Key Takeaways‍
• Price weakness and high correlation to equities continue
• No crypto theme so far to override weakness from rates/growth/inflation/war concerns
• While derivatives markets remain subdued, interest in buying longer dated upside persists
• Regionally, EMEA were the standout buyers; by client type, banks and family offices were better buyers.

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Looking back

Crypto markets remain short of idiosyncratic themes, and the past week has again seen prices move in lock step with equities. We started last week with BTC testing the $39,000 support level, it then spent the next three days grinding higher to test $43,000 on Thursday morning in London, before dipping again with equities after Powell, the Fed Chair, again injected more fear into markets with hawkish commentary.

This morning in Asia, ETH is leading the weakness, with the cross testing the lower bounds of the 0.073/0.077 range. This is the range it has traded within for most of April. Liquidity and volumes across the market remain quite poor.

Our clients have been better buyers of BTC and better sellers of ETH, indicating some risk aversion.  Amongst the other coins, we have had strong selling in SOL, LUNA, MATIC and BNB; and strong buying in ADA, LNK, XLM, XTZ and AVAX.   Broken down by client category, our better buyers were banks and family offices.  Regionally, EMEA were the standout buyers.

The lend-borrow market remains quiet, with continued interest to borrow alts, but limited interest in  stablecoins.  Futures basis has also been moribund, unchanged on the week.  

Vol markets have also been quite stable, supported by the price action (market makers short put skew) and capped by the low level of realised volatility, meaning short gamma positions are not difficult to manage, if prices were to  fall.  BTC ATM vol for May is ranging between 56-59 vols, and the equivalent ETH contract is 61-65 vols.  There continues to be interest in buying back end call options in both ETH and BTC, with a large buyer of Dec ETH 7k calls showing their hand on Friday.

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Looking ahead

Quite a big week for equities with earnings for the major tech and social media groups, which could show the way for risk in general this week.  On the macro front, the economic calendar is quite bare, so players may focus on potential risks arising in the following week (Fed, BoE, Payrolls). Suggests we can possibly expect weakness to persist as risk positions continue to be pared back until the end of this week.  The war in Ukraine is also heating up, with the US sending more and more attack weaponry, so could jump to the front of investors’ minds once more, risking another leg down in prices.

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About B2C2

B2C2 is the crypto-native liquidity provider across market conditions.  450+ institutions globally, including agency OTC desks, aggregators, banks, exchanges, FX brokers and hedge funds, rely on B2C2’s full service offering for 24/7 access to the crypto market.

Since it was founded in 2015, B2C2 built its technology, products and services to meet the evolving needs of diverse institutions.  Continuously innovative, B2C2 is trusted by clients to find solutions to industry challenges, such as creating the first crypto ISDA Master Agreement in 2018.

Acquired by Japanese financial group SBI in 2020, B2C2 remains a standalone company, headquartered in the UK, with offices in the US and Japan.  B2C2 OTC Ltd. is authorised and regulated by the UK’s Financial Conduct Authority (FRN 810834).  For more information, please visit https://www.b2c2.com

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