[Xangle Digest]

※ This article contains content originally published by a third party on June 15, 2023. Please refer to the bottom of the article for the copyright notice regarding this content. 

※ This is a summary of the weekly research published by Matrixport on June 15th.

Executive Summary

The fact that on June 27 2023 the U.S. retail trading app, Robinhood, will end its support for the altcoins, Cardano (ADA), Polygon (MATIC), and Solana (SOL) after the SEC labelled them as unregistered securities is critical as it will further stifle declining retail trading interest. Trading app eToro, also confirmed that they would delist a number of altcoins. After the SEC announcement last week, traders also noticed that crypto wallets associated with large liquidity providers such as Jump Crypto and Cumberland started to liquidate some altcoin positions. Jump holds more than $2 billion in Ethereum (ETH) and the firm recently announced that they would dial back their crypto engagement as trading volumes have declined. As a result, we have observed a 30% decline in perpetual futures open interest over the last weekend, signalling a continued decline in altcoin trading activity. There is now a real possibility that the altcoins from the 2020/21 bull market will never reach new all-time highs again.

Polygon (MATIC) is one of the SEC impacted tokens. Source: Matrixport Technologies

Binance’s BNB is one of the most important tokens in crypto, as it powers Binance Smart Chain (BSC) and is the backbone of the exchange’s ecosystem. Despite its decline, the BNB market cap remains a respectable $36 billion. For the fourth time, Binance Coin (BNB) is testing the critical $220/200 level and IF this level breaks, there could be severe consequences on sentiment.

Binance’s BNB token is testing critical support for the 4th time at $220/200. Source: Matrixport Technologies

The Bitcoin (BTC) options book indicates heavy selling of upside calls. This will likely keep Bitcoin prices capped at sub-$30,000 for the next few weeks. The sizable big-level strikes of $30,000, $35,000, and $40,000 are towering over any upside rally attempt for spot prices. The gamma exposure between the current $26,500 spot level and $30,000 is insignificant, and therefore, the heavy lifting would need to be done by a rally in spot prices, though this seems unlikely currently. Therefore, we would keep selling $30,000 upside calls as vol will likely compress more over the summer after the small move higher this week.

‘Matrix on Target’ readers will remember our December 2022 published outlook report which stated that inflation would fall from 8-9% to just 2-3% by the end of 2023, and this would set off a strong rally in stocks and crypto. Hence, we are not surprised to see U.S. CPI now printing 4% and our 2-3% range appears achievable. We are also not surprised that the FOMC has kept interest rates on hold while at the same time cracking the whip and warning markets not to get too euphoric. In our view, this is simply managing asset prices and we strongly believe that there is no need for more rate hikes. New highs for U.S. stocks are awaiting. Crypto investors, unless they are traders, need to manage their positions carefully.

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