April 21: Essential Oil No More

Trading Crypto with Eugene is a series of daily commentary of market analysis and trading advice shared by Eugene Ng of Matrixport, a veteran trader with 10 years of experience in top-tier global investment banks. If you like the article, please follow us here on Blockchain.News so you won't miss our future publications.

With the exception of USDT, the top 10 market-cap coins are in the red in the past 24 hours with majors mostly down between 4 to 10%. Official confirmation from PBOC that it'll be testing a mobile app for its digital yuan in four cities with a fifth in the works. Despite the positive news, practically almost everyone was looking at oil last night as crude may oil futures settled at a historic -$37.63.WTI should be renamed as WTF. Many argued that it was due to $USO rebalancing, but this isn't the case because the ETF was only down 9% as USO would have owned mostly June contracts now. In short, it's due to retail players not being able to take on physically owned oil (brokers had to liquidate their retail accounts) and to a lesser extent, storages are running tight. On a side note, I actually think it's a great time to nimble into the oil. Who knows maybe the Fed will start buying oil too? 

A $660 billion commodity blew up last night, but BTC only down 4%, another sign that volatility has indeed been declining as the market awaits for halving, increasingly feels more and more binary. Another interesting development is that Tether's market cap has now grown more than US $7bil with $120mil minted recently. 

My bias for higher was driven by technicals yesterday, and today I struggle again to be decisive in where we move. I still think risk assets will give up some of its gains this week; we are only 15% from all-time high in stock markets when the world is in lockdown, global recession, oil market crashed, busted supply chains, 25million unemployed (and more to come), an implosion in global trade, and potential second wave attacks from covid19. The second reason is that Morgan Stanley estimates a selling flow of $30-50 bn of global equities for rebalancing at the end of the month (larger than average) and usually it starts 5-7 days before the month-end.

How do we trade? Keep holding the $7,500 call option as a lottery ticket, while I would advocate on following where risk assets trade. It is also time to start going long volatility (i.e. buy puts or calls) given that implied volatility has basically returned to pre-March crash levels and looking a lot more attractive than before. Good luck. 

Larger wedge formation shows potential for $7,800 to $8,000 region if we do see the uptrend technical play out...

ETH in a triangle too... There is a chance we go either direction, but just wanted to highlight to you how far it has rallied since Friday.. more than 25%...

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Opinions expressed are solely the analyst's own and do not express the views of Matrixport the company.

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