The German government’s plan to sell off Bitcoin is progressing. Currently, the main government wallet holds about 26,000 BTC, valued at $1.5 billion, while the address used for the sale contains 4,800 BTC, worth $276 million. This has led to a temporary drop in Bitcoin prices, testing the $55,000 support level last night. However, the market quickly showed resilience, and prices rebounded, recovering all losses within the day.

Data shows that after several days, the leading ETF, IBIT, saw a significant inflow of funds amounting to $187.2 million. This boost in confidence and morale among bulls has BTC now eyeing the $58,500 resistance level, aiming for a breakthrough to gain further upward momentum.

Source: TradingView; Farside Investors

The rebound in Bitcoin prices has stimulated activity in the options market. Overall implied volatility levels have decreased from the previous high of 16 points, but there have been severe price fluctuations around the last settlement point when IV was at its daily high. Despite some reduction, the current IV remains elevated, particularly with uncertainty introduced by the upcoming major macroeconomic data releases on July 12th, concerning CPI and PPI. This event marks a local peak in volatility expectations.

Source: Deribit (As of 9 JU L2 4 8: 00 UTC)
Source: SignalPlus

In terms of trading dynamics, ETH and BTC are exhibiting markedly different behaviors. The price rebound has attracted traders to establish heavy positions in put options for bulls and call options for bears on two cycles of ETH, likely due to concerns about a potential repeat of the Grayscale sell-off post-ETF launch. This has led to a lower front-end Vol Skew for ETH, in stark contrast to BTC’s term structure.

Large-scale transactions in BTC are particularly active, with the ratio call spread strategy, represented by the 27DEC24 85000vs95000 calls, becoming a market focus. Risk scenario simulations from the chart below illustrate this strategy’s limited bullish view with unlimited tail risk.

Source: SignalPlus, Comparison of BTC/ETH Vol Skew trends.
Data Source: Deribit, Overall Distribution of ETH Tradings;ETH 12 JU L2 4 & 19 JU L2 4 Trading Distribution
Data Source: Deribit, Overall Distribution of BTC Tradings
Source: SignalPlus, Simulation of the 27 Dec 85000 vs 95000 Ratio Call Spread Risk Scenario.
Source: Deribit Block Trade
Source: Deribit Block Trade

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