“Institutional supply has virtually disappeared,” 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 level since early 2023.
He added that six-month options bias, a measure of how much traders pay to protect against a downside, has soared to its fourth-highest level on record, with the only parallels coming in June and November 2022, both of which were near major cycle lows.
When downside insurance becomes so expensive, he said, the market is paying for protection just when the worst may already be priced in.
Oil re-entered the scene overnight. Brent crude rose 0.6% to around $72.45 a barrel after a ship laden with liquefied natural gas was hit by a projectile near the coast of Oman as it left the Strait of Hormuz, according to Bloomberg, a new attack that tests the peace deal reached in late June.
Energy shocks related to the Iran conflict boosted cryptocurrency sales earlier this year before the truce eased them, and a fresh burst is the kind of macro risk that had faded from the market’s view.
Elsewhere, Asian stocks fell as technology stocks again suffered selling, with South Korea’s Kospi falling 6.7%, according to Bloomberg. Samsung Electronics fell 8.3% even after quarterly profits rose, and SK Hynix fell the same as it began trading in the United States. US futures pointed lower, suggesting that Monday’s Wall Street rebound may not happen.
