May 6, 2023
Second Highest Month Ever: $11.2B
April was another phenomenal month for us in terms of volumes and our newly launched Bybit partnership.
After recording a record-breaking $17 billion in monthly trading volumes in March (where we surpassed previous ATHs by approximately 60%), we continued our momentum into April with a total volume of $11.2 billion 🤯.
Options market share remained strong in April, commanding 39% in Bitcoin options trading volumes and 32% in ETH options trading volumes 📈.
The week of April 9-15th saw a flurry of upside buying and put selling alongside the spot rally, which spurred 129k BTC being traded alone.
All this to say, despite the challenging Macro environment of aggressive rate hikes, we are very proud to maintain the most liquid options marketplace on the planet.
April Volatility Insights
What started out as a relatively quiet beginning of April quickly turned into a volatile battlefield for traders, as momentum-based strategies entered at relative lows in volatility quickly yielded profitable gains toward the upside as we rallied above $30K on April 11th. Bullish exuberance was quickly met with unyielding shorts as short term traders piled in a week later on the back of more concern around the banking system and microstructure driven liquidations. Interestingly enough, liquidations last Wednesday happened on both ends of the spectrum - with over $300 million liquidated overall to close out the day.
From a volatility perspective, many eyes were on potential relative value trades considering the recent Chapella event in April. However, some of the more profitable trades were heavily focused on directionality rather than volatility. Implieds were relatively firm to start the month off until price action near $30K toward the middle of the month led to an increased demand for optionality and, subsequently, a driver of higher implieds as traders chased new highs. After a peak on the break above $30K, implieds reactively declined quite quickly in the weekly expiries, with the 7-day ATM implieds falling from 65 IV on April 10th, to around 43 IV a week later.
From an event standpoint, and focusing mainly on Ethereum, the event had quite a mixed bag of perspectives on how price would eventually settle after the event. Several banks had differing opinions, and traders took to Twitter to bring up several metrics supporting both sides of the coin. After the event, however, those who took a bet on massive selling pressure and subsequent price-action toward the downside were left astonished as the upside rally trickled in post-event in the coming days and led to a breakout above $2,000.
As we sit today, in the volatility markets, BTC still trades below ETH in terms of implieds, and BTC skew across all tenors except weekly remains positive - signaling a premium in the 25 delta calls compared to puts. In ETH, skew remains negative across the board - suggesting more of a preference for downside here. Term structure remains standard, with a soft upward-sloping curve taking form in both BTC and ETH. However, there is a noticeable premium in short-dated optionality as the recent market movements have been relatively outsized.
Paradigm x Bybit
In April we launched the long-awaited expansion of our partnership with Bybit with Delta-1 spreads trading on USDT-margined instruments. This new feature allows users to trade the spread between USDT-margined spot and perpetuals on 25 cryptocurrencies with a single click and no leg risk. Best of all, there are no fees on the spot leg of a spread trade executed via Paradigm, settled on Bybit!
April Content Highlights
In this episode of The Big Picture, Gordon Grant from Genesis Trading discusses the most recent Chappelle upgrade and its impact on the crypto markets. In addition, we discuss the sizing difference between the Ethereum and Bitcoin options markets and open interest and talk more about event-based trades such as The Merge.
In the most recent chapter of The Macro Pulse, we dive more into the seemingly everlasting stress in the US banking system, how the recent shifts in rates have impacted the markets, and some general market microstructure data. For more discussion on topics such as the divergence between the 1-month and 3-month yields, and how macro tailwinds have somewhat faltered over the past weeks check out The Macro Pulse below.
In the most recent episode of The Big Picture featuring guest Noelle Acheson, we dive into how crypto has impacted macro markets, the current vol regime we’re trading in, and more macro-specific topics such as potential rate cuts, the debt ceiling, oil and the dollar, etc. We also discuss some of the tradable opportunities or lack thereof in the current market environment.
The Mob Has Spoken
Thanks for taking the time to read our Monthly Brief.
The Paradigm Team 💜