It’s Thursday already! Congrats, you made it this far! We have a BIG DAY tomorrow with a lot of volatility incoming! Cipher is here to help you navigate through the mess!

In Todays Digest:

• Market Overview 👁️

• Latest in Web3 🚨

• UK Classes Crypto as Regulated 🇬🇧

• Crypto Market Analysis 📈

• TradFi Market Outlook 🧐

• Crypto Word of the Day 🤌🏽

Latest in Web3 🚨

• Binance EUR banking partner to halt support of the crypto exchange in September

• Microstrategy has purchased 12,333 more bitcoin for about $347 million, growing its cryptocurrency holdings to 152,333 BTC

• FTT explodes 35% on FTX revival idea

• Ledger unveils Tradelink: a custodial crypto trading platform tailored for institutions

• Tether signs cooperation agreement with the Government of Georgia

• KuCoin crypto exchange to introduce mandatory KYC in July

UK Classes Crypto as Regulated 🇬🇧

UK regulators now have the power to supervise crypto and stablecoins. This happened today as a bill was approved by King Charles.

The Act "gives us control of our financial services rulebook," said Financial Services Minister Andrew Griffith in a statement.

The bill, which was introduced in July last year, gives regulators more power over the financial system, including crypto.

While the bill was debated in Parliament, amendments were added to treat all crypto as a regulated activity and to supervise crypto promotions.

The U.K.’s Treasury, Financial Conduct Authority, Bank of England, and the Payments Systems Regulator will soon be able to introduce and enforce rules to regulate the sector.

This remains in line with the Conservative Government’s goal to turn the country into a crypto hub. New specific rules for the crypto sector could come within 12 months, Griffith told CNBC.

Sooooooo… is this good or bad for us??

Well, crypto getting regulated is not a bad thing, in our opinion. The key here is that the regulations are CLEAR.

Just look at what’s happening in the US, all crypto companies are complaining as they have no clear guidelines from the SEC, and they just continue to get bullied, setting back the whole industry's growth.

If the UK can find the right balance between promoting growth, being fair and tight regulation, then I do believe that the UK can make itself a hub for the future of finance.

Crypto Market Analysis 📈

As we approach this Friday, all eyes are keenly set on the anticipated expiry of Bitcoin and Ethereum options, collectively amounting to an impressive $6.8 billion.

👀 Quick Note - What is an Option? 👀

In the context of crypto, an option is a financial derivative that gives the holder the right, to buy or sell a specific amount of BTC or ETH at a predetermined price (strike price) within a specific period of time.

By purchasing an option, you can speculate on the future price movements of BTC or ETH without actually owning the asset. This allows them to potentially benefit from price increases (call options) or decreases (put options) in the crypto’s value.

What’s the Big Deal on Friday?

Now, when there are a lot of expiries on the same date, it can create a situation known as "options expiration day" or "options expiration Friday." On this day, a significant number of options contracts reach their expiration date, which means that the holders of these contracts need to decide whether to exercise their options or let them expire.

Because there are so many expiries on the same date, it can lead to increased trading activity and volatility in the market. Traders who hold options that are close to the strike price may strategically decide to exercise their options to either buy or sell the underlying asset at the agreed-upon price.

This can result in a surge in trading volume as market participants adjust their positions based on the options expiring.

The high volume and potential price movements during options expiration day can have a significant impact on the overall market sentiment and price direction of BTC and ETH. Traders closely monitor these expiries to gauge market dynamics, anticipate potential price swings, and adjust their trading strategies accordingly.

So back to Friday…

This Friday, at exactly 08:00 UTC, something spicy is happening on the Deribit exchange. Deribit is a company based in Panama that handles a whopping 85% of all the options trading in the world.

There are 150,633 BTC options contracts and a huge 1.23 million ETH contracts that are going to expire.

That’s a total value of $4.57 billion for Bitcoin and around $2.3 billion for Ethereum.

That's a lot of money!

What's really interesting is that the BTC contracts that are expiring make up a big part—around 43%—of all the options that people have been trading.

So, what happens with these contracts could have a big impact on the Bitcoin market.

Recently, there has been a rise in people buying options for BTC at prices even higher than $30,000. It's like they're making bets that the price of Bitcoin will keep going up. If BTC manages to stay above that $30,000 mark as the expiration time gets closer, it could cause those people to want to buy even more BTC in regular markets.

And guess what?

This could lead to a big surge in BTC prices. Some people even call this a "gamma squeeze" or a "slingshot effect" because the price could shoot up really fast!

But, here's the other side of the coin: if BTC starts going down and falls below $30,000, the people who bought those options might get a bit worried. They might decide to sell their BTC instead of buying more, and that could slow down the price rally and realistically cause a crash.

Big day tomorrow!

TradFi Market Outlook 🧐

Before we jump into our TradFi analysis, we want to point out this amazing find by Kaiko Data. The NASDAQ- BTC correlation has dropped off, and HARD at that.

How does this impact our analysis from now on?

Well, when correlations are high, then we can analyse one market and apply the direction to the other. But now, we are seeing that this might not be applicable. So if the Nasdaq is very bearish, we cant assume that BTC will be as bearish.

US GDP increased by 2% in Q1 2023

Judging by the market's reactions, we are still trading in a market where good news is bad news for the markets.

Why?

Well, when good news comes out like this, then the Fed assumes that the economy is healthy enough to continue to raise rates and bring inflation down.

After the “good” news this morning, the odds of a rate hike at the next fed meeting now have jumped to a whopping 87%! This means that rates rise, markets assume a recession will be harder and they will dump.

Memes of the Day 🤌🏽

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