In terms of capital flows, crypto and equity markets continue to exhibit strong co-movement.

Following the Q1 correction, during which both equities and crypto posted notable losses, Q2 has opened with a clear rebound in risk appetite.

The S&P500 has gained over 12% and recently reached a new all-time high, while Bitcoin [BTC] has risen more than 16%, indicating a broad return to risk-on positioning.

This, however, raises the question of whether accelerating capital inflows into risk assets are contributing to bubble-like conditions. As shown in the chart below, over $2.6 trillion in S&P500 call options were traded on the 6th of May, marking a new all-time high.

In addition, call options accounted for nearly 60% of all S&P500…