Key Takeaways
BTC’s rallying, but the the move isn’t built on much as the foundations have only half followed. Coin open interest fell 4.95% into the break and only started rebuilding this morning.
The options market repriced late, and has since overshot. The September $70k call went from 32.3% to 41.3% implied in three days, and the heaviest strike has chased the price from $70k to $75k.
Perp funding is still not paying for the level. Most rates sit at or below base and perp trades at a discount.
● The Open
Happy Friday, thanks to Scott Bessent and Donald Trump we have more to talk about this week than the previous fortnight. BTC printed around $70k on Wednesday, washing out billions in shorts, before rallying above $75k on Friday as momentum persisted.
BTC did the week in two sessions, Wednesday's 7.12% the biggest day since early February and through both the 100-day and 200-day averages in one go, and by Friday morning the mark sat at $75.4k, 17.5% off Wednesday's $64.1k low and the highest since late May. The driver behind it was perps, $73.2bn of volume against $7.8bn of spot, one minute alone on Wednesday carried $1.259bn.
Elsewhere, gold made its own highs this week without over $73bn of perp volume behind it, it didn’t need the leverage.
● Liquidity and Flows
As noted perps dominated the move, with $73.2bn in perp volume against $7.8bn of spot across five major venues over the event window. The net buying splits the same way, with $4.42bn in perps after stripping every liquidation Binance shows, a throttled lower bound, against $333m in spot. The record minute was $1.259bn in sixty seconds on Wednesday afternoon, 361 times the median minute, while spot managed $91.7m in the same minute.
In coin terms open interest fell 4.95% across six venues into Thursday, while the dollar figure rose 6.5%, so the denominator did the rising, and only this morning is Binance rebuilding, 109,245 BTC live. Through Thursday the level stood on an absence of sellers, and this morning brings the first evidence of an actual bid, though nobody is yet paying to hold it.
● Spotlight: What’s Next?
The market’s biggest position is the 25 September $70k call, and it’s been busy all week. It went from 32.3% implied vol on August 18th, with spot near $64.3k and a 0.23 delta, to 35.1% at Thursday's cut, 38.3% Thursday night, and 41.3% this morning with the delta at 0.75.
Its open interest peaked at 11,691.5 BTC and reads 11,372.6 this morning, down 319 from the cut, which tells me that the position most exposed to the mov is being monetised rather than extended.
The finding that matters here is where the open interest sits, because when a strike this close to the money carries this much, dealers hedging their books end up trading around that level all day, and that trading is what can slow a move into the strike or accelerate one through it.
On Wednesday the heaviest strike was $70k, worth $64.6m of hedging flow per 1% move, by Thursday night it was $72k at $58.1m, and this morning it is $75k at $63.3m with spot sitting right on it, while the $73k to $77k band holds $120.8m per 1%. That concentration never faded through the move, it just kept re-building a few thousand dollars higher, ending up wherever the price was. Whether dealers are short those strikes is still just inferred from opening flow.
The vol surface gives an indication of who is doing what right now. The seven-day ATM sits at 42.6% from 25.9% on Tuesday, the front risk reversal is still call-bid at 1.1 vol points though narrowing from 1.8, and the 30-day tenor deepened put-side to −1.7 into the new highs. Meanwhile, Thursday's clean fits had the 60 and 90-day call-bid at 3.9 and 6.7. This suggests existing calls are being monetised into the move rather than new positions being opened. The monthly is being hedged and the quarter is still owned.
Either the flows keep arriving and the foundations catch up to the price, or this is the most extended hollow level of the summer, and the hedging flow around $75k makes whichever comes first arrive faster.
What actually drives it from here
There are three things in my view, in order of how much they matter.
The first is what Treasury does now that the 30-year has taken back the whole move. Bessent is talking about a larger programme, but this is not the same as one arriving, and the operations themselves do not start until 9 September.
Next is whether perp funding on the major venues starts showing a genuine long premium, since that is the tell that someone is buying rather than covering, and there is little sign of that yet.
Finally, if the risk reversal flip carries past seven days, because a front end that has turned while the belly has not is a market positioned for a week rather than a quarter.
One calendar detail is worth noting is where that September 25 expiry falls. It sits inside the buyback window running from 9 September to 4 November, so the gamma that would amplify a macro move and the macro catalyst itself are live at the same time and then one of them disappears.
● The Week Ahead
Japan CPI lands today, August 21, then Jackson Hole runs next week from the 27th to 29th of August, Warsh's first as Chair and payments the theme. Buyback operations begin 9 September, the catalyst the un-turned 30-day tenor is priced for, and the Senate returns 14 September with CLARITY cloture set for the 15th. The 25 September expiry that our spotlight ends on sits in the middle of all of it and should be closely monitored.