Valmar Capital Update (Issue #36)
On A Serious Note:
Volumes:?Trading volumes took a hit across the board as the market struggled for direction. 7D ADV for spot BTC?and ETH measured $15.9B (-42.3% w/w) and $7.1B (-42.6%). 7D ADV for BTC and ETH futures similarly fell to $76.4B?(-26.3%) and $29.8B (-36.6%). Amidst the low volumes, futures open interest steady made new highs this week and?currently sit at $36.3B for BTC futures and $12.6B for ETH futures.
Volatility:?With this slight consolidation action, 30D realized vol for BTC and ETH have come down a little to 76%?and 85%, respectively. 30D implied vol for BTC and ETH measure at 73% and 79%. ATM implied vol 3-6 months out?remain in the 78-80% range.
BTC and ETH Price:?This week, BTC managed to reclaim the prior ATH and has been content to consolidate in the?$68,400 - $71,800 range. BTC currently trades at $70,050. ETH spent most of the week between $3,450 and $3,680?and currently trades at $3,535.
Regulatory and Policy:
SEC scored a minor victory over Coinbase this week, with a?Federal Judge denying Coinbase’s motion to dismiss and?allowing the SEC to proceed with its lawsuit. To be fair, such a broad dismissal was a longshot and this will be a?protracted, expensive, and crucial legal showdown.?
While there is nothing definitive yet,?rumors?are Ripple and the SEC may be trying to hash it out.
A judge has?upheld the right of the Federal Reserve Bank of Kansas City to reject Custodia Bank’s application for a?Federal Reserve Master Account, which allows banks direct access to the Fed (as opposed to access via?intermediaries). The crypto banking battle is one of the toughest, and we salute Custodia for their efforts.
OKX, the second largest exchange by volume, has?re-positioned its US compliance team as its highest priority. Like it?or not, seems as if the US regulatory actions against offshore exchanges are starting to have their intended effect.
Things are getting wild in Nigeria with the?Binance?situation. It seems as if?one of two of the kidnapped executives?escaped, while the other is?suing the government for violating his human rights. We continue to hope for a speedy?resolution, and this is a hard lesson in the risks involved in operating within certain emerging markets.
Man-child supreme,?SBF, was sentenced to 25-years in prison for fraud on Thursday. Sounds like he will be in?medium-security or lower, but that’s still a serious amount of time in a bad place.?Well?earned.?His parents still lack?perspective on the matter, and we hope all FTX money received by them is clawed back.
Adoption:
BTC ETF flows return to positive this week,?with ARK hitting a daily record, and?BlackRock and Fidelity products?amassing ~$17 B in AUM.
Mr. Buterin has some thoughts on Ethereum post the?Dencun?hard fork:?he will be focused on increased scalability?and data availability.
The tokenized fund BlackRock launched last week??It has raised ~$240 M in inflows thus far.
Quick Take Or Two:
A few things this week. First, a big thank you to Seward & Kissel for hosting a fantastic Blockchain Symposium. Valmar was privileged to share its thoughts on crypto off-exchange settlement solutions, and we were encouraged to see so many new faces beginning and continuing their crypto education. We particularly found insights from bankruptcy partners to be illuminating: tldr, bankruptcy courts are run by bankruptcy legal professionals not crypto professionals, so expect bankruptcy decisions to proceed as much along traditional rails/outcomes as possible.
Not sure if there is anything to say about SBF that has not been said already (by us and others). So, we will keep it simple. Crypto is still in its early stages with explosive growth on the horizon. Build good product, present honestly, proceed with consistency and patience, institute checks and balances, and the rest will take care of itself. History is a guide and quality does rise to the top.
On The Lighter Side Of Things:
To those that are celebrating this weekend, Happy Easter! Also, baseball is back (we have no bias). Spring feels like Springsteen.