Wintermute: Energy is building in the crypto market, but the direction is unclear—there may be a sudden surge in trading activity.

Gate News, March 31—Wintermute said in a post that the four-week period of a stabilizing window is nearly over, yet there are still no signs of a resolution. Brent crude oil is above $112, and the Strait of Hormuz is effectively shut, while the probability of further rate hikes continues to climb. Wintermute believes that the macro ceiling for risk assets is lower than it was a month ago, which makes it difficult for the Bitcoin price to sustainably hold above $70,000. The options expiry on March 27 not only cleared $14 billion in risk exposure, but also removed the delta-hedging flows that had previously caused the spot price to oscillate around the key strike-price range. Wintermute noted that without this passive buy/sell order-flow support structure, the market is more prone to one-sided moves as capital flows thin out. On top of that, there are negative ETF inflows for Bitcoin and Ethereum, and although perpetual contract leverage is high, there is no clear direction given the current low volatility environment. Wintermute therefore believes this market setup will not evolve gradually, but instead will erupt suddenly. Wintermute further analyzed that if there are credible diplomatic breakthroughs and oil prices fall back to around $100, the short side would face the risk of being forced to cover, and the Bitcoin price could rebound to the $70,000–$74,000 range. If the situation continues to de-escalate, the $74,000 resistance level may be tested. Conversely, if the situation escalates further, with oil pushed up to $120, Bitcoin could drop to just above $60,000. If the cycle’s trajectory is similar, it could even fall into the $50,000–$55,000 range. Wintermute emphasized that perpetual contract leverage is elevated, funding rates are fluctuating within the narrowest range on record, and volatility-of-volatility is compressing. No matter which direction the catalysts push, the market structure indicates that the resulting volatility in the move will be far greater than the level implied by the current pricing of spot, perpetual contracts, and options.