Market volatility and Bitcoin’s breakthrough prospects - Introduction to volatility profit strategy | Weekly market insight review

At 8 pm on October 22, in a live broadcast on the official YouTube channel of Matrixport, Daniel, head of Matrixport Asset Management, analyzed the market fluctuations last week (October 15-October 21), during which the BTC price experienced a significant correction, affected by multiple factors such as global economic uncertainty and stock market selling sentiment. Daniel analyzed the reasons for BTC market fluctuations, the changes in the current options market, and the impact of institutional behavior on the market, and mentioned the investment directions that investors can pay attention to during this period.

The live broadcast content is as follows

From October 15 to October 21, the price of BTC fell significantly. As of October 22, the price fell below $67,000, although it was close to breaking through the key psychological level of $70,000. This pullback was mainly triggered by the sell-off in the global stock market, and risk assets such as stocks and cryptocurrencies were under pressure. The increase in global economic uncertainty, especially the adjustment of the stock market, has reduced investors demand for risky assets, and the selling sentiment in the crypto market has spread, leading to a price pullback of BTC and other digital assets.

Analysis of the causes of market fluctuations

Elon Musks Market Impact

On October 21, Elon Musk publicly supported BTC on social media, which quickly pushed the price of BTC to briefly break through $69,000. Although Musks comments often trigger short-term market fluctuations, such effects are often not sustainable in the long run, and investors should be wary of the resulting market volatility. The market is highly sensitive to the comments of opinion leaders. Although the comments of such figures push up the market, they are also prone to short-term speculation.

Safe-haven asset linkage: gold and BTC

The turmoil in the global market has triggered a strong demand for safe-haven assets among investors, and both gold and BTC have become the main targets of capital flows. As global concerns about financial instability intensify, gold prices continue to rise, and BTC also exhibits a similar safe-haven function. More and more investors regard BTC as digital gold, and funds continue to flow into these safe-haven assets, further highlighting BTCs special status in the global market.

Miner Behavior and Market Expectations

Data shows that more and more BTC miners have recently transferred their assets to exchanges, which is usually a precursor to potential selling pressure. Especially when BTC prices are high, miners selling may exacerbate short-term price corrections. In addition, the increase in the difficulty of BTC network mining and the increase in mining costs have prompted some miners to choose to exit the market or turn to other high-profit areas (such as GPU and AI computing power). These factors may bring selling pressure in the short term, but in the long run, BTCs scarcity and intrinsic value remain solid, and the balance between supply and demand will gradually optimize.

FOMO sentiment weakens and institutional funds enter the market

Although the price of BTC is close to its historical high, there is no large-scale FOMO sentiment in the market. Unlike the previous rise driven by retail investors, the current rise of BTC mainly comes from institutional funds. This phenomenon shows that the market is gradually maturing, retail investors are more cautious, and the continued inflow of institutional investors will help to smooth out future sharp fluctuations and have a positive impact on the long-term stability of the market.

Options Market and Institutional Behavior in the Current Context

The launch of BTC ETF options and its market impact

Recently, the BTC market has made important progress, with the daily inflow of funds in the ETF market hitting a new high of $240 million. The U.S. Securities and Exchange Commission (SEC) has approved the trading of BTC ETF options, providing investors with more tools to hedge risks. These new financial products have attracted a large influx of institutional funds, driving the further rise of BTC prices and increasing the long-term demand and liquidity of the market.

Options Markets to Mitigate Volatility

The launch of BTC options not only provides investors with more trading tools, but also has a stabilizing effect on market volatility. Through options, investors can manage risks more effectively and reduce the impact of short-term fluctuations on their portfolios. Especially in a market environment with high volatility, option trading helps investors hedge against potential price fluctuations and improves the overall stability of the market.

The continued inflow of institutional funds changes the market structure

With the expansion of ETF and options products, institutional investors have gradually become the dominant force in the BTC market. Unlike the previous market structure dominated by retail investors, the continuous inflow of institutional funds has injected more long-term funds into the market, reduced short-term speculation, and enhanced the stability and sustainability of the market. Institutional investors adopt a strategy of selling high and buying low to avoid over-reliance on leverage, which further reduces the risk of market volatility.

Investment directions worth paying attention to

Robust investment opportunities in the options market

With the launch of BTC ETF options, the options market provides investors with more risk hedging tools. In the context of frequent market fluctuations, investors can reduce their risk exposure through option trading, especially when the market is down, and protect existing assets through hedging strategies. At the same time, the expansion of the options market will provide a new channel for long-term funds to enter the BTC market, further enhancing the long-term stability of the market.

Long-term allocation opportunities led by institutions

As more and more institutional funds enter the market, investors can focus on long-term allocation opportunities for BTC and other crypto assets. The entry of institutional investors not only injects stable long-term funds into the market, but also brings more mature investment strategies to the market. Investors can maximize their returns in the current turbulent market environment through flexible allocation, combined with volatility profit-enhancing strategies and option trading.

Opportunities for volatility strategies

In the context of the current market volatility, investors can gain returns through volatility-enhancing strategies. Matrixport has launched two volatility-enhancing strategy funds, which are suitable for investors with different risk preferences:

• Volatility-increasing stable strategy: This strategy focuses on risk control and is suitable for investors who want to obtain stable returns in a volatile market. 90% of the funds are used for funding rate arbitrage, and 10% is used for volatility-increasing operations of selling high and buying low. This strategy performs well in the case of large market fluctuations, with an annualized return of 12.01%, and the maximum drawdown within 30 days is controlled within 2%.

• Volatility profit-enhancing aggressive strategy: This strategy is suitable for investors who are willing to take higher risks. By using 100% of funds for volatility profit-enhancing operations, the strategy makes full use of opportunities in market fluctuations to obtain high returns. The annualized rate of return is as high as 36.48%, but the risk is relatively high, so it is suitable for investors who have a strong tolerance for market fluctuations.

PS: The data of the volatility profit strategy is real-time data as of 2024-10-23. It is for reference only. The specific rate of return shall be subject to the actual display on the product page.

Summarize

The recent volatility of the BTC market reflects the uncertainty of the global economy and the changes in market sentiment. The impact of Elon Musks remarks, the behavior of miners, and the inflow of institutional funds have all driven or suppressed market volatility to varying degrees. In this context, the launch of BTC ETFs and options products has provided new liquidity and stability support to the market. For investors, the volatility profit-making strategy and the options market in the current market are two important focuses. They not only provide risk hedging tools, but also provide feasible investment directions for investors with different risk preferences.

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【Matrixport Weekly Market Insights】is a new interactive knowledge sharing column launched by Matrixport, which is broadcast live on the official YouTube channel of Matrixport every week. This column will regularly invite industry product leaders, top analysts and KOLs to discuss investment logic under different market conditions, share investment experiences, and help users realize asset appreciation.

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Disclaimer: The above content does not constitute investment advice, an offer to sell, or a solicitation of an offer to buy to residents of the Hong Kong Special Administrative Region, the United States, Singapore, and other countries or regions where such offers or solicitations may be prohibited by law. Digital asset trading may be extremely risky and volatile. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions based on the information provided in this content.