Mid-Week Musing 6.1.22
š§ The Other, 60k ETH Calls, Option Flows, $568M in Funding, and One Meme.šµ
Table of Contents
š§ The Other
šµ Option Data
š Recap
š Funding
š¤” Meme
3 min read
Opinion
Talking to an RIA yesterday I realized how far outside the normie zeitgeist we exist, we are ā as far as the old guard is concerned ā āthe other.ā I like it that way. Although large institutions are here, the bulk of middle Americaās money (which is massive) has yet to find its way into the world of crypto. However, driven by client demand, large broker-dealers like LPL are warming to the idea of dipping their toes into the heretical world of crypto. Pandoraās box is open has been opened my friends.
In our humble opinion, these next three years are crucial for preparation. Troy might fall, it might be buried under layers of regulatory-induced ruin, crypto might look unrecognizable in a few years, but then again, it might not.
Options
Following equities yesterday $BTC pumped quite hard. We will see how long this lasts. Although inflation numbers looked somewhat better, Biden (allegedly) gave Powell the go-ahead to remain hawkish.
Ok, letās get into Option flows. On May 17th we saw a massive amount of far OTM $ETH Call buying. 60k combined between DEC and MAR.
Last week was the opposite, around the 25th/26th of May we saw a notable amount of bearish flow being blocked on Paradigm, including 12k 24JUN 1400 puts. This doesnāt mean the upside lottery tickets were wrong, they still have DEC to MAR for that thesis to play out, but in the near term, traders wanted insurance. Which turned out to be right, because $BTC ended up dropping about $1k.
This week they flipped again buying an ungodly amount of Call Flyās. And like clockwork $BTC and $ETH both ripped higher.
ETH:
15k Sep 3500/4000/4500 call fly bot
11.2k 3Jun 2050 calls bot
10k Sep 3000/3500/4000 call fly bot
5k Sep 3000/3500 1 x 1.5 call ratio bot
4k 1Jun 2000 call bot
3.25k 3Jun 2000 calls bot
A FOMO upside chase as BTC spot breaks through 30k over the US long weekend. With implieds at local lows, Paradigm blocks skewed overwhelmingly to short-dated calls.
We believe a dealer upside gamma squeeze into an illiquid post-holiday tape perhaps exacerbates the spot move further.
-Joe Kruy, Paradigm
Last thing, we mentioned a while back on Twitter that IV seemed to be stuck in its range and that right now might be a good time to sell vol during spikes. It turns out, we were right, sometimes we have good ideasā¦sometimes.
Note: Bear markets are good for LPāing in pools, being that LP pools are essentially short straddles. (More on that next week.)
Recap
On to something a bit more entertaining. Iām interested in watching what happens on Paradigm because sophisticated traders use their platform in size. This can give you a high-level idea of market sentiment, not always, but itās another tool for the toolbelt.
A while back I was lucky enough to do an interview with Anand, the founder of Paradigm. It was fascinating to get his thoughts on business, and the crypto space at large. If you missed it, you should give it a read.
Funding
This week there was $568M raised across 45 funding rounds.
Source: Dove Dispatch
Notable size:
Elliptic ($60M) | Making cryptocurrency transaction activity more transparent and accountable ā with participation from Evolution Equity Partners, SoftBank, Albion VC, Digital Currency Group, Wells Fargo, SBI Financial Services, Octopus Ventures, SignalFire, Paladin Capital Group, and J.P. Morgan.
Babel Finance ($80M) | A leading global cryptocurrency financial institution specialized in serving high-net-worth individual and institutional investors worldwide ā with participation from Jeneration Capital, 10T Fund, Dragonfly Capital, BAI Capital, and Circle.
StarkWare ($100M) | Scalability solution relying on cryptographic proofs produced by an off-chain prover running in the cloud, and then verified by an on-chain smart contract ā with participation from Greenoaks Capital, Coatue Management, Tiger Global Management, Paradigm, Three Arrows Capital, and Sequoia Capital.
Meme
Live shot of Alameda v. Retail.
It really do be like that tho.
Until next timeā¦
_Variant
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