Yesterday, the US stock market and bond market were closed in observance of Memorial Day. However, later this week, there will be significant data releases, including GDP and the PCE inflation data favored by the Federal Reserve, making it a “short but busy week.”
In the realm of digital currencies, Bitcoin broke through the $70,000 mark during yesterday’s US trading session after trading sideways for almost a week. The market’s bullish sentiment seems to have been influenced by the continuous inflow of ETFs. Considering the stock market was closed for the holiday, the analysis platform Santiment sees this surge as an encouraging sign, proving that BTC can perform well even when its correlation with traditional finance (TradFi) is not as strong.
However, things didn’t go smoothly. Just after BTC broke the $70,000 mark, news broke that Mt. Gox’s cold wallet had transferred 12.24k BTC, worth approximately $840 million, to unmarked addresses. Mt. Gox’s creditors were severely affected when the exchange collapsed in 2014. The exchange has been working to recover funds for repayment over the past decade. Today, the on-chain BTC transfer was seen by some traders as a potential catalyst for selling pressure and bearish sentiment, causing the BTC price to rapidly drop below $68,000.
In the options market, attention has once again shifted to BTC. The rollercoaster market movement in the past 24 hours, coupled with concerns about potential selling pressure, has raised implied volatility. The IV curve has remained flat to slightly higher, and the volatility smile quickly tilted towards bearish put options after the price decline. Looking at the trading activity, the largest BTC transaction in recent months was a short risky position (450 BTC per leg) in June. It involved selling the 75,000 Call option while buying the 65,000 Put option as protection, resulting in a net premium of approximately 2 BTC.
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