This week's market has been erratic; on Tuesday, Bitcoin fell 4.6%, but it rapidly rose back to its previous level on Wednesday.
In this volatile market, the winners were in the DeFi and NFT spaces. Last week, Uniswap ($UNI) and Synthetix ($SNX) reported gains of 13.0% and 6.5%, respectively, while the price of Immutable X ($IMX) rose by nearly 20%.
Additionally, we observed some profit-taking actions on Layer-2 tokens over the last seven days. Even though Polygon ($MATIC) saw a 14.4% drop last week, it is still up 55% from its low on October 19.
The market narrative that the Tuesday settlement will soon lead to the approval of the Bitcoin spot ETF drove the cryptocurrency price higher.
Overall Market
The above chart shows the BTC price in 2023.
As was previously mentioned, the price of bitcoin surged following the confirmation of the breakout of the downward trend. Despite the price's sharp drop following Tuesday's news, the upward trend (blue line) is strongly supported. The price of Bitcoin returned within a day to its pre-news level.
Our desk is currently observing a developing sell zone just above the $38,000 mark, but we don't think this sell zone will serve as a strong barrier to BTC's price. With the approval of the BTC spot ETF narrative, the market will likely see another market rally once the dust settles.
The market cap of BTC dominance has fallen below 53% since Tuesday. It could indicate to the market that in the upcoming weeks, altcoins could perform better than BTC.
The above chart shows the ETH price in 2023.
As can be seen above, there is significant selling pressure on ETH at $2,130, which is close to the April 2023 yearly high.
ETH recently broke the bear flag pattern in November, and it attempted to retake the annual high but was unsuccessful. The robust green K-line that was published on Wednesday indicates that capital is flowing into ETH.
Canada recently reported a CPI reading of 3.1%, while the Eurozone reported a CPI reading in the 2% range for the first time in two years. We anticipate that US inflation will return to the 2% range shortly as well. Our desk thinks there is less chance the Fed will raise rates again in December. US equity markets are showing strong momentum as well, with tech stocks just edging closer to a record high.
With the hurdle on Binance now gone, all eyes are on the approval of the BTC spot ETF and the subsequent massive inflow of capital. When that happens, the market will be volatile, driven by the BTC price. With the BTC halving event and the potential ETF approval, we are anticipating stronger BTC demand ahead.
Options Market
The above table shows the at-the-money implied volatility in BTC and ETH options.
The at-the-money implied volatility on both BTC and ETH options is stable on the long end and marginally lower on the short end, despite the market's recent wild swings.
The short-end implied volatility on ETH options is higher than that of BTC options due to ETH's strong performance over the past few days.
Our desk does note that the mid-term BTC options continue to have higher implied volatility. This could be caused, among other things, by the Bitcoin halving event and the possible approval of Bitcoin spot ETFs.
The above chart is the 25-delta skewness of BTC options.
When the market sharply dropped after Tuesday’s news, the skewness of the front-end options declined sharply as well, and it crossed the 0 line at one time.
The strong market recovery on Wednesday was also reflected in the skewness chart, as we see an almost-vertical raise being recorded. Currently, the skewnesses across all time frames are positive, which indicates that the market sentiment is bullish.
The uptick on 30-day expired options on Wednesday also suggests that options traders are betting BTC upside reward rather than downside protection.
Macro at a glance
Last Thursday (2023-11-16)
U.S. initial jobless claims rose from 218k last week to 231k this week, higher than the estimated 220k.
Philadelphia Fed Manufacturing Index was at -5.9 in November, better than the estimated -9.0 and last month’s -9.0. The data suggested that US manufacturing activities were recovering, further implying that the US economy remains resilient.
British retail sales declined 2.7% year-over-year in October, deeper than the estimated 1.5% decrease. The core retail sales dropped 2.4%, worse than the forecasted 1.5% decrease.
Last Friday (2023-11-17)
Eurozone reported the CPI at 2.9% year-over-year in October, dropping from last month’s 4.3%. As the CPI reading came back to the 2% range, it closed the door for another rate hike from the ECB.
On Tuesday (2023-11-21)
Canada’s CPI reading was 3.1% year-over-year in October, an improvement from last month’s 3.8%. Core CPI was 2.7% year-over-year, slightly improved from last month’s 2.8%.
On Wednesday (2023-11-22)
U.S. initial jobless claims were 209k, less than the estimated 225k and last week’s 233k.
US durable goods orders were reported at -5.4% month-over-month in October, a sharp decline from last month’s 4.0%.
The S&P 500 index closed at 4,556.62, only 1% away from the yearly high of 4,607.07 posted in July.
The Nasdaq index closed at 16,001.39 and reached its yearly high of 16,119.31 intraday.
The US dollar closed at 103.882, declining from the yearly high of 107.348 posted in October.
Bitcoin is at $37,383, an inch away from the yearly high of $37,980 posted last week.
Ethereum is at $2,061, just below the yearly high of $2,139 posted two weeks ago.
Convert Portal Volume Breakdown
The above table shows the volume breakdown of our Convert Portal.
Our volume of cryptocurrency to cryptocurrency transactions decreased from 19.10% to 16.95% as a result of the market's erratic swings.
Furthermore, the volume of cryptocurrency to stablecoin has increased from 37.46% to 39.75% in the last seven days.
The shifts imply that investors were taking profits following the recent strong rally in many altcoins.
Binance users can secure the price by using our Convert Portal, without worrying about price risk in a market that has been erratic lately. Furthermore, there are no additional fees or costs; the price listed on the Convert Portal represents the final price.
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