Crypto Market

BTC and ETH Market Insight

The United States struck Iranian missile and drone storage locations, along with radar sites, after Iran launched attacks on commercial shipping in the Strait of Hormuz. U.S. President Donald Trump warned that the military could be forced to wipe out the entire civilization of the Islamic Republic of Iran if violations of the Ceasefire Agreement continue. Bitcoin (BTC) traded in the red alongside the stock market as inflation fears continued to plague investors after core PCE rose to 3.4%, its highest level since October 2023. Speculation that the Fed will announce at least one rate hike is starting to be priced in; investors are now considering that more may come this year if inflation cannot be lowered toward the central bank's target. Bank of America (BoA) even stated that more aggressive interest rate hikes could be possible to curb inflation and align with the judgment of the new Chair, Kevin Warsh, who critiques Jerome Powell for acting too slowly to keep prices stable.

The negative gamma that occurred on Thursday and Friday broke BTC's $60,000 psychological floor. It is now hovering around $59,000, with hopes of reclaiming $60,000. Another bearish signal for the crypto market is the MSTR stock price, which is down 85% from its ATH, increasing concerns over whether the company can deliver promised returns on its bonds and preferred shares. Because its BTC holdings are now valued higher than the entire company's equity valuation, investors worry that Michael Saylor will liquidate another batch of MicroStrategy's BTC treasury to deliver promised dividend and interest payments. If he does, BTC is expected to quickly fall to $55,000. Ethereum (ETH) is following BTC's price action and trading below $1,600, though it has managed to keep its footing above $1,500. Meanwhile, Solana (SOL) has shown relative strength compared to other altcoins, recovering after forming a double bottom.

Overall, BTC puts continue to trade at a premium compared to calls, as persistent demand for downside hedging is no longer a foreign concept to investors.

Upcoming Macro Calendar - Source: Trading Economics

Options Market

Over the past week, renewed selling pressure triggered a volatility spike across crypto assets as the risk-off sentiment from tradfi spilled over. The concern over Strategy fallout further intensified the move. Implied volatility rose notably across short-dated tenors, with BTC 1W ATM IV climbing to ~46.0% (from ~35.8% last week) and ETH 1W IV increasing to ~57.6% (from ~52.1%). Realized volatility surged even higher (BTC RV ~58.1%, ETH RV ~71.3%), pushing the volatility risk premium deeper into negative territory. Skew steepened further into bearish territory compared to the previous week, with BTC 25Δ 1W skew rising to ~20.3 vol points and ETH 25Δ 1W skew at ~15.2 vol points, reflecting intensified demand for downside protection. Transaction volumes picked up during the selloff. ETF netflows remained predominantly negative for both assets, underscoring cautious-to-bearish institutional positioning.

Altcoins and Blockchain News

• Next week's macroeconomic outlook: Non-farm payrolls released early on Thursday, mid-year rebalancing window opens.
  
  
• Bitcoin Spot ETFs saw a net outflow of $445 million yesterday, marking 7 consecutive days of net outflows.
  
  
• Bloomberg: $10 billion worth of Bitcoin options are set to expire, potentially triggering deeper sell-offs.
  
  
• Bank of England relaxes stablecoin rules, abolishing individual holding limits and easing reserve asset requirements.
  
  
• Bank of Thailand Governor: Banks will be allowed to issue Thai Baht stablecoins this year.
  
  
• BlackRock: Bitcoin can be seen as a complementary diversification asset, recommending a modest allocation of 1% to 2%.
  
  
• Vitalik: Ethereum Foundation's budget cut by 40% this year, shifting to a long-term endowment model.
  
  
• Cboe is considering converting its Bitcoin and Ethereum continuous futures into perpetual contracts.
  
  
• OpenAI leans towards postponing IPO until next year; SpaceX stock decline influences its stance.

Macro

The major indices finished the week mostly lower.The S&P 500 and the Nasdaq were weighed down by the retreat of large-cap tech and AI giants. The S&P 500 fell 1.95%, and the Nasdaq lost 4.6%. The Chinese extended their divergent performance for the week, as the STAR 50 Index hit a new record high, whereas the Shanghai Composite remained bogged down.