Notes from the Trading Desk #2

Pionex Trading Desk 2/28/2023


SEC Chairman Gary Gensler says, “everything is a security, except Bitcoin,” in an interview with NY magazine earlier this week. Plus, 3 US government agencies put out a statement about liquidity risk in stablecoins and warned banks “stablecoin reserves, could be subject to rapid outflows.” Is it an early warning sign to get out of stables before the SEC comes cracking down on them as they did with BUSD? 

We don’t see this as a likely scenario, especially with more transparently collateralized stablecoins like USDC. While all this news has dampened the sentiment around crypto assets since last week the chart above shows a bullish story. Above is the 3-month annualized basis spread for purchasing a futures contract, which is at 5% meaning traders are still willing to pay a premium for the leveraged upside exposure. 

Thoughts and Trades

On the desk, we have seen $23,000 as initial support for BTC if this uptrend is to continue, so I have gone long around the $23,300 level. The S&P 500 gapped up and reclaimed its uptrend channel overnight, and BTC followed. However, as S&P 500 turned around, it ran into the 0.618 Fib retracement level. We had news of very negative economic survey results from the Dallas Fed, with many respondents saying they are seeing lower demand and predicting a recession in late 2023. Inflation stagnating plus the economy worsening is the scenario we had been hoping to avoid. Now we are watching to see if S&P 500 can hold its upper trend line and if BTC can hold $23,000. Right now, the formation is neutral to slightly bearish. If we can close over $23,500, we could see a rally. Due to this neutral setup, more chop is to be expected this week. So we are investing in $22,500 Buy-The-Dip and $24,500 Covered Gain 2 – 4 day duration contracts on the trading desk.

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