LMAX Digital volumes cooled off from Tuesday levels but were up overall on Wednesday. Total notional volume for Wednesday came in at $518 million, 7% above 30-day average volume.

Bitcoin volume printed $268 million on Wednesday, 21% above 30-day average volume. Ether volume came in at $93 million, 9% below 30-day average volume.

Looking at average position size over the past 30 days, we’re seeing average bitcoin position size at $9,969 and average position size for ether at $1,544.

Bitcoin volatility has rallied up to peak levels, while ETH volatility has been more contained. We’re looking at average daily ranges in bitcoin and ether of $4,762 and $202 respectively.

We think the market is probably fixating too much on tomorrow’s White House Crypto Summit. The bigger focus should be on the fact that the US government is seriously considering moving forward with the strategic reserve, rather than whatever the outcome will be and exactly what the allocation of crypto assets will look like.

The meaningful takeaway here, in our view, is that the US is embracing crypto and welcoming of a technology that will help drive innovation in the years ahead. Ultimately, this is what is important and what will inspire further on-boarding and mainstream adoption of crypto assets.

With that said, should the market feel letdown about a lack of clarity from the summit, any subsequent dips are expected to continue to be exceptionally well supported on the bigger picture constructive fundamentals mentioned above that are far more important.

In our view, the biggest short-term fundamental risk to crypto assets comes from an additional disruption in US equities. When we look at the S&P500 monthly chart, it wouldn’t be surprising to see the onset of a much bigger pullback to the tune of 10-15% from current levels.

US equities have been up only for years and the possibility that we could see a more intense correction is well within reason, especially at a time when the US economy is struggling, geopolitical tension is on the rise, monetary policy efforts have been stretched and inflation is more of a concern.

Nevertheless, we do believe there is a silver lining here as we contend correlations between crypto and US equities are not as straightforward as many might think.

In a scenario where US equities continue to head south, we believe we will see outperformance in crypto assets as many investors wake up to bitcoin’s value prosposition as an asset with store of value properties, while also getting turned on to the compelling opportunity to diversify into the world of smart contracts and decentralized finance that other crypto assets like ETH have to offer.

Fed rate pricing has also moved in recent days, which should help to bolster equity market sentiment as the market expects nearly three cuts in 2025, up from what had been closer to just two a couple of weeks back.

Technically speaking, in the event we do see more downside pressure on the crypto market, we continue to recommend using bitcoin as the proxy. We believe the extent of bitcoin downside should be the $70-75k area, with any dips below $70k to be short-lived, if at all.