Stocks tied to Chinese markets fell sharply on Tuesday after Beijing decided to hold off on new stimulus measures aimed at supporting the economy.
"As the Chinese rally wanes, we anticipate capital reallocation back into crypto, reflecting the industry’s growing maturity as an alternative risk-on asset," — QCP Capital analysts perspective on market reallocation.
During the Asian trading session, Chinese companies that traded on the Stock Exchange of Hong Kong recorded significant losses, with Hong Kong equities facing their steepest single-day loss since 2008. Additionally, the surge in the VIX reflects increased market uncertainty across global indices.
However, despite the increased VIX, analysts noted that expectations in the crypto derivatives market for future bitcoin price swings are currently lower than recent actual volatility, suggesting that traders are not anticipating significant price movements in the near term.
"In the derivatives market, crypto volatility remained stable, with front-end implied volatility trading at 43%, a 3-vol discount to the seven-day historical realized volatility," the analysts noted.