LMAX Digital volumes accelerated on Tuesday. Total notional volume for Tuesday came in at $642 million, 62% above 30-day average volume.

Bitcoin volume printed $407 million on Tuesday, 60% above 30-day average volume. Ether volume came in at $150 million, 56% above 30-day average volume.

Looking at average position size over the past 30 days, we’re seeing average bitcoin position size at $9,697 and average position size for ether at $3,082.

In recent sessions, bitcoin volatility has deferred to some consolidation, while ether volatility has continued to climb. We’re looking at average daily ranges in bitcoin and ether of $1,052 and $71 respectively.

In our Tuesday update, we highlighted room for movement in global markets on the back of the US inflation data release, but also downplayed the impact from the event on crypto assets.

Indeed, this is how things played out. The net reaction in traditional financial markets was aggressively risk on, with the US Dollar selling off across the board and US equities rallying sharply on the softer than expected inflation read.

Investors have been pushing for a more investor friendly tweak to monetary policy, and softer inflation data has given them good reason to expect the Fed to bend to the will of the market.

At the same time, we think the market has gotten ahead of itself here. We believe we will need to see more evidence of a cooling off in inflation before there is any official shift in Fed policy away from higher for longer.

As far as crypto assets go, the risk on reaction in traditional financial markets did nothing to benefit crypto, with the market selling off in Tuesday trade.

But again, we think this was less about US CPI and more about the normal course of flow following what had already been an impressive run higher in crypto prices.

We’ve also highlighted the fact that traditional market drivers have become less relevant in 2023, as they are ultimately offsetting. That is to say, there is a case to be made for bitcoin to be trading higher or lower in risk off and risk on flow.

One could argue bitcoin sold off on Tuesday given its store of value properties. The move back into risk on therefore resulted in a move away from safer assets like bitcoin and into riskier assets.

At the same time, once could just as easily make the argument that bitcoin should be well supported in a risk on flow backdrop, with the US Dollar selling off across the board and market participants more inclined to be buying into a risk correlated emerging crypto market.

And so, as per our analysis, the correlations with traditional market drivers are less relevant right now. The takeaway here is a net positive, with crypto perhaps showing itself as an attractive, potentially uncorrelated asset class for portfolio diversification.