TL;DR

🚀 May Highlights:

• Paradex: Paradex hits $25B in ATH volume
• Paradigm: Paradigm records 14.6b in trading volume amidst ETH ETF volatility!

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May Momentum

May has brought some newfound momentum onto the global crypto markets. Earlier this year in January, the first leap towards new significant amounts of institutional capital began with the SEC approving spot bitcoin exchange-traded-funds. ETH is having its’ ETF approval moment in May and brought the entire market up with it. During May, Paradigm saw 14.6 billion traded and Paradex traded 4.7 billion. Lets dive into the flows of the ETH approval and volatility dynamics in our markets section!

ETH ETF Approval Reactions

BTC ETF inflows for May have been mainly positive totalling ranging from 45 - 300mio in the latter half of May (Chart 1: Bitcoin ETF Flow Table). Looking back on the ETF approval in January, Bitcoin returned +0.60% in January and +43.5% in the following month, February but there were many months of approval, rumors, and anticipation. The timing of the 19b-4 filings caught the market by surprise. Polymarket had the odds of a 31May approval ETH ETF approval at 11% on 20May (Chart 2: Ethereum ETF approved by May 31) and those odds surged as the 19b-4 filings were announced on 23rdMay. May closed with Bitcoin +11% and outperformance from ETH closing +25%.

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Bitcoin’s price surged from 59k to 64k in the first week of May but this was short-lived as it continued to decline until the ETH ETF news shock. Frontend At-the-money implieds touched above 80v and eventually continued to decline down to the 30 handles as the market continued to slowly bleed lower. Frontend call skew began the month with 25 delta puts trading 6 vols higher than calls and flipped as the market rallied. Mid-month calls were trading 1v over puts. Largest Bitcoin flows were volatility sellers taking advantage of the put skew, buyers of put skew prior to the mid month rally. The other large flows were mainly counterparties assuming the rally would continue past the 71k mark and expressed via call and call spread buys.

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May Top Bitcoin Trades on Paradigm

1. 1409x 31-May-24 77000/81000 Call Spread bought
2. 800x 24-May-24 65000 Call bought
3. 782x 28-Jun-24 80000/90000 Call Spread bought
4. 725x 31-May-24 69000 Call bought
5. 800x 31-May-24 51000 Put sold
6. 750x 20-May-24 65000 bought
7. 610x 24-May-24 69000 Call bought
8. 600x 24-May-24 65000 Call sold
9. 596x 28-Jun-24 60000/80000 Bear Risk Reversal bought

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Ethereum had a similar early jump as Bitcoin, starting the month sub $3,000 and small rise to $3,100. Price action bled slowly into the mid month. Market participants were almost completely discounting the ETH ETF approvals and as speculation / rumors began emerging. Option flows around these dates printed. Multiple tranches of 17May/24May call calendars (sell 17May and buy 24May)were purchased prior to the news. Front-end implied volatility exploded on the 19b-4 filing announcements and 1d ATM vols touching 168v (Chart 5). Other notable option flows were call spread buys after the announcement and a put hedge prior to the announcement.

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May Top Ethereum Trades on Paradigm

1. 26125x 28-Jun-24 3800/4800 Call Spread bought
2. 23250x 28-Jun-24 4000/5000 Call Spread bought
3. 23200x 31-May-24 3400 Put bought (hedge)
4. 21950x 17-May-24 3000 24-May-24 3000 Call Calendar sold
5. 19575x 17-May-24 3000 24-May-24 3000 Call Calendar bought
6. 13575x 17-May-24 3300 24-May-24 3400 Call Calendar bought

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Paradex Key Performance Metrics

In the past month, Paradex recorded a Monthly ADV of $151M, with a Monthly Total Volume of $4.7B. Total fees paid amounted to $1.2M, while we maintained 436 active users. The Total Open Interest reached $10.9M, contributing to a Monthly TVL of $11.8M. Additionally, traders earned a total of 4.4M points. On top of all that, Paradex achieved an ATH total trading volume of $25B!

New Market Listings

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Our mission to reach 100 market listings by year-end is in full swing. This May, we’ve doubled our efforts by launching 26 new perpetual markets, bringing our current total to 54. Here’s a snapshot of our latest additions.

• ORDI-USD-PERP
• RUNE-USD-PERP
• ENA-USD-PERP
• kBONK-USD-PERP
• kPEPE-USD-PERP
• INJ-USD-PERP
• OP-USD-PERP
• JTO-USD-PERP
• TRB-USD-PERP
• APT-USD-PERP
  And more

New Order Book Match and Detection Feature

🪩 New Order Book Match and Detection Feature 🪩

🔹 New Match Bid/ Match Ask buttons under trade tape tab to pre-fill the quantity, price, and side with last traded values

🔹 For Takers - flashing of the order book prices and sending of a notification toast if a matching quote is detected

🔹 Automatic monitoring of the current order book price vs trade tape (last 5 minutes of trades) for matching quotes

📱 Taker's Desk Ticker in RFQ History Tab
For non-anonymous RFQs, makers will now be able to view the taker's desk ticker in the RFQ history tab, providing greater transparency and insight into trading activity.

💅 Trade Confirmation Toast Just Got a Boost
To improve the clarity of trade confirmations we’ve added the currency and venue to the to the UI toast notification for quick reference!

Stay informed and engaged with us through "Paradigm Edge" and "Paradex" Telegram channels — your go-to resources for navigating this ever-changing crypto derivatives landscape.

Thanks for reading our Monthly Brief!

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Sincerely,
The Paradigm Team 💜