Market Volatility and Strategic Response: Seizing Bitcoin Opportunities and Passive Income | Weekly Market Insights Review

On the evening of October 10th at 8 PM, during a live broadcast on Matrixport's official YouTube channel, the head of asset management at Matrixport analyzed the reasons behind the significant fluctuations in BTC and ETH prices from October 1st to October 9th, influenced by global macroeconomic conditions, changes in liquidity, and market sentiment. The discussion also explored the institutional behavior in the current options market, providing investors with potential investment directions and strategy recommendations for the future.

The live broadcast content is as follows:

In the first week of October, the price of BTC fell from $61,000 to below $60,000. The underlying reason is the increasing uncertainty in the global macroeconomic environment, which has led to selling pressure from multiple fronts in the cryptocurrency market. The capital outflow caused by changes in Chinese policies has also intensified market pressure, dragging down BTC's short-term rebound.

Analysis of Market Volatility Reasons

Fluctuations in Macroeconomics and Market Sentiment
Recently, the performance of global stock markets has also had a significant impact on the cryptocurrency market. The A-shares experienced a slight rebound under the stimulus of the People's Bank of China's interest rate cuts and adjustments to mortgage rates, but this did not provide strong support for the cryptocurrency market. On the contrary, the return of capital to traditional financial markets has increased the downward pressure on crypto assets.

Correlation Between U.S. Stocks and the Cryptocurrency Market
The U.S. non-farm payroll data exceeded expectations, and the strong data drove a rebound in U.S. stocks, which in turn led to a short-term rise in BTC prices, which are highly correlated with U.S. stocks. However, unlike gold, which serves as a safe-haven asset, BTC's risk asset attributes are more pronounced. Amid increasing global geopolitical risks, gold prices have risen due to tensions in the Middle East, but BTC has failed to show safe-haven characteristics and instead fell in tandem with the U.S. stock market's pullback, indicating that the market views it as a high-risk investment rather than a safe-haven tool.

During this rebound, small and mid-cap tokens (altcoins) outperformed BTC, indicating that risk assets perform better during capital inflows. This also reflects the speculative nature of the cryptocurrency market, where market liquidity is more concentrated in high-volatility small-cap assets.

Impact of Technical Factors and Market Selling Pressure
From a technical perspective, BTC has been oscillating around $60,000, failing to effectively break through the resistance between the 50-day and 200-day moving averages. Each time the market rebounds above $61,000, it is accompanied by strong selling pressure. This indicates that the market is still digesting large-scale selling pressure and has not yet formed a stable upward trend.

Regarding ETH, after a significant decline, its price has fallen below $2,000, and market demand remains weak. Although ETH's decentralized applications have strong fundamental support, the current decrease in on-chain activity and weak demand in the DeFi sector have dragged down ETH's price performance. Its price performance is far inferior to BTC, indicating that ETH has not yet escaped downward pressure in the short term.

Current Context of the Options Market and Institutional Behavior

Volatility in the Options Market and Institutional Behavior
As global macroeconomic uncertainty increases, the volatility in the options market has also risen significantly. Especially with the U.S. elections approaching in November, the expectations for volatility in the options market have become more pronounced, with institutional investors using the options market to hedge against future market volatility risks.

Data from the options market shows that short-term volatility remains low, but the volatility expectations for November have significantly increased, particularly around the election period when volatility reaches its annual peak. This indicates that the market is highly concerned about the impact of political events, and institutional investors are preemptively positioning themselves in the options market to avoid the risks of sharp market fluctuations. For example, some large institutions have increased their options trading volume around the expiration dates (such as late September and early October) by employing a "dual strategy" of buying both call and put options to hedge against future price fluctuations.

This "dual buy strategy" allows institutions to profit regardless of whether the market rises or falls during significant volatility. Meanwhile, the launch of Bitcoin ETFs in the U.S. has also attracted more traditional financial institutions to participate in cryptocurrency options trading, boosting the activity in the options market.

Changes in Funding Rates and Market Sentiment
From the perspective of funding rates, the arbitrage opportunities in the cryptocurrency market are gradually decreasing. At the beginning of the year, funding rate arbitrage yields were high, but they have now dropped to around 8%, which is not much different from the yield on U.S. Treasury bonds. This indicates that the space for risk-free arbitrage is shrinking, especially in the context of changing global interest rates, with capital increasingly flowing into traditional financial markets, further exacerbating the liquidity pressure in the cryptocurrency market.

This phenomenon suggests that liquidity in the cryptocurrency market is relatively tight in the short term, with increased market volatility, and institutional investors are more inclined to use the options market for volatility trading to achieve relatively stable returns.

Investment Directions to Watch

Volatility Advantage Strategy: An Effective Tool for Managing Market Volatility
Current market volatility expectations are increasing, especially as the U.S. elections approach, which will further elevate volatility. This provides investors with opportunities to optimize returns through volatility trading. During October and November, the volatility curve in the options market shows that the market's expectations for uncertain events are strengthening, particularly with a surge in demand for hedging political risks.

In the current environment, a volatility advantage strategy is an effective risk management tool. By purchasing a combination of call and put options, investors can profit in a highly volatile market, regardless of whether the market rises or falls.

Passive Strategy: Advantages of the M-BTC Covered Call Strategy
In the face of frequent market fluctuations, Matrixport's M-BTC covered call strategy is an effective tool for stable returns, designed specifically for long-term BTC holders. This strategy allows investors to earn stable option premium income by holding BTC spot and selling BTC call options.

One major advantage of this strategy is its high transparency and low risk. The covered call strategy is particularly suitable for investors who are unwilling to take on the risks of high-frequency trading. Through this strategy, investors can achieve stable passive income during volatile markets, and compared to simply holding BTC, this strategy can effectively reduce losses caused by significant market fluctuations.

For example, during a market fluctuation period, investors holding BTC spot can sell call options every two weeks to earn option premium income. If the BTC price rises above the set strike price, although investors may lose some upside potential, the overall return remains stable and attractive. This strategy is particularly applicable in situations where the market is highly volatile and investor expectations are uncertain.

Additionally, compared to traditional staking and lending, the covered call strategy does not require additional margin, and the financing costs are relatively low, making it an efficient financing and yield management tool.

Conclusion

In the current context of increasing global macroeconomic uncertainty, investors should pay more attention to risk management and stable return strategies. The long-term trends of BTC and ETH still hold appeal, but in the short term, market volatility is significant, and investors need to flexibly employ options strategies to mitigate risks and enhance returns.

Matrixport will continue to launch more innovative financial products to help investors achieve steady asset appreciation in the current complex market environment. Through passive strategies like the M-BTC covered call strategy, investors can ensure stable returns in volatile markets without losing potential growth opportunities.

For more exciting content, you can check out the YouTube replay: https://youtube.com/live/FyUF_2mnT84?feature=share

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[Matrixport Weekly Market Insights] is an interactive knowledge-sharing program newly launched by Matrixport, live-streamed weekly on the Matrixport Official YouTube Channel. This program regularly invites industry product leaders, top analysts, and KOLs to discuss investment logic under different market conditions, share investment insights, and assist users in achieving asset appreciation.

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Disclaimer: The above content does not constitute investment advice, sales offers, or purchase offers to residents of the Hong Kong Special Administrative Region, the United States, Singapore, or other countries or regions where such offers or invitations may be prohibited by law. Trading in digital assets may involve significant risks and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions made based on the information provided in this content.