The overall market remains heavy as the majority of altcoins point towards the downside as we see midweek breaks pushing prices lower.
Previous top performing altcoins continue in their downward spiral following BTC.
ARB and STC are amongst the bottom performers both down over 15% in the last 7 days, despite the initial strong movements seen from the start of the year. If the market continues to dip, we are likely to see further downside from both of these coins.
KAVA is one of the top performers this week, currently up 11.87% outperforming the majority of the market. Despite the market turmoil, KAVA seemed to find local support earlier this week where it has seen a bounce to the upside.
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Convert Portal Volume Breakdown
Crypto to stablecoin trades took a slight decline from last week -1.68%, currently we are seeing the market point to the downside with large midweek drops as we experienced yesterday. These transactions remain significant, unless the bulls can step back in and keep price above water.
Stablecoin to crypto transactions increased by 2.2% this week as investors continue to look for the next move up. Unfortunately, the majority of those who bought over the past week will be down on their current positions.
Crypto to crypto transactions remain relatively high with a value of 13.41%, as capital rotation continues with the likes of altcoins soaring such as PEPE which has taken the market by surprise over the past 2 weeks.
Options
As discussed last week, we observed the implied volatility difference between BTC and ETH is narrowing, and now in the longer expiry instructions, we observe that BTC IV has surpassed ETH IV. In the past, the implied volatility on ETH was usually higher than the implied volatility on BTC. Once in a while, the IV on BTC is higher than the IV on ETH. In most cases, it will be back to the norm after several trading days as the ETH price is more volatile than the BTC price.
Currently, we see the volatility on ETH is compressed, and the ETH price is pretty resilient, trading between $1800 - $2000 level. After the big drop in April, ETH IV has been in the sub-50 level for over two weeks. From our observation, the desk thinks ETH volatility will be back to the high-50 to 60 levels in the near future, and a straddle strategy could be beneficial if it plays out as we expect.
Overall market technicals
BTC
Continuing on from last week, BTC traded back within our range we outlined as bulls temporarily pushed price upwards. However this was short lived as the midrange acted as strong resistance pushing price down.
Over the weekend price continued to sell off, the potential trendline support we outlined last week failed to hold, as price nose dived straight through it.
Currently as it stands the price is hovering above the support zone we identified a few weeks back. We saw a sudden sell off yesterday around New York lunch time, perhaps hinting at what is next to come for price.
As always the altcoin market will be depicted by BTC following suit.
Macro at a glance
Last Thursday (05/04/23), ECB increased the interest rate by 25bps to 3.75%, following the FED’s hike on Wednesday. BTC dropped below $29k after tightening market liquidity.
Last Friday (05/05/23), the US reported a stronger-than-expected non-farm payroll reading. It reports 253k instead of the expected 180k, better than the previous month’s 165k. The unemployment rate dropped to 3.4%, better than the estimated 3.6%. Because of that, the US dollar was strengthening and Gold dropped. Risk assets were fueled by the erasing concern of a recession, BTC traded back above $29.5k level.
On Wednesday (05/11/23), the US reported a 0.4% month-over-month growth and a 4.9% year-over-year growth on CPI reading, the lowest since the Fed started the current rate hike cycle. Now the market is pricing a 91.5% chance that the Fed will pause in their June meeting. However, BTC got a flash selloff during the North American session due to fake news saying the US government was selling BTC.
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