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QCP Capital Crypto Market Update – May 19, 2020

Commentaries & Views

Traditional risk markets have broken higher overnight, as global risk sentiment continues to strengthen on the back of waning virus fears. Meanwhile, BTC has been trading sideways in a tightening range (9,000-10,000). All talk of BTC-Equity correlation has faded since a clear decoupling in Q2 on the back of the pre-halving rally. We've seen some BTC halving effects in past few days - as hash rates have begun falling off sharply and transaction fees rising in tandem, but nothing really having any effect on price thus far.

Keeping in line with Q2 bullish seasonality which extends to June, BTC has remained well-supported testing the 10k level twice since halving. However, 10k has proved to be strong resistance and bullish momentum has started to wane. In the absence of any near-term catalyst it seems likely that we've entered a consolidation phase with a 8.5k to 10.5k range. Given this, we expect vols to continue softening and we favour selling short-tenor put options especially with an increasing put skew in the front-end. In the medium-to-long term we remain BTC bulls and we are systematically accumulating BTC with a long-term 6k level support in mind.

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