No one knows for sure what the future holds, and investing is peppered with risk. But a general axiom that I like is whether the fundamentals are already priced-in, or is the market under-invested in a potential opportunity? In my mind, after halving, the BTC events will be behind us, and instead of merely “selling the news (please click the up coming post),” we can “rotate into the alts” in this case, specifically Ethereum. Edited by Benjamin Schiller.

Crypto Trading Guide Book

And, finally, the futures basis reached over 25% annualized, nearly five-times the U.S. Sign up here to get it in your inbox every Wednesday. Bitcoin has one more major fundamental milestone that’s keeping traders and investors excited for higher prices, and that’s the Bitcoin halving. That said, from a derivatives trading perspective, the predictability and certainty around halving isn’t like the uncertainty of an SEC spot ETF decision and the subsequent ETF adoption. Although a small sample size, the past years in which Bitcoin had a halving event, the Jan to Dec performance averaged about 200%. This would imply an end-of-year price for BTC of about $91,500. Where does that leave us today? You’re reading Crypto Long & Short, our weekly newsletter featuring insights, news and analysis for the professional investor.

That means that traders aren’t likely to be surprised by a completely known event. Looking at the April 26 option expiration (top) versus the June 28 expiration (bottom), we can clearly see the dynamics being priced into both Bitcoin and Ethereum options. Given this understanding, using Bitcoin derivatives as a contrast to Ethereum tells us a story around the potential opportunity for a post-halving rotation. Firstly, for April 26, Bitcoin options on the call wing are priced at a substantial premium to the Ethereum call wing, while the Ethereum put wing is priced at a premium to the BTC put wing.

So why should we even care about this opportunity to buy the laggard Ethereum? Ethereum has also just successfully completed the Dencun upgrade, as L2s and L3s begin to facilitate RWA, DeFi and NFT growth, along with the ability to build native “app-chains” for high throughput protocols that want to isolate activity within their own environment. While the market is excited about the BTC halving slowing down the issuance rate for coins into circulation, (clearly displayed through 4/26 options) the ETH supply has not only already stopped growing, but since September 2022, is actively decreasing, due to EIP-1559 burns.