This week, due to a spike in market volatility, our desk saw strong trading demand across the board. Binance users use Convert to hedge their risk during volatile market conditions, allowing users to lock in a price in volatile conditions and be confident that the order will be filled at the exact price displayed on-screen, with no additional fees. This feature provides great effectiveness to our users during volatile markets when they are concerned about experiencing large slippage and not having their orders filled in large market moves.
Gifto ($GFT), which launched in 2017, is a blockchain-based gifting platform. It enables users to create and share custom NFTs, such as artwork and e-cards. The platform also provides staking to earn GFT tokens, yield farming, and a store for trading cryptocurrency. GFT price recently outperformed the market as a result of the launch of Gifto's new bridge product.
Mantra ($OM) is a leading project in the Real World Asset (RWA) space that experienced a significant rally in July. It reached an all-time high of $1.41 by the end of July and demonstrated resilience during the market sell-off, with only an 11.5% retracement last week, whereas ETH dropped 23%.
Overall Market
The above chart shows the BTC price movement in the 1D chart.
As we discussed last week, we expected the Bitcoin price to remain within the blue bull flag for some time before breaking out to the upside. We also listed the $63.8k and $60k levels as support.
However, the poor labour market data released in the United States last Friday sparked market concerns about a possible US recession and delayed Fed action. The S&P 500 index fell 2.06% this week, while the Nasdaq 100 index dropped 3.06%. The Bitcoin price was hovering around our strong support level of $60,000.
On Monday morning in Asia, panic selling on the Japanese stock market dragged down all asset classes, and the VIX surged to levels only seen during the pandemic in the last four years. The Nikkei 225 index plunged, triggering the circuit breaker; USD/JPY fell to 141; and Bitcoin fell more than 15% to $49,000 in a few hours. The price of ETH fell by more than $400 in 15 minutes, causing massive liquidation both on-chain and on the exchange.
Although the Bitcoin price reclaimed $55k after the US market opened, market sentiment remained extremely bearish, with a $168 million outflow from Bitcoin ETFs on Monday.
Now the question remains: “Have we bottomed out?”
The daily chart shows that the BTC price broke the bull flag and broke the $63.8k, $60k, and $52k support levels very quickly on Monday. However, the long needle on the daily close indicated that demand came in below $55k, and we expect the $52k level to remain a strong support.
However, the crash may have some longer-term consequences for the global market, with the BTC price likely to retest the $52k support level in the next two weeks. If the price finds strong support at this level and quickly recovers to the upside, BTC could stay in the bull flag and trade in the $55k-$68k range for the rest of the month.
Options Market
The above chart shows the at-the-money implied volatility history for BTC options with various tenors.
The IVs of BTC options elevated on August 5 when the market crashed, with the 7-day expired options trading at 90% and the 30-day expired options trading at 71%.
After the US market opened and the BTC price recovered, the IVs of BTC options gradually retraced, and BTC options with various expiries now trade around the 60% level.
With the peak period of market volatility over, we recommend that traders take longer-term bullish positions in anticipation of a Fed cut cycle. A bull spread of $60k/70k expiring Dec 27 would provide traders with a favourable return with lower costs.
Binance users can now use our Options RFQ platform to trade large options without worrying about market liquidity on the orderbook. Users can also reach out to our OTC desk for live quotes if the size is too large and not supported on the Option RFQ platform.
You can find out more about options RFQ by visiting:
https://www.binance.com/en/vip-portal/trading?ref=OTC-Option
Macro at a glance
Last Thursday (24-08-01)
The Bank of England announced a 25 basis point reduction in interest rates to 5.00%, as expected by the market. It is the first rate cut by the BoE since 2020, but Governor Andrew Bailey warned that the move would not herald a rapid succession of additional cuts.
US initial jobless claims increased to 249k this week from 235k last week, exceeding the expected 236k. The higher-than-expected initial jobless claims number suggested that the US labour market was weakening.
In July, the US ISM manufacturing PMI was 46.8, significantly lower than the forecasted 48.8 and June's 48.5. Concerns emerged around the state of the US economy as the manufacturing sector continued to contract. US equities closed down, with the S&P 500 index down 1.37% and the Nasdaq index down 2.44%.
Last Friday (24-08-02)
The US nonfarm payroll increased by only 114k in July, much lower than the estimated 176k and the reported 179k in June.
The unemployment rate in the United States rose to 4.3% in July from 4.1% in June, exceeding economists' forecasts of 4.1%.
Because of the poor labour market data, the market is concerned about a potential recession in the United States. As a result, the US stock market fell further and closed in the red, with the S&P 500 index down 1.84% and the Nasdaq index down 2.38%.
On Monday (24-08-05)
The Japanese stock market fell sharply in response to the Bank of Japan's hawkish interest rate hike and the possibility of a US recession. The Nikkei 225 fell 12.4%, its worst drop since 1987, while USD/JPY fell to 141, the lowest level in eight months.
The selloff pressure spread from Asia's stock markets to the crypto market, with BTC falling more than 12% to $49,000 and ETH plummeting to 2,111, the daily lowest.
On Tuesday (24-08-06)
The Reserve Bank of Australia announced that the interest rate would remain at 4.35% for the sixth consecutive meeting in August. Governor Michele Bullock declared that a rate cut was unlikely for the rest of the year, addressing the central bank's primary focus on fighting sticky inflation.
Following market volatility, the BOJ deputy governor signalled a dovish stance, stating that BOJ will not hike rates when markets are unstable.
Convert Portal Volume Change
The above table shows the volume change on our Convert Portal by zone.
On Monday, the Japanese stock market fell by more than 12%, triggering a circuit breaker, and selling pressure spread to the cryptocurrency market. The Bitcoin price fell by more than 15% in 24 hours, reaching $49,000, its lowest of the day. The price of ETH dropped by more than 20% in 24 hours. Other altcoins saw a more severe selloff.
The volume of the Launchpad zone increased by 72.5% as trading demand for Gifto ($GFT) and Artificial Superintelligence Alliance ($FET) rose. Both tokens are on our Top 5 weekly coins of interest list.
The volume of the RWA zone increased by 64.3% over the same time period. Mantra ($OM) and Pendle ($PENDLE) are the two largest contributors to the volume increase.
We also saw a 35.3% increase in the Monitoring zone, owing to strong demand for Gifto ($GFT).
Why trade OTC?
Binance offers our clients various ways to access OTC trading, including chat communication channels and the Binance OTC platform (https://www.binance.com/en/otc) for manual price quotations, Algo Orders, or automated price quotations via Binance Convert and Block Trade platform (https://www.binance.com/en/convert) and the Binance Convert OTC API.
Email: trading@binance.com for more information.
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