This week, our desk noticed that market activity has been slow following the recovery from the August 5 flash sell-off. Last week, US equities performed strongly, while Bitcoin and the cross-border crypto market remained relatively weak.
While the BTC price remains in a range with low volume, our desk has noticed strong demand for some mid- to large-cap coins/tokens, such as Sui ($SUI), Terra Luna Classic ($LUNC), and SATS (Ordinals) ($1000SATS).
Sui, a descendant of Facebook's defunct Diem project, raised $330 million from prominent venture capitalists before launching in May 2023. Since then, it has accumulated more than $600 million in TVL. The recent bullish trend can be attributed to strong holdership, despite significant token unlocks and Grayscale's new Sui Trust introduction. Grayscale, a leading digital currency asset manager, has announced the launch of the Grayscale Sui Trust, which allows accredited and institutional investors to invest in this cryptocurrency.
The Terra Luna Classic ($LUNC) price soared by more than 23% last Saturday, as the community successfully passed a critical upgrade, which could shape the token's future trajectory. The newly approved Tax2Gas upgrade solves the labour-intensive manual calculation issues by automating the tax calculation process. Notably, this automation is expected to reduce the possibility of errors while increasing overall transaction efficiency within the LUNC ecosystem.
Overall Market
The above chart shows the BTC price movement in the 1-day chart.
As we discussed last week, BTC failed to further extend its rapid recovery move, indicating that the rebound from $50k to $61k was more likely a recovery than a reversal of a downward trend.
The $60k/61k range served as a strong support level since the BTC price reached its previous cycle high of $69,000 in March 2024. However, this range has now turned into a resistance level, and the bulls have attempted to break it in recent days but failed to keep the price above it.
The US CPI data was released on Wednesday, and it is consistent with market expectations. However, the Fed's likelihood of cutting interest rates by 50 basis points in September fell from 75% last week to 34% following the CPI announcement. The BTC price was extremely sensitive to such a change, falling below $59k shortly thereafter.
As we mentioned last week, our desk expected the BTC price to retest the $52k support range in the coming weeks. If the price cannot hold above $52k, BTC will most likely fall to the price range starting with a 4.
Suppose the Bitcoin price finds support at $52k. In that case, we expect it to continue its sideways movement within the bull flag range until the Fed announces its first rate cut of the cycle or an innovation is introduced on the Bitcoin network.
Our desk believes that the trading volume of BTC and the broader crypto market will remain muted for the rest of the month, with momentum picking up in September.
Options Market
The above chart is the at-the-money implied volatility for BTC options with various tenors.
Following the volatile sell-off on August 5 and the subsequent rapid rebound, IVs gradually returned to the 60% range across various expirations. The IV of 7-day options traded lower following the CPI announcement on Wednesday US time, and it is approaching 50%.
The IVs of BTC options with intermediate tenors are also trending lower, whereas the IVs of options with 90- and 180-day expiries remain around 60%.
The options market is currently pricing low volatility in the next 30 to 60 days, with IVs for options of both tenors trading below 55%. However, we have Fed Chair Powell's upcoming speech at the Jackson Hole conference next week and Nvidia's earnings release at the end of August. Furthermore, the September FOMC meeting is only one month away, during which the Fed will decide whether or not to cut interest rates for the first time in this cycle.
With current IVs trading lower, options traders can profit from going long on volatility if any unexpected results arise in the coming days.
Using a long strangle or straddle option can help you profit from volatility. A strangle option consists of a call and a put with the same expiry but distinct strikes, whereas a straddle option has the same expiry and strike. Being long with either approach can be profitable if there are any sparks in IVs.
Binance users can now use our Options RFQ platform to trade large options without worrying about market liquidity on the order book. Users can also reach out to our OTC desk for live quotes if the size is too large and not supported on the Option RFQ platform.
You can find out more about options RFQ by visiting: https://www.binance.com/en/vip-portal/trading?ref=OTC-Option
Macro at a glance
Last Thursday (24-08-08)
US initial jobless claims fell from 250,000 last week to 233,000 this week, lower than the expected 241,000.
The German CPI rebounded slightly in July, with a monthly change of 0.3%, up from 0.1% in June, and an annual change of 2.3%, up from 2.2% in June.
Last Friday (24-08-09)
In July, Canada lost 2,800 jobs, rather than the expected 26,900 job gain. The unemployment rate was 6.4%, unchanged from June.
On Monday (24-08-12)
Canada's new building permit issuance fell 13.9% from June, instead of the expected 5.6% increase.
In June, the UK saw a 97,000 job gain on a three-month moving average, up from a 19,000 job gain in May.
The UK unemployment rate was 4.2% in June, lower than the forecasted 4.5% and 4.4% in May.
On Tuesday (24-08-13)
In July, the US PPI increased by 0.1% month on month, less than the expected 0.2%. The core PPI changes monthly by 0.0%, which is less than the expected 0.2% increase. The lower PPI number could lead to lower inflation in the United States later this year, increasing the chance for a rate cut by the Fed this year.
In July, the monthly CPI in the United Kingdom fell by 0.2% after rising by 0.1% in June. The annual CPI in the UK fell to 2.2% instead of the expected 2.3%, but it was still higher than June's 2.0% CPI reading.
On Wednesday (24-08-14)
In July, the US CPI rose 0.2% monthly and 2.9% annually. Core CPI rose 0.2% monthly and 3.2% annually. The CPI data is broadly consistent with market expectations, decreasing the likelihood of a 50bps rate cut by the Fed in September.
Risk assets were sold off following the CPI readings, but most of them recovered the losses before the market closed. The S&P 500 index rose 0.38%, the Dow Jones Industrial index rose 0.61%, and the tech-heavy Nasdaq index rose only 0.03% at market close.
Gold fell 0.87%, closing at $2,486, while crude oil fell 1.44%, closing at $77.22.
BTC fell 2.4% and traded below $59k, while ETH fell 2.7% and traded around $2,660 following the CPI announcement.
Convert Portal Volume Change
The above table shows the volume change on our Convert Portal by zone.
Last week, the market calmed down following the August 5 flash sell-off, with the VIX trading back below 30. The Bitcoin price, along with the altcoin markets, has traded sideways. Overall, our desk has observed a slow market over the last seven days.
Last week, the Fan Token Zone experienced high trading demand on Convert. Alpine F1 Team Fan Token ($ALPINE) is a major contributor to this zone's 3.3% growth.
The volume of the Launch pool zone decreased by 22.3% during the same time period. Pendle ($PENDLE) and Notcoin ($NOT) were the two tokens with the largest volume drops in the zone.
We also saw a 35.9% decrease in the Liqud Staking Zone. Lido DAO ($LDO) volume fell the most in this zone.
Why trade OTC?
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