Weekly Research Report-Volatility Spikes after Fed Rate Hike

Satori Research
6 min readMar 21, 2022



Market Recap

Crypto market trending higher after the Fed hiked rates for the first time since 2018.

Bitcoin rallied over 10%, penetrated the 50dma and closed above $40k the next five consecutive days. Bitcoin printed a weekly high of $42.4k on Saturday, which coincidentally is the 100dma. However, we think it is still premature to call for a bull market as BTC subsequently pulled back by 4%.

Altcoins outperformed Bitcoin this week, implying positive market sentiment and increasing risk appetite ($ETH +13.2%; $SOL +10.8%; $AVAX +22.6%; $LUNA +7.6%). We expect higher volatility in the coming weeks, which is typical after the FOMC hikes interest rates.

Derivatives Market

Average funding rates turned slightly positive this week as crypto prices trended higher after the FOMC meeting on Wednesday (Chart 1).

Historically, funding rates in a bull market could go up to 30%-80% apr.

However, current funding rates are still languishing below 5%, indicating market sentiment is still rather weak, or at best neutral.

Chart 1: 7dma of BTC, ETH Perpetual Futures Funding Rate (Source: FTX)

Bitcoin is the most popular trading pair in the crypto option market. We observed that the amount of BTC options expiring this coming Friday (25 MAR) is relatively large (Chart 2).

The options open interest for that date has exceeded 78.4k BTC which is equivalent to more than USD $3.2b. The max pain level for BTC options expiring this Friday is clustered between $40k and

$42k (Chart 3). Speculators are also seen betting on calls with strikes at $45k, Chart 3 shows extensive trading volume and open interest. We expect an increase in volatility this Friday, especially close to options expiry cut-off time (4pm HKT).

Chart 2: BTC Options OI by Expiry (Source: coinglass)
Chart 3: BTC Options OI on coming Friday [220325] (Source: coinglass)

More on Bitcoin

Bitcoin is currently trading at $40.8k (at the time of writing), lower than its price of $56k a year ago. However, Bitcoin outflow from exchanges has been increasing.

Chart 4 shows that there was around 2m BTC in exchanges at the start of 2021 and the volume progressively dropped to 1.7m in 2022.

If demand for Bitcoin increases, ceteris paribus, its current price of $40k can be deemed under- valued.

Bitcoin volatility index is currently at 4.5 (Chart 5).

During the Black Swan crypto sell-off in March 2020, the index traded up to 9.0.

From a historical standpoint, volatility index at 4.5 tends to precede positive trading sentiments. In Feb, May and Oct 2021, the index was at 4.5 and subsequently followed by a steep price uptrend.

Ergo, we think this may be an opportunistic time to accumulate Bitcoin.

Chart 4: BTC Balance on Exchanges (Source: coinglass)
Chart 5: 30dma of BTC volatility (Source: coinglass)
(Mar 21, 2022, Major Crypto KPI)

Altcoins Roundups

Ethereum exhibited similar price action to Bitcoin this week. The ETH merge on ‘Kiln testnet’ earlier this week caused ETH to slightly outperform the market ($ETH +13.2%). The ‘Kiln testnet’ was the final public testnet before Ethereum’s transition to proof-to-stake network. It was regarded as an upgrade in terms of the transactions’ validations in Ethereum. The merge was successful with no major issue reported. Other smart contract platforms, Avalanche, in particular recorded the most significant increase. ($BNB +7.3%; $LUNA +7.6%; SOL

  • 10.8%; $AVAX +22.6%). Major Metaverse coins also rallied, Sandbox outperformed the rest with rising institutional adoptions. ($AXS +9.3%; $MANA +5.0%; $SAND +11.1%). London- based megabank, HSBC, announced their entry into metaverse with ‘The Sandbox’ on Wednesday by acquiring a plot of land.

Crypto Natives

Yuga Labs, the creator of Bored Ape Yacht Club (BAYC) — the blue chip NFT collection, announced the launch of ApeCoin ($APE). Beside trading on secondary market, the token will also be distributed as airdrops to NFT holders of BAYC, Mutant Ape Yacht Club (MAYC) and Bored Ape Kennel Club (BAKC). Yuga Labs added that the token would be operated by the ApeCoin DAO and used for culture, gaming, and commerce to complete the Web3 development for the company. $APE instantly became the hottest topic in the crypto community. It was then listed on major exchanges including Binance and FTX. According to FTX, $APE dropped from a high of $40 to $4.4, ~90% drop in the first hour, before recovering, and it is now trading at $10. Some speculators bought aforementioned NFTs prior to the airdrops and sold the NFTs immediately after their claims of the ApeCoin. The NFT market was not very liquid but the earning of $APE airdrop was more than sufficient to liquidate the NFTs at a discount. The airdrop boosted the trading volume for NFTs this week.

On the other hand, the CEO of Tesla and SpaceX, Elon Musk, once again share his bullish views on Crypto on social platform, Twitter. He mentioned that he would not sell his Bitcoin, Ethereum and Dogecoin.

Government Front

A relatively quiet week on the governmental front. Ukrainian President, Volodymyr Zelenskyy, confirmed that Ukraine effectively legalised cryptocurrency in the country. In the last few weeks, Ukrainian government has raised funds and received donations in cryptocurrency. The funds were used for cyber security, digital infrastructure recovery and providing additional support for Ukrainian army and citizens.

Institution Front

Flood of capital continued to pour into the cryptocurrency space. Blockchain company, ConsenSys, has raised another

$450mio in a new funding round. The backing for this cash injection was solid as Microsoft, SoftBank and Temasek were joined as new investors. The new round of funding doubled its valuation to $7b. ConsenSys was founded in 2014 by Joseph Lubin, co-founder of Ethereum. It was viewed as one of the leading Web3 companies in the future. Blockchain Protocol, Mina, secured $92m in funding round led by FTX Ventures and Three Arrows Capital. Other investors such as Alan Howard, Pantera and the Amber Group were also included. Mina claimed itself as the lightest blockchain with just 22 kilobits (kb) to sync the full chain. Bitcoin and Ethereum is currently about 396 gigabits (gb) and 601 gbs respectively. The tiny size could help Mina to achieve decentralisation more easily. Following the NFT collection features that Instagram would like to add last week, one of the largest music and media platforms, Spotify, has announced to dive into the Web3 and is now hiring a team to integrate the NFT features for its streaming service.

Macro Front

This week was action-packed with the Fed Rate Hike for the first time since 2018. The FOMC meeting ended on Wednesday and Jerome Powell raised interest rate by 25bps as expected. Crypto market reacted positively, and Bitcoin reclaimed $40k. Equities showed similar strong price actions (DJIA +5.8%; S&P500 +6.2%; NQ +10.4%). Although geopolitical tension is still ongoing between Russia and Ukraine, commodity prices eased (Gold -1.15%; Wheat -2.23%; Oil -4.5%).


Traditional and crypto markets recovered strongly after FOMC last week.

At current levels, we at Satori Research are adding, albeit conservatively to our long-term investment.

Volatility could stay elevated this week due to large option contracts expiring on Friday.

Good luck!