Crypto Market Insights 12th October 2022

Market Summary

• Bitcoin & Ethereum are up 1.31% & 1.01%, respectively, over the past fortnight.
• Binance lists $GMX.
• The Binance Smart Chain halted on Thursday after an exploit on the BSC Token Hub protocol. An estimated $100m was drained.
• Huobi Global is set to be acquired by a Hong Kong-based investment firm, About Capital Management.
• US CPI is due to be released tomorrow, estimated at 8.1%.
• The BoE brought back its QE operations after significant instability across the UK’s financial markets.
• Traditional markets, the S&P 500 & the Nasdaq 100, are down 2.69% & 4.36%, respectively, over the past fortnight.
• Greythorn views that Bitcoin will range below $21,000 over the upcoming week.

The market opened at $19,436 this week. Although displaying slight weakness over the weekend, Bitcoin continues to hold its position above $19,000, where it has fluctuated around for the past several weeks.

Increased volatility is expected at a series of price levels with negative gamma supply, namely the interval between $16,000 and $19,000, $20,000 and $25,000.

Should price decrease, $15,000 and $14,000 are the only two significant levels of support. On the upside, the first relatively weak resistance is $20,500. $21,000 is the second resistance level, while the interval between $22,000 and $24,000 and $26,000 are all areas of significant resistance.

Option supply has increased over the past week, indicating relative stability over the next few trading days. Participants are injecting liquidity into the market through option selling, particularly the $21,000 and $23,000 calls.

Considering UK GDP is set to be published on Wednesday, coupled with inflation data from the US & Germany the day after, sharp and extended moves can present themselves with these catalysts.

Greythorn believes that Bitcoin will range below $21,000 over the upcoming week based on our option flow model.

For an introduction to Greythorn Option Flow Model, please refer to our newsletter from 8th June 2022. https://greythorn.substack.com/p/greythorn-asset-management-newsletter

Greythorn’s view of markets is significantly dependent on supply & demand mechanics. As crypto markets mature & attract large flows of capital, their derivatives markets also grow. Derivatives markets tend to have a large influence on their underlying assets as market participants tend to hedge their exposure through spot & futures markets. Our proprietary option flow model has been developed in-house to inform our judgement regarding how positioning across derivatives markets may influence the movement of Bitcoin.