May 31: Everyone Wants to be the Broker in Crypto

Matrixport Lookout   May 30, 2020 16:00 3 Min Read

Trading Crypto with Eugene is a series of daily commentary of market analysis and trading advice shared by Eugene Ng of Matrixport, a veteran trader with 10 years of experience in top-tier global investment banks. If you like the article, please follow us here on Blockchain.News so you won't miss our future publications.

A flurry of "prime broker" headlines past few days with Coinbase's acquisition of Tagomi for a price between $75 to $100 million so they can start building a prime broker business. BitGo coincidentally announced it would also be launching BitGo prime after buying Harbor and Lumina. Last week, Genesis also shared that they have purchased crypto custody provider Vo1t and spun up "Genesis Prime." This all happened as Goldman slammed Crypto as an uninvestable asset class, so you start wondering who's going to be customers for these aspiring prime brokers now. 

First, it's really the sell-side unit of GS that's playing BTC down. If you've been following crypto for some time, you would have known that GS are investors of the once-mighty crypto trading firm called Circle. Third, economists are seldom proven as visionaries. For example, Krugman predicted that the internet would have little impact on the global economy. Whether GS has denounced BTC out of fear, we are not going to debate here. You can also check out Jill Carson's piece on why GS is wrong.

BTC has managed to get into my sell zone with ETH clearly leading the charts with the triangle breakout getting quite a few technical guys excited. Contrary to this spike, 20k+ ETH Dec 120 puts traded at $8.4 yesterday. So who's going to be right? Whether ETH has the might to lift all boats in crypto remains to be seen, so I am still comfortable with my strategy that is to have a BTC short here, and if we hit $9.7k, we will trade another short with a tight stop. If my stop fails, we could see $10.5k Feb high; otherwise, I think we are likely to slide back down. 
I've got my reasons for my view. For example, open interest hasn't really recovered for the largest derv exchange, BitMex. We've been up for the last two months & I continue to see the lack of any "FOMO buying," especially those who are trying to sell me the institutions FOMO story because I know institutions don't just make a snap decision to buy BTC the next day. Yes, they are all excited, and I got more calls from macro hedge funds and institutions last month than the whole of last year. I'll also stop selling volatility here, as 1-month IV has crept below 70%, and we should start scaling into some tail risk calls and puts if vol starts trading at 60% or lower. I apologize for my two-day absence, so trying to make up with a note today. Good luck and enjoy your weekend. 

Stick to the game plan; short here and try for another clip at $9.7k with a tight stop just above the resistance line.... 

ETH Technical Triangle Breakout. Getting ETH bull camp excited as well is the ETH 2.0 narrative... $240-244 should be the first stop, and if we close above there, could see us visit $258... 

BitMex's Open Interest hasn't recovered since March 12 capitulation.... so where's the FOMO going to lift all boats > $10k decisively tomorrow?

Crypto no greed yet how to have FOMO for Bitcoin... In fact, it's likely healthier for BTC to sail lower to form a stronger base for a higher move later...
Opinions expressed are solely the analyst's own and do not represent the views of Matrixport, the company. 
The views and opinions expressed in this article are those of the contributor and do not necessarily reflect the view of Blockchain.News.

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