Derivatives and trading sessions reveal cautious market sentiment.
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Bitcoin $114,168 entered October cautiously as China’s Golden Week holiday coincided with partial government shutdown in the United States. Although Bitcoin’s price trends upwards, K33 Research points out in its recent report that weak Asian liquidity during the holiday period could result in flat or negative returns at the start of October. The report also highlights 2021 as an outlier year. The potential delay of U.S. data releases, like employment and inflation figures, could introduce additional volatility. Bitcoin closed September with a 4.7% increase, trading at approximately $114,120, and is currently around $116,700.
ContentsLiquidity and Volatility Dynamics for Early OctoberLong on SOL, Short on LTC: The Grayscale Influence Liquidity and Volatility Dynamics for Early October
Golden Week in China spans from 1st to 7th October, and South Korea will observe public holidays from 3rd to 9th October. Regional breaks often reduce participation, leading to local lows in volatility at the beginning of October. According to K33 Research Director Vetle Lunde, the composite return of the Asian session for the year has been -9.7%, with significant upward movements occurring during U.S. trading hours following spot ETFs. Profit-taking and relatively low liquidity are major reasons for the session-based performance discrepancy.
In Washington, a partial government shutdown took effect from October 1 due to the failure to pass a budget package. Some public employees are on leave, and the delay in releasing critical macro data complicates price discovery. K33 warns that thinning order books during the Asian-U.S. overlap might trigger excessive movements. Derivative indicators such as CME’s open interest, which is at a five-month low, sub-neutral funding rates, and increased demand for puts, support a cautious outlook.
Long on SOL, Short on LTC: The Grayscale Influence
Meanwhile, after the SEC’s general listing standards for cryptocurrency ETFs took effect, Solana $208 and Litecoin spot ETFs are expected to come to the table within weeks. However, the government shutdown may delay the schedule. Lunde notes that Grayscale’s supply pressure is not symmetrical. For Solana, Grayscale’s share of circulating supply is only 0.1%, and it will trade without a discount, limiting mass dissolution risks. Multiple Solana ETF applications and institutional treasury strategies bolster demand for the altcoin.
The situation with Litecoin is different. Grayscale’s share of the circulating supply is 2.65%, and historically, deep discount periods have occurred. Sales flow may be triggered in the altcoin, similar to GBTC/ETHE conversions. K33 recalls that in Bitcoin and Ethereum $4,145, nearly half of the nominal assets under management flowed into the market within the first 200 trading days. The relative lack of issuer interest in Litecoin suggests a short approach, while a long strategy in Solana targets relative value differences.
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