• Uniswap, a leading decentralized exchange (DEX), saw its UNI token skyrocket last week after a proposal to share platform fees with token holders who delegate and stake their tokens. Last Saturday, the UNI price soared over 70% to a near two-year high of $12.79, driven by expectations of increased demand and lower UNI circulating supply due to increased staking on the platform.

  • Other DEX projects, such as DYDX ($DYDX), Curve ($CRV), and Pancakeswap ($CAKE), benefited from the rising UNI as well. Investors hope that the same fee-sharing model will be applied to other DEX platforms.

  • Pepe ($PEPE), a fog-themed meme coin, has seen a surge in demand in recent days, following rumors on social media that it will be listed on a US cryptocurrency exchange. The bullish sentiment caused the price to double in 48 hours, and it is currently trading at 0.00000330. The increased number of active Pepe wallet addresses fueled the bullish sentiment.   

  • Theta Network ($THETA) is currently developing the Theta EdgeCloud, an innovative decentralized software platform for periphery computing. The first phase of EdgeCloud will be unveiled on May 1, 2024, according to Theta's roadmap. The Theta team's announcement sparked investor interest, sending the THETA price to a two-year high of $2.30.

Overall Market

  • The above chart shows the BTC price movement since May 2021.

  • As we discussed last week, once Bitcoin broke through the $53,000 resistance level, the next resistance level was $59,000. BTC price fluctuated in the $53,000 red zone for 12 days before breaking through the upper boundary in the European session on Wednesday, February 28.

  • The bullish momentum continued when the US market opened, and the massive inflow from Bitcoin spot ETFs drove the BTC price even higher. Over $500 million of net inflows from Bitcoin spot ETFs in two consecutive days demonstrates the market's strong demand for Bitcoin exposure from investors.

  • On Thursday morning, European time, the strong buy flow returned, pushing the Bitcoin price above $60,000, a level not seen in over two years. The rapid movement in the Bitcoin price resulted in a large liquidation of short positions, and the squeeze pushed the Bitcoin price to 64,000 USDT, according to the Binance spot market. 

  • Although bears pushed the BTC price down to 58,700, the daily low, right after the $64,000 high was claimed, bulls were able to recover their gains and keep the price around $62,000 into Asia morning.

  • The volatile market caused significant long- and short-position liquidations, and the market normalised after the big up-and-down swing in the US session.

  • Our desk noticed that altcoins, particularly Ethereum, the second largest coin by market capitalization, were not moving in conjunction with Bitcoin. Instead of spreading purchasing power across other altcoins, the buy flows were heavily concentrated on Bitcoin.

  • The capital inflow pattern is different from what we have experienced in the 2016 and 2020 bull markets. In our opinion, it indicates that the new capital flowing into the crypto market is primarily from the traditional finance world via ETFs, rather than capital from the blockchain/crypto native world.

  • That being said, Bitcoin spot ETFs have a significant impact on the Bitcoin price and the crypto market as a whole, and this new capital may disrupt the bull market structure seen in the previous two bull runs following the Bitcoin reward halving event.

  • We might see the bull market top sooner than most crypto traders expect in 2025. It also suggests that we might see an all-time high in Bitcoin price before the Bitcoin reward halving event in April.

Options Market

  • The above table shows the at-the-money implied volatility for BTC in February.

  • Bitcoin's price fell to $38,500 in January before beginning a bull run on February 7. The strong bullish move during the Lunar New Year drove the IVs up from below 40% at the beginning of February to 50% by mid-February.

  • After the BTC price consolidated in the $51,000 to $53,000 range for 12 days after mid-February, the IVs of BTC options remained between 50% and 60%, rather than dropping back to 40%.

  • When the BTC price rose recently due to strong demand, so did IVs, indicating that the market was pricing in more volatility in the underlying bitcoin price.

  • Things got interesting after Bitcoin broke the $53,000 and $59,000 resistance levels in a very short time; IVs erupted as the market was surprised by such a rapid rise. The IV for 7-day options spiked over 80% due to the large up-and-down swing last night, and it is currently priced at 70%.

  • The IVs of longer-term options also increased following the volatile trading session, with all trading above the 60% level.

  • The IVs will be maintained at such a high level in the coming days if the BTC price stays above the critical level of $60,000. If the BTC price gradually falls below $60,000, we expect to see 50% IVs for options across all expiries.

Macro at a glance 

  • Last Thursday (2024-02-22)

    • In January, Eurozone CPI growth decreased by 0.4% on a monthly basis, while the annualised CPI growth rate was 2.8%. The continued slowdown in CPI growth in the Eurozone provides the basis for the European Central Bank to lower interest rates later this year.

    • US initial jobless claims fell to 201k last week, below the estimated 217k and the previous week's 213k. The data suggest that the US labour market remains tight.

    • In February, the S&P Global US Manufacturing PMI was 51.5, exceeding economists' expectations of 50.5. The higher-than-expected PMI reading indicates that the US manufacturing sector is recovering from its contraction last year.

    • The US S&P Global Services PMI was 51.3 in February, below economists' forecasts of 52.4 and the previous month's 52.5. It demonstrates that managers in the US service sector were less optimistic than last month about future economic activity.

    • Germany reported GDP growth of -0.3% q/q and -0.2% y/y. The decline in Germany's GDP growth raised market concerns about the economy's impact from high interest rates. 

  • On Tuesday (2024-02-27)

    • In January, US durable goods orders fell 6.1% month on month, worse than the expected 4.9% drop. It marked a significant change from the 0.3% decline in durable goods orders in December.

    • Consumer confidence in the United States fell to 106.7 in February, from an estimated 114.8 and 110.9 in January, according to the Conference Board. Lower consumer confidence will reduce retail sales and consumption.

  • On Wednesday (2024-02-28)

    • The US GDP growth rate in the fourth quarter was 3.2%, slightly lower than the expected 3.3%. The 3.2% growth rate followed a strong 4.9% GDP growth rate in the third quarter in the United States, implying that the US economy was on a firmer footing heading into the first quarter.

  • Next Week, we will keep an eye on the following events:

    • US ADP nonfarm payroll change

    • Bank of Canada interest rate decision

    • European Central Bank interest rate decision




Convert Portal Volume Change

  • The above table shows the volume change on our Convert Portal by zone. 

  • This week our desk observed massive trading demand on Meme and DeFi zones. 

  • The Meme zone's 78.0% volume increase is primarily due to high demand for Pepe ($PEPE). The abnormal hype surrounding PEPE coin on social media resulted in high demand for this coin, which quickly spread to other Meme coins such as Bonk ($BONK) and Dogecoin ($DOGE), causing their prices to move in the same direction. 

  • The trading volume in the DeFi zone increased by 64% in the last seven days. The primary drivers of increased demand are Spell ($SPELL), COTI ($COTI), and Uniswap ($UNI). As stated at the beginning of the commentary, all three tokens are in the top five weekly coin interest tables.

  • We observed a 16% drop in trading volumes in the AI zone. Following a remarkable 375% increase in trading volume last week, demand for coins in the AI zone has decreased.


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