“The institutional bid has all but vanished,” said Yusuf Fakhro, partner at ARP Digital, pointing to CME futures open interest at a 32-month low and a term structure at its tightest since early 2023.
He added that six-month options skew, a measure of how much traders pay to protect against a drop, has spiked to its fourth-highest on record, with the only parallels in June and November 2022, both of which came near major cycle bottoms.
When downside insurance gets this expensive, he said, the market is paying up for protection just as the worst may already be priced in.
Oil re-entered the picture overnight. Brent crude rose 0.6% to about $72.45 a barrel after a laden liquefied natural gas carrier was struck by a projectile near the Omani coast as it left the Strait of Hormuz, according to Bloomberg, a fresh attack that tests the peace deal reached in late June.
Energy shocks tied to the Iran conflict drove crypto’s selling earlier this year before the truce eased them, and a renewed flare-up is the kind of macro risk that had faded from the market’s view.
Elsewhere, Asian shares fell as technology stocks came under renewed selling, with South Korea’s Kospi down 6.7%, according to Bloomberg. Samsung Electronics slid 8.3% even after quarterly profit surged, and SK Hynix fell the same as it began marketing a U.S. listing. U.S. futures pointed lower, suggesting Monday’s Wall Street rebound may not carry.
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