deen

10 September 2021

Market commentary: “We saw moderate buying interest at low price levels”

Mike Schwitalla

Mike Schwitalla

Senior Trader at Crypto Finance (Brokerage) AG

About the author

The week started so well…

BTC$ traded above 52,000, and ETH$ scratched the 4,000 mark. One day later, we saw a bloodbath throughout the entire market. BTC$ plunged almost 17%, the alts on average 24%, and the small caps in part well over 30%. The market tried to explain this sell-off in various ways. From “buy the rumour sell the fact” for El Salvador news, the high leverage in the market, to the potential conflict between Coinbase and the SEC. I distance myself here from any possible explanations. Because I am not good at telling stories.

What was amazing was how the options market reacted. With such market movements, the volatility term structure normally becomes inverse (short-term implied vol trades higher than later maturities). Not so this time. Neither in BTC nor ETH was the structure inverse.

On the client side, we also saw moderate buying interest at low price levels.

Later this week, we recovered some of the price declines.

The high-flyer from August also performed excellently after this sell-off. Solana even climbed to a new all-time high of over USD 210. Crypto wizard Sam Bankman-Fried also supports Solana with his statements, and sees Solana’s recent rise as sustainable. In the short term, I disagree. But more on this in TA-Tuesday next week.

 

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