Greeks.live: The momentum to restart the bull market is limited, and a slow decline is the most mainstream view in the options market.
Golden Finance reports that Greeks.live macro analyst Adam posted on social media stating that at the recently concluded Federal Reserve meeting, a 25 basis point rate cut was expected, and the Fed announced it will restart the purchase of $40 billion worth of short-term US Treasury bills (T-bills). The dovish stance can effectively supplement the liquidity of the financial system and is undoubtedly a clear positive for the market.
However, it is premature to restart QE and expect a bull market now. Christmas and year-end settlements are approaching, and in previous years, this period has always been the worst for liquidity in the crypto market, with low market activity and limited momentum to restart a bull market.
Looking at cryptocurrency options data, currently, over 50% of options positions are accumulated by the end of December. The biggest pain points for BTC are at the $100,000 round number, and for ETH at $3,200. The implied volatility (IV) of main expiry dates has been decreasing throughout the month, indicating that the market’s expectation of volatility this month is gradually diminishing.
It is worth noting that Skew has shown a persistent negative bias this month, with Put prices significantly higher than Call options at the same Delta. This is mainly due to two reasons: first, the market is stable, and covered call strategies are once again mainstream, artificially suppressing Call prices; second, the recent crypto market has been weak, with many traders using put options as a hedge against declines.
Overall, the crypto market is currently quite weak, with poor liquidity at year-end and low market sentiment. The most mainstream options market view is a slow decline, but there is also a need to watch out for potential reversals caused by sudden positive market news (although the probability is relatively low).
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