Market Update: 22 July 2022

This mini bull-run in the last 10 days has been a pleasant surprise for all. Especially since it started on the back of a shockingly high inflation print (9.1%) on Wednesday last week.

From a post-CPI low of 18,892 in BTC and 1,005 in ETH, prices have broken the topside of the range reaching 24,288 in BTC and 1,631 in ETH (+28.6% and +62.3% respectively!)

ETH has been a clear leader in this run-up, driven by new clarity on the ETH merge (now expected to happen on 19 September). An interesting correlation has also been the spike in Cryptopunk volumes coinciding with the bottoming and breakout of ETH price (Chart 1).

Chart 1

Positive macro factors have also been the core reason for the uplift in crypto and also across most asset classes:

1. Since the high CPI print, the market has been decisively pricing out the probability of a 100bps hike in the July FOMC. Currently, a 20% chance of 100bps is still being priced in but our view is that 75bps is the most the Fed will do. So expect another boost as 100 bps gets completely priced out.

2. Inflation is showing signs of peaking. Oil prices are testing pre-Ukraine levels.

The short-squeeze was most keenly felt in the option market. There was a mad rush to buy ETH topside (calls – especially the September expiry), as both trading desks and funds covered shorts and put on bullish ‘merge’ trades, driving September ETH vols from 85% to 100% and the risk reversal (calls minus puts) from -19% to -4%.

We were positioned well from our last update. Long topside gamma (short-term options), long rega (longer vols with higher spot price) as well as long call wings (far strike options). We’ve taken profit on a large chunk of these but remain long the end-July vol bucket as we head into FOMC on 27 July along with US Q2 GDP and all the large US Megacap Tech Q2 Earnings.

In terms of spot direction, we are not sure if the upside momentum continues in a big way. The speed of this move higher felt positioning-driven (market was caught short) and the market is starting to show some signs of exhaustion.

Yesterday, we saw massive selling of longer-end ETH calls, causing the risk reversal to drop sharply back down to -10%.

There has also been more news of potential insolvencies with Zipmex suspending withdrawals this week, rumours of further difficulties at Hodlnaut as well as miners across the globe looking for bailouts.

The 3AC creditor meeting on Monday also revealed a shocking $1.2 billion impairment being claimed by Genesis Trading (by far the highest of the total $3 billion in default claims so far) and Babel has yet to provide any updates on the status of their debt restructuring.

While the markets have been sanguine, it’s possible that the credit contagion is not completely over yet. We have been adding to our downside skew position and we are keeping slightly long gamma and vega (longer term options). We will be closely observing upcoming economic releases to get a better sense of macro direction.


This information contained in this website is intended as a general introduction to QCP Capital and its activities as a Digital Payment Token (DPT) service provider and is for informational purposes only.

QCP Capital is not acting and does not purport to act in any way as an advisor or in a fiduciary capacity vis-a-vis any counterparty. Therefore, it is strongly suggested that any prospective counterparty obtain independent advice in relation to any trading investment, financial, legal, tax, accounting or regulatory issues discussed herein. This website is only directed at informed and qualified investors. Your entry to this website attests that you are fully aware that trading of DPTs is not suitable for the general public and that you are an informed and qualified investor, and are also fully cognisant of all technological and financial risk(s) associated with trading Digital Payment Tokens.

In the event you intend to onboard with QCP Capital to trade in DPTs, by onboarding with us you acknowledge that you are aware of any rules and/or regulations applicable to the provision of DPT and/or financial services, the high degree of risk involved and that in no event will QCP Capital or any if its directors or employees be liable for any injury loss, claim or damage (whether direct, indirect, consequential or incidental) arising either directly or indirectly out of, or in any way connected with, the site, or its use.

If you are located, incorporated, or otherwise established in, or a citizen or resident of certain jurisdictions, QCP Capital may be unable to, or otherwise reserve its right to refuse to engage in or establish a trading relationship with you. Please contact us if you believe you have received this notice in error. QCP Capital is not registered or licensed to operate in the states of Louisiana and New York and will not be able to establish a trading relationship with you if you are resident, incorporated or have your principal place of business in New York or Louisiana.

You also acknowledge that you understand that trading in payment token derivatives (“PTD”) are also not any less risky than trading in DPTs. PTD services are not regulated by the MAS and QCP Capital is as such not licensed under the MAS to provide PTD services. You should only trade in PTDs if you are an Accredited Investor and/or have sufficient experience and knowledge in trading PTDs.

Risk Warning on Digital Payment Digital Services

The Monetary Authority of Singapore (MAS) requires us to provide this risk warning to you as a customer of a digital payment token (DPT) service provider.

Before you pay your DPT service provider any money or DPT, you should be aware of the following. 

Your DPT service provider is an exempt payment services provider pending licensing under the Payment Services Act (2019) to provide DPT services. Please note that this does not mean you will be able to recover all the money or DPTs you paid to your DPT service provider if your DPT service provider’s business fails.

You should not transact in the DPT if you are not familiar with this DPT. This includes how the DPT is created, and how the DPT you intend to transact is transferred or held by your DPT service provider.

You should be aware that the value of DPTs may fluctuate greatly. You should buy DPTs only if you are prepared to accept the risk of losing all of the money you put into such tokens.

You should be aware that your DPT service provider, as part of its licence to provide DPT services, may offer services related to DPTs which are promoted as having a stable value, commonly known as “stablecoin”.