Last night (23 MAY) the market did not disappoint the market's expectations, and it was lively from 9 pm to the early morning. Before the much-anticipated ETH spot ETF was announced, the price of Ethereum went up all the way to challenge the 4,000-point high, but soon gave up all the gains of the past day at the highest point in a short period of time, and fell to around $3,720. Although the price quickly recovered most of the lost ground, the latest data released by the United States at 21:45 (UTC+ 8) dealt another heavy blow to the risk market. The data showed that the S&P Global Composite PMI index in the United States in May recorded 54.4, far exceeding the expected 51.1 and setting a new high in the past two years. The manufacturing and service PMIs also exceeded expectations. After the data was released, the U.S. Treasury yield rose sharply in the short term, with the 10-year yield reaching 4.4980% at one point, and the two-year yield also stood above 4.9% again. Traders also postponed the Fed's first rate cut to December. The futures market cut bets on full-year rate cuts to 34 basis points. The three major indexes all closed lower. Nvidia bucked the trend and closed up 9.3%, setting a record high and leading the way.

Source: SignalPlus, Economic Calendar

Source: Investing, US May S&P Global Composite PMI index exceeded expectations to a two-year high; 10-year Treasury yield

At 4 a.m., as the highlight of the night, the U.S. SEC officially announced the approval of the ETH Spot ETF, but the price of ETH plunged sharply to around US$3,500 after the news was released, just as the traditional market motto "Buy the rumor, sell the news" goes. In the past week, ETH has risen by 29%. Digital currency commentator Zach Rynes also commented on last night's Move, "Everyone who wanted to buy the approval already did." If we delve into the reasons why it did not rise after the good news, it is very important that the so-called "approval" this time only approved the 19 b-4 applications submitted by 8 institutions (BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark, Invesco Galax, Franklin Templeton). The actual trading must wait for the Form S-1 to be passed, which may take weeks or months. Moreover, it was the TradingMarkets department of the SEC that agreed to approve it, not the SEC Chairman Gary Gensler and the other four members. In this regard, Bloomberg's ETF analyst James Seyffart believes that it is normal to make decisions in this form of delegation. If the SEC needs to make an "official vote" for every decision and every document, it is unreasonable. But regardless of how to speculate on this detail, the crypto community has expressed a positive attitude towards this approval, calling it a "historic move."

Source: TradingView

In terms of options, after the ETF was launched, the overall IV levels of BTC and ETH also quickly fell back, the curve became steeper, and the average IV level of ETH returned to around 63%. In terms of trading, ETH's bulk Top Trade showed obvious directionality. We observed 20,000 ETH short puts at the end of May and June, and two groups of about 12,000 ETH long call spreads at the end of June and July. As mentioned above, the approval of 19 b-4 is only a prelude to victory. It will take several weeks or even months for the S-1 application of ETH spot ETF to be approved. When the funds of TradFi really flow into the digital currency market, the upward movement of the currency price will have more real motivation.

Source: Deribit (as of 24 MAY 16: 00 UTC+ 8)

Source: SignalPlus

Data Source: Deribit, overall distribution of ETH transactions

Data Source: Deribit, overall distribution of BTC transactions

Source: Deribit Block Trade

Source: Deribit Block Trade

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