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By Omkar Godbole (All times ET unless indicated otherwise)
Bitcoin’s BTC$69,241.44 been trading in a tight range lately, with volatility indices surprisingly calm despite the Iran war, oil shocks and Fed rate-hike expectations hanging over the market.
Bulls are calling it resilience. But if you zoom out and look at other markets, maybe it is just complacency — and could lead to a brutal reality check.
Take oil, for example. WTI has jumped 37% this month to $91.84, and some analysts are saying $200 isn’t out of the question. Call options on oil are now three times pricier than puts. That’s a pretty clear sign of outsized bullish positioning. All this means more inflation and economic shocks ahead.
In the U.S. Treasury market, the MOVE index, which tracks expected volatility in the backbone of global finance, has shot up 33% to 98.00. Increased volatility in debt of the world’s largest economy, which underpins global finance, typically leads to tightening of credit worldwide.
Compare that with bitcoin’s implied volatility index, BVIV, which has actually slipped 7% to 54%. Resilience or complacency? Some firms think it’s latter.
“Notably, short-dated implied volatilities have compressed to their lowest levels since February, signaling a degree of market complacency regarding this tail risk,” TDX Strategies said in a market note.
The firm recommends “accumulating gamma,” basically, betting on big moves on select altcoins, as a proxy hedge for your portfolio.
As of now, bitcoin is down 2.4% on the day at $69,500. Ether (ETH), XRP (XRP), and solana (SOL) are following suit, while non-serious tokens like DOGE$0.09140 are taking a bigger hit, down nearly 5%.
The backdrop isn’t helping: Iran just rejected the U.S. peace plan, laying out conditions that include closing all U.S. bases in the Gulf, reparations for attacks, lifting all sanctions, and keeping its missile program unrestricted. The U.S. probably isn’t going to agree, which leaves the situation deadlocked and risk assets on edge.
The dollar index is climbing, Treasury yields are ticking up, and U.S. stock index futures are in the red. Stay alert!
Read more: For analysis of today’s activity in altcoins and derivatives, see Crypto Markets Today
What to Watch
For a more comprehensive list of events this week, see CoinDesk’s “Crypto Week Ahead“.
Iran launches fresh strikes after Trump says regime wants deal (The Wall Street Journal): Iranian strikes continued after Arab mediators and other people familiar with the matter had said Tehran was privately showing a willingness to hear out diplomatic efforts to end the war.
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