KEYTAKEAWAYS
- Ether and Bitcoin are trading flat as Asia's week opens, with major ETF decisions looming.
- Nvidia's earnings report could significantly impact Bitcoin and AI-related tokens this week.
- A "covered strangle" strategy could yield 17% for Bitcoin holders, though it involves high risk.
CONTENT
In the Crypto Pre-drink, we serve up a daily shot of the hottest crypto news and market insights to fuel your investment decisions.
ETHER, BITCOIN START ASIA WEEK FLAT AMID ETF DECISION AND NVIDIA EARNINGS
Market Opening
The cryptocurrency market started the week on a subdued note in Asia, with both Ether (ETH) and Bitcoin (BTC) trading flat. As of early Monday, Bitcoin was priced at $67,156, while Ether was trading at $3,127, according to CoinDesk Indices data. This follows a week of bullish activity driven by optimism about a potential U.S. interest rate cut and a rally in the stock market.
Upcoming ETF Decisions
A major focus for traders this week is the impending decisions on Ether exchange-traded funds (ETFs). The U.S. Securities and Exchange Commission (SEC) is set to rule on VanEck’s Ether ETF on May 23 and the Ark/21Shares Ether ETF on May 24. While the market has largely anticipated a rejection of these filings, there remains cautious optimism for eventual approval. March Zheng, managing partner of Bizantine Capital, noted that the removal of staking provisions from filings could reclassify ETH as commodities, potentially paving the way for future approval.
Market Sentiment and Predictions
Polymarket, a platform for trading on global event outcomes, currently estimates a 10% chance of an Ether ETF approval by May 31, a 13% chance by June 30, and a 28% chance within the year. Coinbase analyst David Han believes the market may be underestimating the timing and likelihood of an ETF approval. Positive news could boost trading sentiments, particularly for BASE, a Layer-2 network, which has seen its native token’s price decline by nearly 25% over the past two weeks.
Nvidia Earnings Impact
Traders are also closely monitoring Nvidia’s upcoming earnings report, scheduled for Wednesday. Historically, Bitcoin has shown strong correlation with Nvidia’s stock performance. Artificial intelligence-themed tokens surged in February following Nvidia’s strong earnings report. Although the direct correlation between Nvidia and Ether market movements is not as strong as during the mining boom, positive earnings from Nvidia could still uplift the broader cryptocurrency market. A favorable report is expected to benefit both Bitcoin and AI-related tokens, potentially driving overall market sentiment higher.
CRYPTO TRADING INSIGHT
Research firm 10X recommends a “covered strangle” strategy for Bitcoin (BTC) holders to enhance portfolio yield by 17%. Key points include:
Strategy Mechanics:
- Hold BTC in the spot market.
- Sell out-of-the-money (OTM) call and put options.
- Suggested strikes: $100,000 call and $50,000 put, expiring December 2024.
- Yield: 11% from call, 6% from put.
Market Conditions:
- Ideal for a slow bullish trend with low implied volatility.
- The strategy offers a 17% yield or downside buffer, capturing all BTC price movements.
Risk Considerations:
- High risk tolerance required.
- Losses below $50,000 are leveraged, potentially doubling the loss percentage compared to a covered call.
Current Market Context:
- Bitcoin trading at $67,170, up 58% year-to-date.
- Analysts expect a slow upward trend.
