BTC and ETH Market Insight

The US Federal Reserve raised rates by 25 basis points, but the future of rate hikes remains uncertain. The market anticipated cuts, but the Fed was committed to its inflation target. Curve Finance launched crvUSD on the Sepolia testnet, backed by a basket of stablecoins, to provide more stable trading pairs on DEXs and minimize price volatility. The rise of memecoins has resulted in increased gas fees and network congestion. Sui, a new alt layer 1, recently launched, and cheaper alternatives may emerge as users seek to avoid high transaction costs on the ETH mainnet. Despite potential issues, the crypto market often offers support for new chains.

Options Market

It was a disappointment for gamma holders ahead of the FOMC trading session as there was effectively little in the way of crypto assets fanfare. Even though the banking woes persist, the vol market in BTC and ETH remained relatively sanguine as both implied and realized vol continued to collapse, with Jun IV now sitting slightly below 50 for both and Sep IV sitting around 51 which is near the historical low. The IV spread between BTC and ETH reverted to flattish in a slow fashion after the Shapella upgrade. Skew-wise, more optimism was observed in BTC than in ETH. Buying long-dated vol does look attractive at this juncture. Additionally setting up an ETH/BTC IV spread could still be considered given IV on BTC is trading relatively rich compared to ETH.