Matrixport Market Observation: Repricing After High-Level Correction – The Crypto Market Enters a New Phase of Zero-Cap Game

Recently, global markets have exhibited a delicate balance amidst high-level fluctuations. On the one hand, expectations of interest rate cuts and marginally weakening macroeconomic data have provided some support for risk assets; on the other hand, geopolitical uncertainties have resulted in market risk appetite exhibiting a distinct characteristic of "resistance to upward movement and greater sensitivity to pullbacks." Against this backdrop, asset allocation strategies are shifting from pursuing growth to emphasizing defense and certainty.

Gold's strong performance (up 6.15% in December) confirms this logic, with traditional defensive assets seeing increased investment. Meanwhile, while the stock market has demonstrated index resilience, its internal structure is undergoing profound changes: funds are quietly flowing from overvalued, highly crowded sectors to value and cyclical sectors with more visible cash flow, creating a rebalancing pattern of "stable index, changing structure."

The cryptocurrency market is inevitably amplified by macroeconomic sentiment and fluctuations in funding conditions. Currently, the market is undergoing a typical high-level correction and repricing process.

Crypto spot trading: Entering a "rebalancing phase," with no clear trend drivers in sight.

Bitcoin experienced a pullback after approaching approximately $126,000 and is currently trading within a highly volatile range of $85,000 to $95,000. This pattern can be seen as a "repricing" and "rebalancing" of the market after a lack of upward momentum. On-chain data shows that selling pressure from long-term holders has eased marginally, but new buying interest remains cautious, with more buying on dips than actively chasing rallies.

Liquidity is a key indicator of short-term sentiment. The flow of funds in spot Bitcoin ETFs is having an increasingly significant impact on the market: continued net outflows will suppress marginal buying power; only when outflows converge and turn into sustained inflows will it be more likely to inject momentum for the resumption of a trending market.

Futures and Options: Leverage Clearing, Market Returns to "Healthy Game Play"

Excessive leverage in the futures market has been significantly cleared. Open interest (OI) has fallen to a safer level, greatly reducing the risk of a stampede caused by cascading liquidations. A noteworthy signal is that the basis for BTC forward contracts briefly traded at a discount, and driven by hedging activity, the futures-spot spread narrowed to a one-year low, reflecting a cooling of market optimism and increased risk management awareness.

The options market is showing signs of a gradual recovery in sentiment. The implied volatility (IV) of BTC and ETH options has fallen from its highs, indicating that the market is shifting from panic pricing in "sudden shocks" to a more normalized pricing pattern. Although implied volatility skewness suggests some short-term market concerns about a pullback, overall sentiment is recovering. Currently, call options still dominate the position structure, and a large number of options expire on December 26th, making key strike prices important short-term resistance and support levels.

Crypto stocks: Premium recedes, value reassessment in progress

The stock performance of listed companies related to cryptocurrencies also reflects the market's return from frenzy to rationality.

• Digital Asset Trusts (DAT): Their market capitalization to net asset value ratio has fallen back to nearly 1, and the significant premium generated in the early stages due to "equity packaging" has been greatly compressed. Their stock price volatility has been amplified by "coin price pullback" and "expectations of potential financing dilution".
• Mining and computing power sectors: Valuations show significant divergence. Companies that rely solely on computing power operations are valued more based on cost control and capacity expansion efficiency; while companies with high-quality power and data center resources benefit in part from the market's "repricing" of their infrastructure's potential cash flow in the AI computing power field.
• Exchanges and compliance platforms: As bridges connecting the traditional and crypto worlds, the scarcity premium of their licenses and compliance channels still exists, but future valuation increases will depend more on institutional business penetration and the actual realization of recurring revenue.

Summary and Strategic Outlook

The current crypto market is in a "rebalancing phase after a high-level correction." Macroeconomic uncertainties are suppressing risk appetite, and the market lacks a clear unilateral trend driver. Leverage in the futures market is becoming healthier, and volatility in the options market is declining, making the overall landscape closer to a "healthy zero-sum game."

In this environment, trend traders may need more patience, waiting for clearer signals from the macroeconomic or financial sectors. For investors focusing on current market characteristics, the following strategic approaches may be considered:

• Volatility-neutral: Consider products such as FCNs (Fixed Income Notes) or dual-currency investments that aim to generate potential coupon income by selling volatility.
• Bullish strategy: Consider using a discount Accumulator to gradually build positions during market fluctuations and use its knock-out (KO) mechanism to control the risk of chasing highs.
• For those who are bearish or seeking to hedge/reduce positions: Decumulator (decreasing option) or covered call strategies can help reduce positions in batches at a premium during volatility, or provide downside protection for spot positions.
• For investors who need liquidity but are unwilling to bear the risk of margin calls, margin financing products without margin calls offer a low-interest and controllable risk option.

The market's "repricing" process, where it cools down after the initial turmoil, often marks the beginning of a new cycle. Maintaining vigilance while remaining defensive and seeking structural opportunities within a balanced framework may be a better approach at this stage.

The above content is from Daniel Yu, Head of Asset Management, and represents only the author's personal views.

Disclaimer: Investing in the market involves risks; please exercise caution. This article does not constitute investment advice. Digital asset trading can be extremely risky and volatile. Investment decisions should be made after careful consideration of your individual circumstances and consultation with a financial professional. Matrixport is not responsible for any investment decisions made based on the information provided in this content.