Below is a short note on recent moves in Bitcoin and Ethereum from Justin Chuh, Senior Trader at the regulated digital asset investment manager Wave Financial.
Q1 2021 hedge fund letters, conferences and more
The Shift Over From Bitcoin To Ethereum
Another relatively quiet week for Bitcoin as it ranges between $53k and $59k, and still at a familiar resistance level. Implied Volatility for near term At-the-Money Options has upticked from 65% to 80%. It seems as if price is stalling every time it’s been reaching this level, where buyers aren’t willing to pay more per unit and miners are very happy to sell and take profit. I pointed out the lower low from 2-weeks ago, we should also note this lower high, and remember it’s been nearly a month since Bitcoin was above $60k. Not to inject any FUD, but we should be able to admit when the party's over. Bitcoin has been on a great tear, up from $9k this time last year, and 103% YTD.
Eyes continue to shift over to Ethereum as it continues to push milestones and make new highs. Last week breaking through $3k, and again this weekend through $4k. We know DeFi as the leading driver, but let’s ask ourselves, what else? There are definitely other reasons for this move. I’m thinking due to stagnating Bitcoin, we’re seeing risk participants rotating over to the second largest and most trusted blockchain technology. Investors may also be positioning themselves in front of Ethereum ETF launches. Another huge stamp of approval is the European Investment Bank issuing €100m two-year zeroes on the network, minting its first digital bonds and tokenizing those securities. Talk about a big deal. On a more technical side, we’re nearing the introduction of Ethereum Improvement Proposal (EIP) 1559 this summer, first introduced in 2018. Without getting too deep into it, EIP 1559 will change the network’s fee structure, making fees paid to execute transactions more predictable and stable, and ultimately lowering supply. Ethereum has also been running strong, up from $200 this time last year, and 456% YTD.
There are still big tail risk bets out there, with Dec Bitcoin Options trading at the $400k strike, and Dec Ethereum Options trading at the $25k strike. Bitcoin dominance is now 44%, and Ethereum is at 19% of total market cap.
About Justin Chuh, Senior Trader at Wave Financial
Prior to joining Wave Financial Justin Chuh was at proprietary trading technology business HC Tech where he was a FX trader for 7 years. Justin is a CFA Charterholder, member of CFA Society Los Angeles and graduated from Arizona with a BS in Business Economics and Management. Justin is responsible for trading Bitcoin and other digital assets that make up Wave’s assets under management, ensuring that their trading strategies cover fund inflows and redemptions.
About Wave Financial LLC
Wave Financial LLC (Wave) is a Los Angeles and London based investment management company that provides institutional and private wealth digital asset solutions. Led by a team of highly experienced financial services professionals, Wave provides investable funds via their diverse investment strategies applied to digital assets and tokenized real assets. Wave also offers managed accounts for HNWIs and family offices seeking tailored digital asset exposure, bespoke treasury management services, and early-stage venture capital and strategic consultation to the digital asset ecosystem.
Wave is regulated as a California Registered Investment Advisor (CRD#: 305726).
T: https://twitter.com/wave_financial
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