As digital asset investment products saw a 7th consecutive week of inflow this week totalling US$293mil (source: CoinShares), $SOL was also a key beneficiary outside of the heavyweights, seeing a surge of over 50%. Solana took home 4.2% of the share of inflows according to the report. $ETH came in second place at 16.8% of the inflows.
$MEME continued its pump to new all-time highs amidst the bull rally amongst altcoins surging over 100% through the week, but easing off slightly after to find some ground around $0.03438. This coin debuted 2 weeks ago at $0.0232. Despite this move, on the contrary, $DOGE $SHIB or $PEPE failed to see a similar rally, raising concerns on how long this move will last.
Another coin hitting an all-time high this week was Celestia ($TIA). Up 146% this week, this conceptually novel modular blockchain technology has been gaining traction and facilitates setting up individual blockchains.
This further translated down to increasing implied volatility for ETH options across the expiries as we dive into the details in the Options Market segment.
Overall Market
The above chart shows the year-to-date BTC price.
After a long time of moving sideways below the trendline resistance, in recent weeks we saw that BTCUSDT started to test this resistance again.
After multiple breakthrough attempts, the trendline was finally crossed over on 9 Nov, briefly touching 38,000. However, it was met with heavy selling pressure there and thus the crossing was short-lived. The trendline didn’t turn in resistance but BTC fell through in one clean sweep.
After meeting some buy orders above the 35,000 level, it started to climb up again towards the trendline resistance. Now that resistance has been breached just days ago, a retest might follow soon.
Binance Fear & Greed Index has come down a bit from 66 last week, to 60 as of November 15, showing bullish momentum is still on the table, albeit less pronounced.
BTC market cap dominance slumped further down to 51.9% over the last week. It is clear that the recent rise in BTC has sparked interest in altcoins, which are gaining market share slowly.
The above chart shows the year-to-date ETH price.
Ever since the most recent high of $2,146 in April, Ethereum has been stuck in a bearish channel, which slowly carved out a bear flag pattern.
In last week's report, we wrote that this bear flag pattern had been tested on November 5 when BTC was trading sideways, giving room for ETH to perform.
On November 9, this move followed through with a convincing sweep upwards $2,137. Just slightly short of the April high, it seems that ETH is on the way up.
This is a confirmation of our desk's previous forecast that crypto would gain more popularity on the back of surging interest rates from central banks and recent declining global inflation readings.
Options Market
What was most evident this week was ETH implied volatility (IV) starting to show signs of “normality”. Compared to a week before, ETH IV continues to climb past BTC across all tenors, even as BTC IV surged again in the wake of the surprise softening US PPI print.
The following chart shows the at-the-money (ATM) IV of BTC across the last month.
Prior to the surge in volatilities across the board, BTC IV had started to show signs of easing, with the short term 7 day expiry dipping below 50%, but on the whole, still maintaining at elevated levels as a proxy of elevated market activity. Those expecting volatility to remain elevated and bought the dip especially in the short term expiries would have seen some healthy profit levels.
As the market continues to digest and get comfortable with the prospect of more institutional inflow into the market, IV eased across the expiries and more notably in the short tenor.
Macro at a glance
Last Thursday (11-09-2023)
China CPI -0.2% y/y in October, slipping further from -0.1% y/y in September, falling below estimates.
China core inflation also slowed to 0.6% in October down from 0.8% in the previous month, putting increased pressure on the government meeting its full-year headline inflation target of around 3%.
Friday (11-10-2023)
Initial UK Q3 GDP figures from the Office for National Statistics showed that the economy stagnated q/q in Q3 with no quarterly growth, just slightly better than the forecasted -0.1% dip, and increased 0.6% y/y from the previous year.
Tuesday (11-14-2023)
US CPI y/y +3.2%, slightly below expectations of 3.3% and the lowest rate since July, with the USD losing 1% against major currencies. This print boosts expectations that the US may see the end to rate hikes.
Wednesday (11-15-2023)
China industrial output was up 4.6% y/y in October, ahead of consensus expectations of 4.5%
UK CPI plunged to 4.6% in October, down massively from 6.7% in September, the lowest rate in two years and below estimates of 4.8%.
UK core CPI reflected a similar trend, falling to 5.7% down from 6.1% the month before, and also below expectations of 5.8%.
US producer price index (PPI) showed surprising signs of easing, down 0.5% in October, the largest fall since April 2020, way undershooting expectations of a 0.4% increase. Excluding food and the sharp drop in energy prices, core PPI stood unchanged m/m, further encouraging bulls that rate hikes may be in the rear-view.
Convert Portal Volume Breakdown
The above table shows the volume breakdown of our Convert Portal.
We see some profit-taking activity this week with Crypto to Stablecoin picking up slightly from 36.2% a week ago.
Notably, with altcoins being largely in favour and the laggards in the space, and with various alts getting some love this week, we see increased rotation in the space with crypto-to-crypto activity seeing a spike from 16.4% a week ago.
Elsewhere activity was quieter, with less stablecoin swaps and off-ramping related activity.
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