Amber Group Market Weekly Review 211220 | Insights on Bitcoin and Ethereum markets, news highlights

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Bitcoin and Ethereum Market Observations:

• We observe that during the recent pullback, Bitcoin holders have been accelerating their selling at a loss, indicating investors' nervousness about further decline. Following the FOMC meeting, the cryptocurrency market started to rebound as it has already digested the hawkish expectations of the Fed for three potential rate hikes in 2022 and a faster tapering of asset purchases over the past few weeks.
• Compared to the end of November, the open interest in options and futures markets has decreased by 30% and 14%, respectively. The 1-month and 3-month options skew is around 0%, indicating that the market does not have a clear directional expectation for mid-term price performance. We expect the price of BTC to remain volatile for the rest of this month.
• Terra is planning to increase incentives on Convex: $12 million worth of UST will be swapped for LUNA to participate in Convex's bribery pool, gaining more CRV tokens on Curve stablecoin pool, while also distributing $250 million worth of UST to incentivize stablecoin pools.
• Nike announces the acquisition of RTFKT Studio, bringing more attention and investment to the NFT market and Opensea. Opensea's trading volume has been steadily recovering over the past week.

Options Market Observations:

With spot BTC ranging between 45k to 48k, the 1 to 3-month expiry BTC options implied volatility remains below 90. Notably, the ATM IV term structure has steepened sharply compared to previous weeks. One possible reason for this term structure could be that the market is becoming more patient with BTC price consolidation and more willing to sell short-term options. Options traders are advised to consider the term structure in addition to their views on future price movements to enhance capital efficiency. For example, option sellers may consider options with a month or longer expiry as they have higher implied volatility.

Market News and Highlights:

• The Bank of England plans to advance international negotiations for establishing a regulatory framework for crypto assets. Sarah Breeden, Executive Director for Financial Stability Strategy and Risk at the Bank of England, stated that an increasing number of banks are providing crypto trading and custody services to customers, necessitating global rules to protect the financial system.
• Uniswap v3 contract deployment on Polygon approved with 99.3% consensus.
• DeFi yield aggregator Yearn.finance recently announced the purchase of $7,526,343 worth of YFI from the open market. They bought back 282.4 YFI at an average price of $26,651, accounting for 0.77% of the total supply.
• Instagram head Adam Mosseri stated on Saturday that Instagram is actively exploring NFTs and how the platform can make NFTs easier to use. Mosseri added, "I think this is an interesting area where we can play and hopefully help creators."
• Adidas Originals NFT trading volume surpasses 10,000 ETH, valued over $40 million. In November of this year, Adidas Originals issued POAP NFT with a total supply of 3,178.
• Fantom chain's yield farming platform Grim Finance suffers a flash loan attack, with losses exceeding $30 million. Grim Finance has currently suspended all vaults and advises users to withdraw their assets immediately.
• Decentraland announces a collaboration with NBA star Stephen Curry and sports apparel brand Under Armour to release a collaborative NFT on December 21st at 8 pm EST.

Traditional Financial Markets:

• All eyes were on the Federal Reserve last week. The Fed announced a faster pace of tapering bond purchases and the possibility of three rate hikes next year.
• Following the December FOMC decision, the biggest uncertainty of the year was resolved, leading to a rise in US stocks. However, the gains were all given back during the week. By the end of Friday, the Dow Jones Index fell by 605.55 points to close at 35,365.44 points; the S&P 500 Index dropped 91.38 points to close at 4,620.64 points; the Nasdaq fell 460.92 points to close at 15,169.68 points.
• Due to concerns about the Omicron variant of the coronavirus, the yield on the 10-year US Treasury bond briefly dipped below 1.37% on Friday, closing at 1.41%.

About Amber Group:

Founded in 2017, with operations across major cities in Asia, Europe, and the Americas, Amber Group provides crypto financial services to over 800 large institutional clients. With a total trading volume exceeding $800 billion on over 100 exchanges and assets under management exceeding $4 billion, they help clients manage risks associated with various crypto assets, offering flexible investments and maximizing returns to optimize long-term value.

Amber Group official website: www.ambergroup.io

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