some of the private credit worries from the First Brands bankruptcy and the subprime auto lender write off (Tricolor, $170M charge-off), even despite Jamie Dimon ominiously stating that “And I probably shouldn’t say this, but when you see one cockroach, there are probably more. And so we should — everyone should be forewarned on this one.”, with regards to more credit defaults down the line.

On the flip-side, high velocity credit card data was actually better in Q3 based on Wall Street reports, with analysts reporting a further acceleration in Q3 consumer spending based JPM data reporting +9%, Citi at +4%, and Wells Faro at +6.3%, all above their Q2 pace.

Furthermore, recently released data shows retail buyers being extremely aggressive in buying the equity dip from two Friday ago, as option volumes exploded to the highest levels in 2 years with traders betting on a USA-China descalation, which has worked brilliantly against for the 2nd time in a row. Will we get a 3rd crack on the TACO trade?

While equities and credit markets largely calmed down on Friday, precious metals fell by the most in 6 months (Silver -5%), showing the 1st signs of weakness after a record setting run. Significant profit-taking and VaR de-risking flows likely drove some of the selling flow, with traders likely focusing on PNL protection as geopolitical headline risks continue to add volatility to safe-haven assets.

Crypto certainly has seen better weeks, with prices suffering yet another drawdown last week after the altcoin flash crash from the week before. Bloomberg reports that retail investors have lost $17bln across BTC DATs after the recent crash, with BTC ETFs seeing the 2nd worst weekly outflows YTD (-1.2bln) while DAT premium continued to crater to record lows.
DAT company owners have done well through this process, as they monetized their shares at a significant NAV premium to buy extra Bitcoin holdings, but that’s of little consolation to shareholders who have suffered a cumulative loss of $55b+ in equity premium since the early summer.

As we have long feared, this generation’s altcoins might not see much of a recovery, with the industry’s focus shifting back to TradFi’s centralised model (DAT, ETFs, private chains), and AUM/TVL continuing to shrink as ‘degen losses’ mount without a new FOMO narrative. The loss of a core Ethereum Foundation researcher (Dankrad Feist) to Stripe-owned Tempo is another sign of the seismic change in ecosystem values, while the recently announced halt of stablecoin plans out of China offers a reality check against immediate, mainstream integration.

Finally, one of the few crypto-related proxies that have done well is with the public miners, who are increasingly shifting to a hybrid model to deploy their powerful hardware into AI and high performance computing (HPC) to benefit from the booming AI wave. The pivot towards AI appears to come in the wake of last year’s BTC halving, which has squeezed profit margins and forcing miners to pivot towards other economic models. Will the industry’s sustained lower hashrates help to limit supply and propel BTC prices upwards again in the medium term? Only time will tell.

Finally, the economic data calendar remains in a semi-blackout with the US government shut-down for a record 3 week period now… We might soon run out of macro things to talk about if this were to continue!
Good luck & good trading everyone.

Worst liquidation day since FTX.. $19bln (or much more) in PNL wiped out from ADL (auto-deleveraging) algorithms across CEXs… altcoins touching zero as market-maker support evaporated… There’s probably no need for us to regurgitate on what was a brutal Friday close for crypto traders and macro investors alike.

The China-US trade truce came to a sudden end as President Trump unended the calm with an exasperated response to the Chinese renewed export controls, which is unprecedented in its complexity and comprehensiveness. A US/Japan long-holiday weekend provided unfortunate timing as markets flash crashed into the Friday close, leading to a -4% drop in the Nasdaq and an instant wipeout across many altcoins.

In response, the crypto community was quickly introduced to the ‘ADL’ mechanism, aka Auto Deleveraging or ‘maintenance margin’ in the TradFi world. While logical in theory, auto stop-losses do not work well in gap-down markets when liquidity becomes discontinuous and prices ‘gap down to zero’ in an order-book vacuum. Traders often forget that market makers disappear in one-way markets as price discovery evaporates, and the auto-develeveraging ends up ‘hitting the first’ bid regardless of how low it is, creating negative “reflexivity” (or convexity) as prices accelerate to the downside.

To make matters worse, a significant jump in data traffic overloaded exchange infrastructure, which further confounded the auto-liquidation mechanisms with delayed data feeds and congested orders. However, this problem wasn’t limited to just the major CEXs, but was also seen in leading DEXs such as Hyperliquid, which ‘led’ the liquidation leaderboard with over $10bln of capital wiped out on-chain on a 24-hour basis. Liquidity vacuums are agnostic to whether your capital is on-chain or not, unfortunately.

In the TradFi world, this is mitigated somewhat by the presence of circuit breakers, which would have shifted some of the pain buy asset holders onto the exchange operators, which would require a reserve / insurance fund similar to FDIC for banks. However, that would lead to less leverage available to CEX traders as costs of trading increases (which is one reason why crypto exchanges can offer more trading leverage than say, CME), and also goes against the ‘24/7’ continuous markets that crypto traders value highly.
As with all things though, all decisions come with a trade-off, but we imagine that this wipe-out will lead to a lot of renewed discussions on infrastructure investments if crypto were to continue to be institutionalized.

Looking ahead, markets have bounced a bit on Monday due to a lack of further escalation from both the US and China sides, and also due to long-weekend holidays in Japan and US markets. While the overriding view is that the recent escalation is a mere bargaining chip ahead of the Trump-Xi meeting (now in question), we believe that the longer term impact is for the macro decoupling theme to have massively accelerated. The enhanced rare metals ban is a non-trivial escalation, and highlights the declining effectiveness of any US tariff retaliation.
In the short-run, the consensus view is for both sides to dial down the temperature (as they have over the weekend), and asset prices to see a short-term repreieve. Nevertheless, we are concerned over any significant altcoin recoveries this time around, given the deep critical PNL damage, and BTC-focused rally YTD which has left many native investors behind.

With the US government still shut and US economic data in a semi-blackout phase, markets are expected to remain extremely choppy this week with views subject to change on a whim. With systematic and momentum funds still highly invested, we would keep an eye out on any sustained rise in IVs to drive derisking flows from that community. Of course, any sudden tweets or announcements from either administration could turn the situation 180 at any time, so it’s probably best to keep risk as light as possible over the next few days.
Stay safe everyone.

Key metrics: (22Sep 4pm HK -> 6Oct 4pm HK)
· BTC/USD +9.2% ($113,000 -> $123,450), ETH/USD +8.6% ($4,180-> $4,540)

A very sharp and fast move back to test and make new highs in the past week, after probing down to $108k on the month/quarter end rebalances the week prior. Technically, the (extended?) flat correction we have been looking for appears to have begun playing out. Given the price action is broadly consistent with our long term levels, we continue to think a flat correction is the most probable dynamic here and with that we think a high could be made around $129–130k; beyond that we will need to revisit this move as it becomes increasingly likely to be part of a progressive move. We expect good support on pull-backs initially to $120–118k, but any moves below that could signify that we are moving into our eventual expected more aggressive Wave C correction lower (below $100k)
Market Themes
It’s been an eventful two weeks for crypto as the highly anticipated month/quarter-end rebalancing flows pushed BTC to lows around $108k and ETH briefly below $3.9k, while SOL had a vicious retrace after failing at $250 and printing down to $190. However this all quickly reversed as soon as we entered ‘Uptober’, with a quick rally up to the previous highs of $117.8–118k (which held after Jackson Hole and FOMC) triggered some short stop losses, and eventuated in a test and break of ATH for BTC, briefly above $125k. Much of this is attributed to a ‘catch-up’ play with Gold pushing fresh highs on a daily basis given the US government shutdown and the accelerating fears of sticky inflation in a world where most G10 central banks are cutting rates. Equities also shook off some heaviness around the month-end rebalance with lots of positivity continuing around AI and data centre investments
BTC$ ATM implied vols

Despite the large range of the moves in the past two weeks, traversing $113k->$108k->$125k, realised volatility on a high frequency basis has been rather subdued in the 25–35 range. Ultimately we haven’t seen any discontinuous gap moves as spot liquidity remains ample in the broad range for now, while the market seems to trade long gamma locally with an increase in supply of gamma from overlay/treasury strategies seen in recent weeks, again helping to contain moves locally
The lacklustre realised vol offset the usual risk premium reflation we would expect to see on higher spot/range break, resulting in a broadly static implied vol curve for expiries 1 month and out. Front-end implieds have rallied significantly given the unexpected moves over the weekend, though with spot finding a level for now around $123–124k and realised still remaining subdued, we could expect a correction lower in those expiries quickly. With the US government shutdown, variance for NFP and CPI data remains ‘floating’ given the uncertainty around their release date, and given the inversion of the curve we prefer owing 31Oct expiries to cover those data points and FOMC
BTC$ Skew/Convexity

Skew prices retraced from their deep pricing for puts over the past 2 weeks, as fears of a plunge below $100k quickly abated when spot buying flows resumed once the month/quarter end rebalances were done. While realised volatility has been muted on the topside, the market is seeing some demand for calls and also remains cognisant of a continuation of momentum on the topside to ‘price discovery’ levels that could result in more volatility. Against that, it’s clear the ‘riskier’ side for this asset is on the downside and with funding rates picking up/leverage beginning to build, the market is also wary of the downside flush and for this reason we haven’t seen skew prices push into positive territory yet (outside of very short dated expiries)
Convexity prices moved lower towards the end of last week as the market was supplied with some wings via call-spread demand. Also the market is perhaps pre-positioning for some fresh overlay topside supply at these levels of spot and thus keeping a lid on implied levels for topside. Against that some opportunistic supply of wing downside on higher spot has also provided further supply. One thing worth noting is that a clean break either side from here of $115–130k would likely see a sharp reprice in levels of skew (i.e. bid for calls above $130k vs bid deeply for puts below $115k), so there is some risky gamma dynamics that offer value to the flies from here
Good luck for the week ahead!

True to years past, markets enjoyed an explosive start to Uptober with BTC and equities rallying to new ATHs, with US stocks powered by yet another multi-billion OpenAI/AMD deal, while Japanese stocks surged 5% (JPY FX -2%) on Takaichi-san’s surprised leadership win as fiscal dove.

Despite the data blackout due to the government shutdown, the equity rally powered on led by Semi Conductors (+4.4%), Biotech (+10%) and Consumer Durables (+3.6%) leading the way last week. The few data pieces that have come in continue to show a robust US economy, with surprises coming in at YTD highs against lowered expectations. US GDP is widely expected to trough in Q4 before making significant rebounds into 2026 and thanks to ample system liquidity and a resilient US consumer.

The biggest losers last week were with global bonds, where we are seeing renewed stress on higher yields on the back of the aggressive fiscal spending plans out of US, China, and now possibly Japan, all of which are happening with risk assets at ATHs and inflation pressures still on everyone’s top of mind. A sudden political crisis emerging out of France (PM Lecornu’s resignation) has added to the bond market’s woes, but to the benefit of gold, which has strung together its best winning record since the early 1980s.

The current ‘fiat debasement’ theme continues unabated, with most measures of M2 liquidity, loan supply, and other credit availability pointing to record levels of money-easiness, leading to cash allocations beign at their lowest level in history based on JPM estimates.

Once again, retail traders have benefitted from the rally as they have been a major participant of the current move, consisting of over 12% of single stock volumes with SPX option volumes re-approaching April highs. It would seem that President Trump’s efforts to ‘monetize’ the US economy with positive wealth effects are working as intended.

Not to be outdone, BTC staged its own rebound to new ATHs ($126k) on renewed ETF buying, which saw US investors pouring over $3.2bln of inflows into BTC ETFs last year, good for the 2nd largest week in history. Open interest on Blackrock’s IBIT ETF also rose to a record $49.8bln on Friday, and is now the single largest ETF revenue generator for the mega asset manager, an absolutely incredible feat for a newly launched product.

BTC ETFs now own over 1.47M BTC (~90% USA dominance), followed by DATs at 1M BTC (MSTR at 0.63M), and miners at only 93K. It’s probably not unreasonable to say that the Wall Street takeover of crypto is complete, at least in terms of driving the day-to-day price action.

Given the US government shutdown, there’s not a lot of data to look forward to in the near-term, with things looking to heat up in late October over FOMC and the Mag-7 earnings. Options markets are pricing in a feral 5% chance for another 10% rally in the SPX into year-end, and it’s increasingly difficult to find a negative catalyst to counteract that view at the current juncture.

In crypto, we saw little shorts liquidation on the recent gap up (ETF buying), suggesting that participants are underweight with minimal risk exposures. BTV IV remains very low (and a record gap vs ETH IV) with skews barely positive, suggesting that the path of resistance in the meantime may be higher as Uptober lives true to its name.

In any case, equity risk sentiment shall continue to be the key driver over the following weeks. Good luck & Happy Golden Week to our friends in the region!

Key metrics: (15Sep 4pm HK -> 22Sep 4pm HK)
BTC/USD -2.2% ($115,500 -> $113,000), ETH/USD -9.1% ($4,600-> $4,180)

BTC spot price action continues to exhibit dynamics that are consistent with our flat corrective pattern. From here our base case is that after a test of $112k lows (possibly a brief visit to $111–110k), a hold/bounce off this level will set up for a re-test of all time highs. That final wave higher will be the setup for an eventual violent move back lower. Should key support at $110–112k fail to hold, then this would potentially suggest the multi-year progression has indeed already completed with the visit to $124–125k in August. Locally, topside resistance is at $116k and then larger resistance at $117.5–118k, which notably held both after Jackson Hole and FOMC
Market Themes
Focus was on FOMC this week with the 25bp cut cemented following the US data this month, but all eyes were on Powell’s tone and the committee’s dots to ascertain whether the market’s pricing of the future rate path would be validated. Ultimately this was the case with 50bps of further cuts for this year in the dots and Powell/committee rather sanguine on inflationary risks from tariffs at this juncture. The knee-jerk reaction was a pop in equities and a sell-off in the USD, though this was quickly reversed as the market had pretty much priced this in fully and booked profits accordingly. However equities have subsequently marched on higher with nothing obvious to stand in the way and US-China relations moving steadily in the right direction as an additional tailwindCrypto initially benefited from the risk-supportive FOMC, with BTC testing up to key resistance at $117.5–118k in the 24h following the event. ETF inflows were modest after a decent pick up in the prior 2 weeks. However, once again the market was left disappointed with the lack of follow-through and relative underperformance of the asset class, with BTC eventually reversing the whole move and plunging to $112k support on Monday, while SOL rejected a break of $250 to pullback to $220 and ETH also failed again at key resistance around $4800, plunging to $4150 on Monday. Ultimately it feels there are sufficiently attractive alternative ways to invest for returns in this environment (mainly US tech/AI) and as such retail participation in crypto remains broadly muted
BTC$ ATM implied vols

Realised volatility continued to remain in the low-mid 20s last week, as ETF inflows/treasury purchases (MSTR) helped to underpin spot, while significant offers remain on every leg higher, capping the realised vol on the topside for now. The underperformance of gamma locally resulted in daily vols pricing at around 22–25 vols this week, while there was a last minute squeeze for gamma over FOMC pushing overnight to 60 vols ahead of the event, pricing a break-even of 2.4% which ultimately didn’t realiseThe lacklustre realised vol weighed heavily on the implied vol curve, particularly in the front-end towards the end of last week. Some fresh supply of 1w at the local lows of 25–26 vols was seen to end the week, as the market continues to seek yield in this environment. Further out the curve the vol levels have found a bit of support with absolute valuations reaching historical lows on a multi-year look-back
BTC$ Skew/Convexity

Skew prices moved aggressively for puts towards the end of the week, after the disappointing lack of follow-through on the topside and low realised vol was countered by nervousness as spot began to retrace and eventually manifested in a sharp pullback lower on Monday. Ultimately though realised volatility was pretty low even though we pulled back 5.5% from the highs, with the market still clearly long local gamma, and this has resulted in a lack of sustained performance of the risk reversals from a spot-vol correlation perspective.Convexity prices moved higher towards the end of the week from already elevated levels, as the market continues to seek wing protection particularly on the downside given the poor price action and the institutional longs that have built up over the past few months. However these levels of convexity (particularly in shorter dated expiries) are unsustainable, especially given base vols are already very low, and — unless the range break happens imminently — any short dated wing protection will decay rapidly at the valuations
Good luck for the week ahead!

According to Bloomberg, for just the 26th time over the past 100 years, the S&P 500, Nasdaq, the Dow Jones Average, and the Russell 2000 all set new record highs over the same week as the melt-up sentiment continued unabated. At the same time, investment-grade credit spreads hit record tights since 1998, with the index coming in at a mere 0.72% over equivalent treasuries, offering next to zero protection buffer if the economy were to really worsen.

On the geopolitical side, there has been a notable improvement in the US-China narrative with a tetative TikTok deal, with the Trump-Xi phone call affirming continued progress being made on trade talks. The leaders have also promised an in-person meeting during the APEC Summit in South Korea next month, which would be their first face-to-face meeting since the G20 back in 2019. All of this has buoyed risk sentiment, particularly in EM stocks, with the BoJ even signalling plans to (slowly) divest out of their ETF holdings with the TOPIX hitting record highs.

Risk sentiment barometers remain in extreme territory, but have eased off a bit since late summer, albeit without impacting equity prices much. Risk appetite remains driven by loose-money conditions, which remain at some of the easiest levels in history, thanks in large to the Fed’s recent dovish policy pivot.

This week will be quieter on the data side, with focus shifting to the Fed speakers, with 17 speaking events planned for the week, headlined by Powell on Tuesday. Recently appointed Fed Governor Miran came out swinging, doubling down on his dovish dissent by claiming that he doesn’t “see any material inflation from tariffs… with no discernible core good inflation in US vs elsewhere… and that the Fed Rate is quite far from neutral”…

While it’s not the first time that stocks & bonds have told a different story — with equity pricing implying next to zero chance of a recession, while fixed income is pricing close to 50% — it’s helpful to revisit how they have respectively traded into and out of a Fed easing cycle.

Assuming the Fed is successful in generating a soft-landing, US stocks have generally done well into AND out of the first rate cut, while outperforming global stocks at the same time. On the other hand, bonds have experienced quite the opposite, with performance being front-loaded and yields tending to re-drift higher as the economy stabilizes. For the US dollar, there doesn’t appear to be a clear pattern, as FX movements are more susceptible to the confounding influence of both capital and current account flows, though it’s probably fair to say that the Trump administration is more explicit about wanting a weaker dollar this time around.

Not a lot to look forward to this week, with macro assets successfully bucking the negative Sep/Oct seasonals thus far, and US household allocation to equity closing in on an incredible 50% as the financialization of the US economy continues. Volatility remains low and hedges remain cheap, with no obvious catalysts suggesting otherwise in the meantime.

Crypto prices had a flattish week, with nearly all major tokens in the red last week, with the notable exception of Binance’s BNB, which hit a new record high with a handful of successful token launches (eg. $ASTER). On the other hand, the Dogecoin ETF (DOJE) was successfully launched last Thursday, opening the door to a likely flood of memecoin-themed ETFs to be listed in the months’ head.

BTC/ETH ETFs saw modest inflows, but it was otherwise another uneventful week with both outright volatility and momentum trading extremely heavy. DAT premium rebounded slightly but lingers at near the lowest levels in a year. We expect markets to stay range bound in the foreseeable future, but would expect crypto to lag any further rallies in gold and equities in the meantime. Good luck & good trading.

Key metrics: (8Sep 4pm HK -> 15Sep 4pm HK)
BTC/USD +3.8% ($111,300 -> $115,500), ETH/USD +7.2% ($4,290 -> $4,600)

BTC spot is trading in a manner consistent with our evolving view that we have primarily finished the progression that began in Sep 2024 and moving into a corrective phase. We think this is likely to be a flat correction with the market poised to test the highs (and possibly make a new ATH) before setting up for a bigger correction lower. Such a correction will likely take out the $101k support and throw us back into the volatile price region of $88–92k. This in turn could ultimately lead to a three wave mutli-month (or even year long) correction that takes us down to the $60–75k region. Top side resistance initially comes in around $118k and then above there, $120k before ATH above. Support is likely to be solid around $112–113k below here
Market Themes
Focus was on US data and earnings last week, with the threshold to de-rail Fed pricing for a cut in September very high coming into the week on the back of a soft NFP print. Soft UMich confidence and PPI gave the market the green light for the rates market to continue to price a full cutting cycle from the Fed even ahead of the CPI print, with 6 cuts being priced in by the end of 2026. The headline CPI number was actually on the strong side, with MoM core at 0.346% marking the highest print since January… despite this the market shrugged it off quite quickly given the recent Fed-speak and focus around jobs and this gave US equities the green-light to continue their rally into the weekendCrypto benefited from the risk-supportive backdrop and BTC filled the $116k-110k gap from post Jackson Hole. ETF inflows picked up considerably after a quiet ‘summer lull’, as the market regains confidence in the space after an underwhelming few months of performance. The collapse in NAV premium of DATs is actually probably helping sentiment broadly speaking, as coin prices begin to decorrelate from DAT-equity prices once more. Having said that, SOL was ultimately a beneficiary last week of the announcement of Galaxy Digital leading a $1.65billion investment in Forward Industries to establish a Solana treasury, pushing up towards $250
BTC$ ATM implied vols

Realised volatility dropped off significantly last week into the low-mid 20s, as ETF inflows returned to underpin spot, while significant offers remain on every leg higher, capping the realised vol on the topside for now. As we move incrementally higher towards the psychological resistance band of $120–124k, it will be key to see how this realised dynamic plays out, as orderbook offers/liquidity may start to thin outThe lacklustre realised vol weighed heavily on the implied vol curve, particularly in the front-end towards the end of last week. However with FOMC ahead this Wednesday and spot probing the upper end of the recent range, we have seen front-end vols naturally reflate ahead of the events and it’s possible we see renewed participation in call spreads to play for the ‘BTC catch-up’ trade to global liquidity/lower rates, which may lend some support to expiries beyond September
BTC$ Skew/Convexity

Skew prices gradually priced less for puts over the course of last week, as the ETF inflows underpinning spot helped to keep realised volatility muted on the downside and the risk-supportive backdrop helped spot clear initial resistance in the $113–114k zone. However structural demand for topside remains muted compared to previous and cycles and if anything the market continues to see downside protection bought on rallies from long cash players given the suppressed levels of volConvexity prices moved higher towards the end of the week and the market continues to seek wing protection given the historical poor seasonality for BTC over September and the market well positioned for risk-on over Fed. While predominantly the demand was for downside keeping skew very bid for puts, the recent rally in spot has brought into view wing topside strikes above the prior ATH and that has manifested in higher flies (and skew less for puts) as the market clearly does not want to be caught too short optionality in the event of a break of prior ATH
Good luck for the week ahead!