QCP Capital: Multiple factors have brewed a market storm, but the forward basis and financing rates in the crypto market remain stable

Singaporean crypto investment firm QCP Capital wrote that they feel like they have encountered a perfect storm, with the panic selling and liquidation in the early Asian market causing Bitcoin and Ethereum trading prices to drop to lows of $49,000 and $2,116 respectively. The triggering factor that immediately appeared in the cryptocurrency market seems to be the aggressive ETH selling by Jump Trading and Paradigm VC. As the front-end ETH volatility surged more than 30% to 120%, market makers rushed to cut short-term gamma values, which may further exacerbate market volatility. After the terrible unemployment data announced by the United States last Friday, macro sentiment also plummeted. In addition, the huge unwinding of all assets caused a sharp increase in volatility. VIX touched 50 (only higher during the COVID-19 panic and the 2008 financial crisis), and USD JPY's one-month parity volatility soared to 16%. This may lead to further unwinding. With Israel killing a Hamas leader over the weekend, global safe-haven sentiment has also emerged. Iran has vowed to take action, and the United States has actually begun deploying troops to the Middle East. Surprisingly, despite the market turmoil, forward basis and financing rates have remained strong. Zero downside risk strategies use these returns to express trading views.