- CME futures open interest has dropped to a 32-month low, signaling the institutional bid has “all but vanished.”
- The six-month options skew has spiked to its fourth-highest on record, mirroring levels seen near major cycle bottoms in 2022.
- A fresh attack on a liquefied natural gas carrier near the Strait of Hormuz has reintroduced energy-shock risk to the crypto market.
Institutional demand for cryptocurrency has nearly disappeared, according to Yusuf Fakhro, partner at ARP Digital, who pointed to CME futures open interest at a 32-month low and a term structure at its tightest since early 2023. “The institutional bid has all but vanished,” Fakhro said, citing Bloomberg data.
Consequently, the cost of downside protection has surged dramatically. Fakhro noted that the six-month options skew, a measure of how much traders pay to hedge against a price drop, has spiked to its fourth-highest on record, with the only parallels occurring in June and November 2022 near major cycle bottoms. “When downside insurance gets this expensive, the market is paying up for protection just as the worst may already be priced in,” he added.
Meanwhile, a macro risk that had faded from view has re-emerged after a laden liquefied natural gas carrier was struck by a projectile near the Omani coast as it left the Strait of Hormuz. According to Bloomberg, Brent crude rose 0.6% to about $72.45 a barrel following the attack, which tests the peace deal reached in late June. Energy shocks tied to the Iran conflict drove crypto selling earlier this year before the truce eased them.
Elsewhere, Asian shares fell as technology stocks came under renewed selling pressure. South Korea’s Kospi dropped 6.7%, according to Bloomberg, while Samsung Electronics slid 8.3% despite surging quarterly profit. U.S. futures pointed lower, suggesting Monday’s Wall Street rebound may not carry.
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