OG Fan Token ($OG), the cryptocurrency associated with the European Esports organisation OG, experienced significant price fluctuations over the past week. The token's value rose dramatically from $2.6 to a peak of $14.3 within just four days, only to drop by more than 50% to $6.6 in a single day. Despite this volatility, the token still recorded an impressive seven-day return of 178%. During this period, trading volume on Convert increased by over 350 times, as traders leveraged the platform to execute large trades while mitigating market risks.
Similarly, the Santos FC Fan Token ($SANTOS) witnessed a notable surge in trading activity on Convert, with trading volume increasing twelvefold compared to the previous week. The rise in demand for Fan tokens on the Chiliz blockchain was largely influenced by the activity surrounding the OG Fan Token.
Wing Finance ($WING), a decentralised lending platform that operates on a credit-based, cross-chain model, also saw a significant uptick in interest. The platform's partnerships have allowed it to explore various lending markets, including under-collateralized and synthetic token lending. Last week, WING's trading volume skyrocketed by 33 times on Convert, resulting in a weekly gain of 20.3%.
The Prosper ($PROS) token experienced a remarkable surge in value following an announcement from Animoca Brands, a blockchain and game software company, regarding its intention to acquire additional native tokens of the platform. This news captured the market's attention, leading to a price increase of over 55% within a week, accompanied by an 89.9% rise in trading volume on Convert.
Overall Market
The above chart shows the BTC price movement in the 8-hour chart.
Last week, the overall risk sentiment in the financial markets showed signs of improvement, primarily driven by positive developments in both the China A-share market and the Hong Kong stock market. This uptick in sentiment was particularly notable during the closure of the China A-share market for the National Holiday, a period during which our team observed a significant influx of capital into the cryptocurrency sector. This surge in investment led to a remarkable increase in Bitcoin's price, which rose from $60,000 to over $64,000 over the weekend, reflecting heightened investor interest and optimism in the crypto space.
However, this bullish momentum was short-lived. On the first trading day following the reopening of the China A-share market, a significant drop in stock prices cast a shadow of bearish sentiment over the cryptocurrency market. The decline in the A-share market raised concerns among investors, leading to a cautious approach towards riskier assets like cryptocurrencies. Compounding this bearish sentiment was the release of robust labour market data from the United States, which indicated a strong economy and reduced expectations for aggressive interest rate cuts by the Federal Reserve. This development contributed to a strengthening of the US dollar, further pressuring Bitcoin and other cryptocurrencies.
As a result, we witnessed notable sell-offs in Bitcoin during the US trading sessions in the past three out of four days as investors reacted to the changing economic landscape. Our analysis revealed a consistent pattern: Bitcoin's price typically declined by over 2% during US trading hours, while it tended to stabilise during the Asian and European sessions. This trend suggests that market dynamics and investor behaviour during different trading hours play a crucial role in Bitcoin's price movements.
Interestingly, despite the S&P 500 index reaching a new all-time high, Bitcoin faced considerable selling pressure. One potential explanation for this phenomenon is that investors in Bitcoin spot ETFs may be reallocating their capital towards the US stock market, seeking to capitalise on the bullish momentum in equities. This theory is further supported by the ongoing capital outflows observed in 11 Bitcoin spot ETFs, indicating a shift in investor sentiment and strategy. As investors navigate the evolving market landscape, the interplay between traditional equities and cryptocurrencies will continue to shape the dynamics of both asset classes.
On Thursday, the US Consumer Price Index (CPI) data indicated a rebound in the declining inflation rate for September, effectively diminishing the prospects of a 50 basis point interest rate cut by the Federal Reserve in November. Following this news, Bitcoin experienced a swift sell-off during the US trading session but managed to recover most of its losses before the Asian markets opened.
Our analysis maintains the view that the $58,000 to $59,000 range will serve as a support level, from which we anticipate a rebound in Bitcoin's price. Should this support level be breached, we expect Bitcoin to revisit the $50,000 to $52,000 range. If that scenario plays out, we do not foresee the price reaching the $100,000 mark until the first quarter of 2025.
Options Market
The above chart is the implied volatility of at-the-money BTC options.
Following the recent robust labour market data and a rebound in CPI figures, the US dollar demonstrated notable strength, leading to a new all-time high for US equities, particularly in the S&P 500 index. In contrast, Bitcoin experienced a significant sell-off due to capital outflows from Bitcoin ETFs in the United States. The accompanying table indicates that the implied volatilities (IVs) for the 7-day expiry options are on a downward trend, while the IVs for intermediate and long-term BTC options remain relatively stable within the 50%–55% range.
As highlighted in the Overall Market section, our analysis indicates that the BTC price is likely to find support at this level and subsequently rebound. Given our positive long-term outlook for BTC prices, deploying a calendar spread options structure could optimise profit potential while minimising losses.
The typical calendar spread trade involves the sale of an option (either a call or put) with a near-term expiration date and simultaneously buying an option (call or put) with a longer-term expiration. Both options are of the same type and typically use the same strike price.
By entering a long call calendar spread strategy, the trader will be profiting from price increases in the underlying asset's price or from rising volatility. This strategy has limited risk, with the maximum loss being the net premium paid by the trader. Furthermore, it offers unlimited profit potential if the underlying asset appreciates by the expiration of the longer-term option.
Macro at a glance
Last Thursday (24-10-03)
US initial jobless claims for this week were recorded at 225,000, which is slightly above the anticipated 222,000 and last week's figure of 219,000. This level of initial claims continues to reflect a trend towards the lower end observed in recent weeks, indicating a strengthening labour market in the United States.
In September, the ISM non-manufacturing PMI reached 54.9, surpassing the expected 51.7 and the previous month's 51.5. Additionally, the ISM non-manufacturing Prices Index for the US stood at 59.4 in September, marking the highest level since January. This figure significantly exceeds the forecast of 56.3 and last month's 57.3. The elevated price index suggests ongoing inflationary pressures, which may lead the Federal Reserve to adopt a cautious stance regarding future interest rate rates.
Last Friday (24-10-04)
The US nonfarm payroll report revealed an increase of 254,000 jobs in September, far exceeding the expected 147,000 and August's total of 159,000. This strong payroll data has reduced the chances of the Federal Reserve making a 50 basis point rate cut in the near term.
The unemployment rate in the US decreased from 4.2% in August to 4.1% in September, falling below analysts' predictions of 4.2%.
In light of the robust labour market, the US dollar index climbed above 102.66, ending the week with a five-day winning streak and a 2.15% gain. In contrast, gold prices saw a slight decline to $2,653, while Bitcoin bounced back from $60,700 to $62,000.
On Wednesday (24-10-09)
The FOMC minutes indicate a lack of further guidance, with Federal Reserve members continuing to rely on data for their decisions. The market has eliminated the possibility of aggressive rate cuts and is now anticipating reductions of 25 basis points in both November and December. As expectations for a Fed rate cut diminished, the US dollar maintained its upward trend, finishing at 102.87. Meanwhile, Bitcoin encountered substantial selling pressure, dropping below the $62,000 support level and closing at $60,300.
On Thursday (24-10-10)
US CPI data for September exceeded expectations, with a monthly increase of 0.2% and an annual rate of 2.4%, surpassing the anticipated figures of 0.1% and 2.3%, respectively. The core CPI also indicated a rebound, registering a monthly increase of 0.3% and an annual rate of 3.3%, both above the forecasts of 0.2% and 3.2%. Following the higher-than-expected CPI report, the US dollar index rose above the 103 mark but gave up most of its gains in the later trading session. Meanwhile, Bitcoin continued its downward trend, trading below $59,000 before recovering some losses after the US market closed.
Convert Portal Volume Change
The above table shows the volume change on our Convert Portal by zone.
BTC experienced a rebound from the significant $60,000 level, surpassing $64,000 over the weekend. However, a sell-off commenced after the reopening of the China A-share market post-National holiday, leading to a downturn. The strength of the US dollar, bolstered by robust labour market data and elevated CPI figures, added further pressure on BTC's price, which fell below $59,000 during Thursday's trading session. In this high-risk environment, our desk noted a marked rise in demand for Fan tokens last week.
In the Fan Token Zone, there was a significant spike in trading activity, with trading volume increasing by more than 14 times. This remarkable growth was primarily driven by the performance of two of the top five trending assets for the week, which were instrumental in this surge. The excitement surrounding these Fan tokens indicates a rising interest among traders and investors, underscoring the vibrant dynamics of this sector within the cryptocurrency market.
The BNB Chain Zone saw a remarkable surge in trading volume, which increased by 30.7%. This uptick was largely driven by the OG Fan Token ($OG), which experienced a highly volatile trading week, boasting over 30 times the usual volume in the spot market. This indicates a vibrant community within the BNB Chain ecosystem.
Additionally, the Launchpool Zone recorded a substantial increase in trading volume, rising by 23.1%. The OG Fan Token ($OG) was instrumental in this volume growth.
Why trade OTC?
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