History Shows How A UK Election Can Impact The Country’s Stock Market

Call options are dominating ether open interest as investors position themselves for a potential increase in institutional demand from spot ETH exchange-traded funds , analysts noted.

Ether spot ETFs were approved by the U.S. Securities and Exchange Commission last Thursday — but, unlike bitcoin ETFs, which started trading the day after approval, the ether ETFs may not go live for a few weeks or months.

In light of the recent approvals, QCP Capital analysts expressed a positive structural outlook for ether — noting that the largest increases in ether options open interest over the past 24 hours were primarily in calls.

This observation aligns with data from the Deribit derivatives exchange, which shows the ether put-call ratio for all expirations is now at 0.56. A put-call options ratio below one indicates that the call volume exceeds the put volume, signifying bullish sentiment in the market.

The analysts added that implied volatility for near-term ether calls is higher than that for put options — a situation that indicates the market is anticipating upward price movement or greater demand for call options relative to put options.

"Ether frontend vols could remain 15-20 vols above bitcoin, and ether skew is likely to remain in favor of calls," QCP Capital analysts added.

However, the QCP Capital report said that a potential breakout for the ether price will have to wait until there is more clarity on the S-1 approvals.

The Block's Data Dashboard shows ether IV spiked last week amid the SEC's decision to approve eight spot ether ETFs. Since then, IV has decreased slightly but is still elevated compared to that for bitcoin.

IV is a measure used in the options market to estimate the market's forecast of a likely movement in an asset's price. Higher IV indicates that the market expects significant price movements (higher uncertainty or risk), while lower IV suggests more stability.

Options are financial derivatives that give the holder the right, but not the obligation, to buy or sell an asset (in this case, ether or bitcoin) at a predetermined price before a specified date.

Ether's price increased by a muted 0.5% in the past 24 hours and was changing hands for $3,922 at 6:24 a.m. ET, according to The Block’s Price Page.

The GM 30 Index, representing a selection of the top 30 cryptocurrencies, increased by 0.43% to 146.98 in the same period.

The death of Iranian President Ebrahim Raisi in a helicopter crash on Sunday 19 May has reignited optimism among some that Iran’s stance towards the West may soften again into the pragmatic approach of his reforming predecessor, President Hassan Rouhani. For the moment, presidential power has been transferred to Vice President Mohammad Mokhber, but a snap election is due to be held on 28 June to determine the president for the next four-year term. So, will it usher in a new dawn of better relations between Iran and the West of the sort that previously saw the forging of the Joint Comprehensive Plan of Action (JCPOA, or colloquially ‘the nuclear deal’) on 14 July 2015?

It is true that when he was elected president on 3 August 2013, former President Rouhani was instrumental in allowing more access for Western companies into Iran’s key businesses – including its huge but still relatively underdeveloped oil and gas sectors - in exchange for allowing greater oversight of its nuclear program. From Iran’s side, this would see a huge influx of investment from the West that would swell the coffers of an economy blighted by decades of international sanctions. This in turn would alleviate increasing social discontent from a large proportion of Iran’s young, well-educated, and non-Islamic fundamentalist population. It would also, as far as the country’s Islamic Revolutionary Guards Corps (IRGC) was concerned, provide funding for a stealthy advancement in key elements of its nuclear program and for the plugging of technology gaps elsewhere in its economy, as analyzed in full in my new book on the new global oil market order. After the signing of the JCPOA, commitments for massive investment rolled in from scores of Western firms, and Rouhani won a second term as president. It was at this point, though, that the P5+1 group of nations (the U.S., U.K., France, Russia, and China plus Germany) that had signed the JCPOA deal revealed their own surprise, which was that they essentially wanted to dismantle the power of the IRGC across all key areas of Iran’s political and economic life, as also detailed in the book. It was at that point that the JCPOA began to fall apart, even before the U.S. unilaterally withdrew from the deal on 8 May 2018.

More than any other factor, the failure of the deal underlined that in reality there is no such thing as a ‘moderate’ Iranian politician in the truest sense of the word. Rouhani had been keen to re-engage with the West based solely on the beneficial economic considerations for Iran and not on some deeper ideological basis that might include embracing anything other than the notion of Iran as a fundamentalist Islamic state. Crucially, he had only been able to do so with the full blessing of Iran’s Supreme Leader, Ali Khamenei, and the ‘Guardians of the Islamic Revolution’, the IRGC in his first presidential term. When the powers of both were threatened by the JCPOA as it evolved past Rouhani’s first four years, the deal was effectively dead from the Iranian side. In this sense, then, there is no meaningful difference between those commonly portrayed in the West as Iranian political ‘moderates’ or ‘hardliners’, with the only variance in politicians being the degree of freedom they have been allowed by the Supreme Leader and the IRGC at any given moment. Moreover, as also analyzed in my new book, the portrayal of Iranian politicians as either moderate or hardliner has been encouraged by the IRGC as a ploy to leverage the West into certain negotiating positions and certain deals by playing up to its fears of ‘further empowering the hardliners’, or ‘undermining the moderates’.

“At the centre of the guiding principles for all top-level Iranian politics is the concept of Velayat-e-Faqih, which means that all serious political and religious authority is entrusted to the [Shia] clergy, which makes all key decisions for Iran, provided that they have been approved by the Supreme Leader, and this is then enforced by the Guardians of the [1979] Revolution, the IRGC,” a senior source close to Iran’s Petroleum Ministry exclusively told OilPrice.com. “These decisions cover everything of significance for Iran, from foreign policy, through defence policy, economic policy, and intelligence policy, to any domestic policy over and above how many aerials a specific apartment complex in Tehran can have on its roof,” he added. “It should be remembered that [former President, Hassan] Rouhani himself - often cited as a moderate – began his adult life as a cleric, becoming an ardent follower of the leader of the 1979 Revolution, Ayatollah Ruhollah Khomenei,” he said. “This structure is reinforced with the second element in Iran’s power structures that pre-determine the type of president it will have after the next election, which is the Majlis,” he underlined. The Majlis - Iran’s 290-member parliament - is an elected house, but its real powers are confined to determining non-essential matters, although even these decisions can be overturned by the Guardian Council of the Constitution, which approves all legislation. In turn, this 12-member body acts in the manner of a general constitutional overseer, with half of its membership always being Shia theologians directly chosen by the Supreme Leader himself. The other six members are lawyers selected by the head of the judiciary, who in turn is also directly appointed by the Supreme Leader.

The final element of pre-determination in the upcoming Iranian presidential elections is the pre-selection process for ‘suitable candidates’ for the position by a body over which no one, except the Supreme Leader, has any authority at all – the Expediency Discernment Council of the System. The Expediency Council will vet all candidates and then pass the list to the Guardian Council, which will then publish the official shortlist of shortly before the election date. The Expediency Council was originally created by the Supreme Leader to resolve any differences that arose between the Guardian Council and the Majlis, but it also now functions as a key advisory body to the Supreme Leader. According to the Iran source, Iran’s Supreme National Security Council will also send a ‘foundation document on candidates’ to the Expediency Council that stresses the current security concerns of Iran’s key geopolitical backers – China and Russia. “This document will ensure that all the shortlisted candidates have ideas on politics, economics, and global security that are congruent with those of our Chinese and Russian partners,” the Iran source exclusively told OilPrice.com last week.

The late President Raisi was what the West terms a hardliner, but even he was given no say in Iran’s backing for Hamas’s 7 October 2023 attacks on Israel or on the 13 April drone and missile attacks directly on Israel, according to the senior Iran source. “He also had no say on Iran’s maneuvering of the Houthis to attack ships in the Red Sea area, or to threaten Saudi Arabian oil facilities or any such matters, and nor will the next president whoever it is,” he said. “All the key decisions will continue to be made by the Supreme Leader in conference with the IRGC,” he added. This said, a far more important appointment for Iran’s future may come from the replacement of Raisi on the Assembly of Experts, which is the group that chooses the new supreme leader when the ailing 85-year-old Khamenei dies. “For a long time, Khamenei has looked to his son, Mojtaba, to replace him as Supreme Leader, and he could well be appointed to the Assembly of Experts,” the Iran source underlined last week. “This would be the genuinely big event following Raisi’s death,” he concluded.

Speaking in Tokyo on Tuesday, Mester recommended two key changes: adding more words to the Fed's post-meeting policy statement – to describe how officials assess economic developments and potential risks to the outlook – and more detail to its quarterly summary of policymakers' economic forecasts.

“Enhancements to communications would make monetary policy more effective in normal times and also improve the effectiveness of nonconventional policy tools, such as forward guidance, in extraordinary times,” she said in prepared remarks at a conference hosted by the Bank of Japan.

The Cleveland Fed chief, who votes on the Fed's policy-setting committee this year, said she expects officials to consider communications as part of the five-year review of their policy framework set to kick off toward the end of 2024. She did not comment on the outlook for the economy or interest rates.

Mester said increasingly short policy statements, while often seen as a virtue, can also be problematic as each word takes on added significance. They can also make it harder for the public to see the link between economic developments and policy decisions.

She said it would be better for policymakers to “take control of the narrative” and use more words to describe how economic developments have affected the outlook, and the potential risks to that outlook.

Putting more emphasis on risks “would give market participants and the general public a better sense of the contingent, data-dependent nature of policymaking and would raise the central bank's credibility in that a change in policy would be seen less as a breach of promise,” she said.

Mester also said scenario analysis – or describing how different scenarios would lead to different policy actions – should also be a standard part of Fed communications.

“This could be particularly useful in periods like today when the underlying structural elements of the economy may have changed,” she said.

The Fed should also consider publishing an anonymized matrix connecting officials' forecasts for interest rates – often referred to as the “dot plot” — with their projections for growth, unemployment and inflation in their Summary of Economic Projections, Mester said.

“Currently, the variables in the SEP are not linked across participants, and the median paths provided don't necessarily represent a coherent forecast,” she said.

Connecting the dots would give the public a better sense of how each individual official would adjust policy based on changing economic conditions, Mester said, echoing an argument Chicago Fed President Austan Goolsbee also made in May.

Mester will step down from her role as Cleveland Fed president in June when her term expires.

Speaking on the same panel, Fed Governor Michelle Bowman focused her prepared remarks on the Fed's balance sheet, the reduction of which “has proceeded relatively smoothly,” she said.

Fed officials will slow the pace at which they're shrinking the balance sheet starting next month, and have said they intend to stop when the level of bank reserves are somewhat above a level they deem ample.

“In my view, we are not yet at that point,” Bowman said, adding that she would have supported waiting to slow the pace of asset runoff or implementing a more tapered slowing.

“In my view, it is important to continue to reduce the size of the balance sheet to reach ample reserves as soon as possible and while the economy is still strong,” she said. “Doing so will allow the Federal Reserve to more effectively and credibly use its balance sheet to respond to future economic and financial shocks.”

The data comes just days after official figures for April disappointed against expectations, with a wet April being blamed.

Some payback appears to be underway, with the weighted balance rising to +8% from -44%, which represents the fastest increase since December 2022.

"May's increase in retail sales adds to the swathe of data pointing to an improvement in activity over the near-term. Falling inflation, and continuing real wage growth will contribute to a healthier consumer outlook, in turn supporting the retail sector further," says Alpesh Paleja, the CBI's lead economist.

The latest CBI Distributive Trades Survey also showed selling price inflation in the retail sector eased considerably in May, to its lowest since August 2020. Selling price inflation eased considerably to +20% from +54% in February and has now fallen back below its long-run average.

The data comes on the same day the British Retail Consortium (BRC) shop price index revealed inflation is back to what the BRC describes as "normal levels" after it eased sharply to a 30-month low at 0.6% y/y in May.

Economists say fading inflationary pressures can help sustain an improvement in retail sales in the coming months. Indeed, retailers said they expect sales to fall slightly next month but to remain broadly in line with seasonal norms.

Sales were seen as "average" for the time of year (+2%), which was the firmest outturn in eight months. Sales are expected to remain broadly in line with seasonal norms in June (+1%).

Orders placed upon suppliers declined moderately in the year to May (-11% from -49%). Retailers expect the cutback in orders to continue next month at a slightly faster rate (-16%).

However, retail employment continued to decline for the seventh consecutive quarter (-26%). Headcount in retail is expected to continue to contract next month, but at a more moderate pace (-18%).

"The mixed mood from our survey demonstrates just how nascent the economic recovery is. All parties should use this general election campaign to embrace policies which will embed sustainable growth, foster the investment we need to develop a labour market which delivers higher living standards, and to accelerate our transition to net zero," says Paleja.

Chinese Premier Li Qiang praised what he called a restart in relations with Japan and South Korea as he met their leaders for the first three-way talks in four years on Monday in Seoul, striving to revive trade and security dialogues hampered by global tensions. Li, South Korean President Yoon Suk Yeol, and Japanese Prime Minister Fumio Kishida will adopt a joint statement on six areas including the economy and trade, science and technology, people-to-people exchanges and health and the aging population, Seoul officials said.

They may also agree to resume three-party free trade agreement negotiations, which have been stalled since 2019, according to Japanese media reports. At the summit, Li called for the comprehensive resumption of trilateral cooperation with an open attitude and transparent measures, China's official Xinhua news agency reported.

He said relations between the three nations had not changed despite profound global transformations. "Our meeting today, first in more than four years, is both a restart and a new beginning," Li said, according to a post on X by China's foreign ministry.

China and U.S.-allied South Korea and Japan are trying to manage rising distrust amid the rivalry between Beijing and Washington and tensions over democratically ruled Taiwan, which China claims as its own. Yoon and Kishida have charted a closer course with each other and to Washington, embarking on unprecedented three-way cooperation with the United States on military and other measures.

Monday's summit comes a day after the leaders met separately for bilateral talks with each other. In those meetings, Li and Yoon agreed to a diplomatic and security dialogue and resume free trade talks, while Kishida and the Chinese premier discussed Taiwan and agreed to hold a new round of bilateral high-level economic dialogue.

Yoon also asked China to play a constructive role with its partners in North Korea, which is expanding its nuclear weapons and missile arsenal in defiance of United Nations Security Council resolutions. North Korea has notified Japan of its plan to launch a rocket carrying a space satellite between May 27 and June 4, the Japan Coast Guard said on Monday.

Officials from the United States, Japan, and South Korea held phone talks in response to the notice and demanded that North Korea cancel the launch because it would use ballistic missile technology in violation of the U.N. resolutions, Japan's Foreign Ministry said. TRADE RELATIONS

The trade relationship between China, South Korea and Japan has evolved over the past decade to become increasingly competitive. Those ties have been further tested by U.S. calls for its allies to shift their supply chains for key products, such as semiconductors, away from China.

Officials and diplomats from South Korea and Japan have set a low bar for the summit, saying it is uncertain whether there will be major announcements but that just gathering will help the three countries revive and reinvigorate their strained relations. The three leaders are also due to attend a forum with top business executives.

South Korea, Japan and China held 16 rounds of official negotiations over a three-way FTA after they first kicked off in 2012. At their last negotiation in November 2019, the three countries agreed on liberalisation at a level higher than the Regional Comprehensive Economic partnership (RCEP), of which they are all members, encompassing areas from trade of goods and services to investment, customs, competition and e-commerce.

Bitcoin saw four-day lows into the May 28 Wall Street open after holiday BTC price action deceived bulls.

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hovering below $68,000 after spiking to weekly highs.

The trip to $70,600 during the Memorial Day holiday in the United States came without institutional involvement, for example in the form of demand for the spot Bitcoin exchange-traded funds (ETFs).

Despite rapidly gaining momentum, Bitcoin’s latest rally failed to endure for long before the market retraced all of its progress.

The volatility came amid new movement of BTC worth $7 billion from wallets linked to defunct exchange Mt. Gox.

“And there is a full retrace of that recent pump as expected,” popular trader Credible Crypto wrote in part of his ongoing commentary on X (formerly Twitter).

“Let’s see what kind of reaction we get here at the lows.”

The latest data from monitoring resource CoinGlass highlighted liquidity concentrations around spot price, with the area around $67,000 now the nearest point of interest below.

Responding to the past 24 hours’ moves, fellow trader Daan Crypto Trades revealed a positive impact on market structure — a removal of leverage.

“All positions entered during yesterday's move were flushed out and the funding rate is back to neutral,” he wrote on X alongside a chart of open interest data.

“ETH is a bit stronger still but as long as BTC is within its bigger range we'll keep seeing more of this low timeframe chop.”

BTC price performance thus continued to hinge on overcoming key resistance and flipping it to support.

As Cointelegraph reported, the greatest challenge remains the 2021 all-time highs of $69,000 and the subsequent trip to $73,800 this year.

Zooming out, popular trader Jelle revealed a mere consolidatory structure on monthly timeframes despite the lack of upward momentum since March.

In a further post, he considered a broader BTC price range in place all the way since mid-2017 — when BTC/USD hit historical all-time highs of $20,000 two cycles ago.

“Bitcoin has spent the past 6.5 years inside this rising channel, and I don't expect that to change anytime soon,” he confirmed.

“If history is any indication, it's time for another trip towards the highs of the channel. 6-figure Bitcoin is coming.”BTC/USD chart.