TL;DR

- June saw a shift in trading activity, with regulatory news and institutional focus sparking FOMO and momentum-driven trading.
- Paradigm had a strong month, with impressive trading volumes and a significant share of the BTC Option Market.
- Spot ETF filings, led by Blackrock, drove institutional spot buying and raised questions about the nature of spot demand.
- Catch the latest Paradigm articles and episodes for insights on Bitcoin, market dynamics, and volatility in ETH.

Jekyll and Hyde

What a rollercoaster of a month! The end of June was a complete 180 from the beginning. 

First, regulatory news sparked FOMO and momentum-driven trading, while spot ETF filings fueled institutional spot buying. Then implieds rallied, creating an exciting backdrop for traders. At Paradigm we saw our second-best month ever, with a total trading volume of 12.3B while also commanding 38% of the $BTC Option Market Share.Long story short, volume went from 0 to 100 really quickly. Now let’s dive into the weeds a bit. 👇

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End of June Pamp

The month of June was seemingly a complete converse to the trading activity of the month of May. As implieds rallied due to the onslaught of regulatory and institutional-focused news coming out, chaotic price action was catalyzed by FOMO and momentum based traders re-entering the fray. With the SEC suing Coinbase at the beginning of June and alleging that some of the cryptocurrencies offered were unregistered securities, price saw a quick dive back to the $25,000 levels. 

In the coming weeks, Blackrock led the charge to file for a spot BTC ETF and since then their push has been accompanied by several other notable asset managers renewing their old applications or filing new ones. This onset of spot ETF filings catalyzed a move higher, and led to massive spot buys across the board - seemingly by institutions. 

There is some hesitation about what institutions had been buying spot the past few weeks as news came out that the most recent purchases were specifically led by Michael Saylor as he purchased another 12,333 BTC. Is the recent spot demand driven by a diverse set of institutional interests? Or is it just Saylor looking to buy the dip on the back of this news.

From a trading perspective, the regime seen in May has most certainly flipped. Dwindling and dawdling implieds quickly flipped to a much more exciting backdrop for both directional and volatility-focused traders. Those local lows seen in May at one point had flipped from 42 to 62 according to Volmex’s BVIV index, although they have quickly reverted and are on a steady decline now. 

Flows seen during this time were sharply focused on momentum traders chasing upside as several large blocks of OTM calls hit the tape with popular strikes ranging between the 30-40K levels. June 30th will be a massive expiry as the negative dealer gamma seen in BTC has an opportunity to reset as makers reposition their books and offset expiries. 

Skew and term structure across BTC and ETH surprisingly have to be looked at in isolation according to asset. The large ETH overwriter the past two months has been a quintessential reason for the dislocation and kinks across ETH. While the BTC spot-ETF focused news at one point led to a massive shift in skew, favoring calls over puts across a variety of tenors.

June Content Highlights

Macro Pulse: Bitcoin is about to Break

June has been one of the most interesting months for both regulatory and institutional news. With Blackrock filing for a spot BTC ETF and several other competitors diving in as well, take a look at our most recent Macro Pulse article covering this recent institutional wave. We also discuss volatility & flows, macro policy, and much more!

Read Now

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TBP: Diving into Kaiko Research

In our most recent episode of The Big Picture, we brought on Clara Medalie, Director of Research at Kaiko. We discuss a wide range of topics, including some of the most recent flows on Paradigm, BTC dominance, and liquidity data. Join us in this enlightening discussion as we gain a deeper understanding of the Bitcoin market dynamics and the factors shaping its future.

Watch Now

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Increased ETH vol Supply as ETH becomes a Yielding Asset

As Ethereum evolves into a yield asset due to its transition to proof-of-stake and the Shanghai Fork, a large overwriter is significantly influencing implieds across the curve. Check out our most recent research article to learn more about the change in market microstructure as volatility selling became prevalent throughout the recent month.

Read Now

The Mob Has Spoken

Thanks for taking the time to read our Monthly Brief. Q2 is shaping up to be great, and we are excited to see what else the market throws at crypto in Q3. We stand ready and waiting to serve our clients!

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Sincerely,
The Paradigm Team 💜