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Vibe Check: Ether Finds Support: CoinDesk Indices' Todd Groth
Periodic observations and market musings from Todd Groth, Head of Research, CoinDesk Indices.
Support in the ether.
It looks like we’ve hit a decent level of support for ether ETH$1,788 as we hug the $2,200 level and, coincidentally, the 38 Fibonacci retracement level - one of the indicators traders use to gauge potential price stall or reversal.
STORY CONTINUES BELOW
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As we wait for more constructive price trends to re-emerge within the market, it’s a good time to check in on the macro environment. While we’ve recently seen an uptick in interest rates (10-year currently at 4.12%), the longer-term trend lower, for real rates, is still supportive for digital assets, especially the smaller-cap altcoins contained within the CoinDesk 20 Index- a benchmark that tracks top cryptocurrencies.
So how did the crypto options market price in the bitcoin BTC$93,220 spot exchange-traded fund (ETF) launch? From a quick ex-post analysis of option implied vs subsequent realized volatility (see below), expectations in the markets have subsided after the event, and it looks like the bitcoin options market gang correctly priced in the market reaction while team ether options were asleep behind the wheel w.r.t. the rally in ETH post bitcoin spot ETF launch.
Bitcoin options have been more efficiently priced over the period, too. Perhaps team ether got too fat and happy off of collecting that implied vs. realized premium spread?
Need more color on what's happening in the markets? Check out these stories:
- Bitcoin ETF Flows Show Negative Trend For First Time Since Launch:Outflows at Grayscale’s GBTC have remained high while inflows for the other funds as a group have slowed.
- ETH ETFs Are Inevitable — But When?:As the SEC delays applications from Grayscale and BlackRock, here is a look at how soon the Securities and Exchange Commission might approve these investment products.
- Many Retail Investors See Bitcoin Price Dropping Below $20K by Year End: Deutsche Bank:More of those surveyed said they expect bitcoin to disappear than those who said they expect it to continue to exist, the bank said.
Todd Groth
Todd Groth was the Head of Index Research at CoinDesk Indices. He has over 10 years of experience involving systematic multi-asset risk premia and alternative investment strategies. Before joining CoinDesk Indices, Todd served as Head of Factor Insights at Premialab, an institutional fintech analytics company, and as a Managing Director at Risk Premium Investments (RPI), a systematic multi-asset asset manager. Before RPI, Todd was a Quantitative Portfolio Manager at Investcorp and began his finance career at PAAMCO, a fund of hedge funds, as a manager within the risk analytics group. Todd holds a BS in Mechanical Engineering from the University of California, San Diego, an MS in Mechanical Engineering from the University of California, Los Angeles, and a Master of Financial Engineering from UCLA Anderson School of Management. Todd holds BTC and ETH above CoinDesk’s disclosure threshold of $1,000.
