BIT Blog

"The W"

"The W"

“It's not panicking if you're first.”

- Margin Call
The W
Who doesn’t love bull market volatility? Within one week, we went through half a cycle of pain and glory—from a lull in the lower $40K range to new highs above $45K, only to drop down over 10% within a few minutes. Shorties with long arms and deep pockets all got flushed in a flash crash that even Kodak couldn’t have pictured.

While it’s completely predictable that Crypto Twitter piles on a single target to blame for a multi-million dollar dip, that overlooks the fact that the market was already overheated and over-leveraged. Look no further than funding rates and futures premiums pushing to annualized rates above 60%.

We’re all excited for the ETF New Years’ party, but if you pre-drink straight vodka, you might not make it 'til the countdown. And if you care this much about the ETF being priced in or not, your time horizon is too short. It's all noise.

Whether the ETF comes today, next week, or next quarter, the only thing that matters is that A) it will launch in the near term with long-term effects and B) the halving is coming for you. More demand combined with less supply is what God Candles are made of, to use an Austrian Economics term. Amidst the W-shaped recovery and bullback to $44,500, did you at least buy the dip, anon?

What else matters?

When you operate in an industry that experiments rapidly, some might even say innovates relentlessly, the best thing is often the new thing without the baggage of the previous soul cycle. And there’s no shortage of shiny new things now that every dog has his day listing bonky tokens wif hats on DEXs. But there’s more sustainable plays besides meme tokens.

Way out in the Cosmos, there’s a whole universe of new protocols with Big DeFi Energy and interchain genesis block airdrops. ATOM, OSMO, INJ, KUJI, and TIA stakors could all be eligible for a piece of the pie when new modular chains launch native tokens. Right now, it’s all about Dymension’s DYM token live and direct in your Keplr wallet.

We can’t act like we forget about SEI. Launched in August 2023 with the backing of Jump Crypto and Multicoin Capital, the trading-focused EVM chain has shown bullish on-chain metrics and developer activity driven by a forthcoming update the developers say will make the network the fastest blockchain in the market.

Waking up from its slumber in the $0.10 and $0.15 range, SEI finally took off reaching a new ATH at $0.877, up 68% over the last 7 days. After a fashion, it already has its own meme coin with super SEIYAN gaining 125% in just 2 weeks. There’s probably an extensive SEI airdrop playbook out there, but we’ll get into that another time.

Why did every paragraph in this note start with a ‘W’? I don’t know, it just happened and I like it.
Understanding Arbitrum
The Ethereum network has long been a cornerstone of the blockchain ecosystem, serving as the preferred platform for smart contracts and decentralized applications (dApps).

However, the network's scalability limitations have become increasingly apparent, especially during periods of high activity when transactions face delays, and gas fees soar to exorbitant levels.

This predicament, often referred to as the "blockchain trilemma," has prompted the development of Layer 2 scaling solutions, with Arbitrum emerging as a notable player in this space.
Read more
Researching Aptos
In this article, we explore the evolution of the Aptos blockchain, born from Meta's Diem project.

Covering its history, team, funding, and technology, we detail recent 2023 developments, emphasizing robust on-chain data and ecosystem expansions.

Despite mixed community sentiments, Aptos exhibits strong market performance, boasting over 5,800 transactions per second, 1.4 million monthly users, and diverse projects.

The article provides a balanced perspective on Aptos' journey, from its origins to its current position in the blockchain landscape.
Read more
Ethscriptions: Ethereum's Response to Bitcoin Ordinals
Following the significant impact of Bitcoin Ordinals Inscriptions, which revolutionized the Web3 space by introducing the Ordinals protocol in January 2023, Ethscriptions have captivated the attention of developers, crypto enthusiasts, and investors alike since their introduction in June 2023.
Read more
Technically Speaking
Market analyses from our partners

Entering 2024, global markets are optimistic, buoyed by bullish sentiments across various asset classes except the USD. Reflecting on 2023, risk assets thrived amid Fed rate hikes.

With momentum and central banks signaling rate cuts, the risk-on move prevails, supported by strong seasonality and fresh capital inflows. Traders return to a busy week with key economic data, including ISM, FOMC Minutes, ADP, NFP, and Durable Goods.

Crypto markets witness rapid recovery, nearing BTC highs at $46k, fueled by speculation around SEC approvals for BTC spot ETFs. Traditional equity-crypto proxies show year-end profit-taking ahead of the ETF decision, cautioning against standing in the way of market momentum.

Happy New Year and successful trading in 2024!

Fueled by insider news on ETFs, BTC surged to $45,000, reaching a nearly one-year high. This triggered a sharp rise in short-term options IV, surpassing 70% on January 12, and flat options IV reaching 65% this week.

Block trading, dormant for days, saw renewed activity with almost $300 million notional value traded in block calls, dominated by short-term flat and intermediate-term vanilla options.

The resurgence in block trading suggests potential ETF developments in the first half of the month, raising anticipation in the market.

In anticipation of significant fluctuations in ETFs' Realized Volatility (RV) and Implied Volatility (IV), caution is advised for beginners and intermediates, favoring simpler option strategies.

For BTC, the call side on January 12th shows an 8% increase compared to ATM, suggesting avoiding short positions due to potential gamma or delivery losses.

Implied Volatility is at a nearly year-high, and short vega strategies may face short-term unrealized losses but are likely to suppress IV in the longer term.

Short-term IV saw a pullback after surging on January 2nd but remains significantly higher than a week ago. Large-scale transactions and Gamma points focus on $45k, $46k, and $50k levels.

For ETH, long positions on shallow OTM calls for January 12th are favored, with less emphasis on Gamma positions compared to BTC.
Required Reading
  1. Crypto Hayes: Expression - Substack
  2. The Messari 2024 Crypto Thesis - Messari
  3. Pomp: Trade of Our Generation- Substack
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