QCP Market Update- 7th August

US came to the rescue again overnight, providing much needed support and liquidity to a panicking market. This was especially felt in crypto with strong spot buying on Coinbase orderbooks. By the end of the US session, BTC recovered to $56,000 and ETH to $2,500.

Macro markets rebounded hard today with Japan’s stock market up 9% today after a 12% drop yesterday. US futures also signal a potential rebound following US ISM data showing service sector expansion in July.

Has normalcy returned?

It is definitely too soon to say. While the VIX has fallen from its peak of over 65 yesterday, it remains above 30. Asset prices are likely to stay volatile and markets remain choppy until clarity on Fed and BoJ policy is provided, with key updates expected from BoJ Deputy Governor Uchida on Wednesday and the Fed’s Jackson Hole conference from August 22-24.

Chatters of an emergency rate cut…

We believe it is unlikely, as it would seriously undermine the Fed’s credibility and reinforce market panic, feeding into the belief of an impending recession.

Trade Idea

Yesterday’s risk-off rout flushed out a decent chunk of leverage. With prices having fallen off a cliff, it is possibly time to start thinking about accumulating BTC and ETH spot.

BTC Accumulator

Buy BTC spot at 9.8% discount (49,800) every week as long as spot is below 60,000.

• Maturity: 11OCT24 (10 weeks)
• Strike: 49,800 (-9.8%)
• Upper Barrier: 60,000 (+8.7%)
• Observation Frequency: Weekly

(Spot Ref: 55,200 BTCUSD)

ETH Accumulator

Buy ETH spot at 10.5% discount (2,200) every week as long as spot is below 2,850.

• Maturity: 11OCT24 (10 weeks)
• Strike: 2,200 (-10.5%)
• Upper Barrier: 2,850 (+15.9%)
• Observation Frequency: Weekly

(Spot Ref: 2,460 ETHUSD)