After passing $51,000 last Wednesday, Bitcoin encountered strong resistance at $53,000 and is currently trading sideways in the $51,000 to $53,000 range.
While Bitcoin struggles to gain another leg up, the altcoin space is brimming with strong performers.
The recently released text-to-video model Sora by OpenAI reignited market interest in artificial intelligence (AI). Worldcoin ($WLD), founded in 2019 by Sam Altman, Max Novendstern, and Alex Blania, is one of the winners following the product's release. Sam Altman is also the CEO of OpenAI. WLD prices increased from $3.50 to $7.80 in only four days following the introduction of Sora.
Livepeer ($LPT) has also benefited from Sora's introduction. Livepeer is a decentralized live video streaming network protocol that leverages decentralized technology to provide a viable alternative to traditional, centralized broadcasting methods. LPT's market capitalization nearly tripled in two days following the news, and it now trades at $15.
Prom ($PROM) also had a volatile week, with a more than 90% increase in a few hours after DWF Labs CEO Andrei Grachev publicly confirmed his personal investment in the project. Prom is a gaming non-fungible token (NFT) marketplace and rental platform that allows for uncollateralized rentals of NFTs and mortgage services.
Overall Market
The above chart shows the BTC price movement since December 2021.
As we discussed last week, BTC faces significant resistance above $53,000, as shown by the red zone. If BTC overcomes this resistance level, there will be no significant resistance until it reaches $59,000. As a result, the bears will try to defend this resistance level as much as they can.
While BTC has been trading sideways over the last few days, inflows from Bitcoin spot ETFs remain strong. A constant $300 to $500 million in net inflows to Bitcoin ETFs per day demonstrates the high demand from investors for risk exposure to bitcoin.
However, the Bitcoin price has increased by 35% last month, rising from $38,500, the lowest level since the FTX bankruptcy estate liquidated $1 billion of GBTC, to $52,000. It's not surprising that investors and traders are rotating their capital from Bitcoin to other altcoins. This capital rotation is completely normal given BTC’s significant price movement.
The above chart shows the ETH/BTC price movement in the last two weeks.
After Bitcoin surged and passed $51,000 last Wednesday, our desk noticed a strong demand for Ethereum. In the last seven days, the ETH/BTC price has increased from 0.0531 to 0.0572, with ETH outperforming BTC.
Our desk expects this upward trend in ETH/BTC to continue in the coming weeks, as the ETH network will have the long-awaited Dencun upgrade in March.
Another factor contributing to the ETH price's outperformance is the potential approval of an Ethereum spot ETF. Currently, the market expects the SEC approval in May.
Options Market
The above table shows the at-the-money implied volatility for BTC and ETH options with different expiries.
While the implied volatilities for BTC options are all above 50%, they stay at the same level as last week. On the other hand, the implied volatilities for ETH options are around 60%, except for the 30-day expiry one.
With a large difference in IVs between ETH options and BTC options in the front end, it seems options traders are buying ETH options and pushing the options in the front-end tenor to be higher. It signals that a potential large movement in ETH price in the next few days is priced in the options market.
It will be interesting to monitor the IV on ETH near-term options and see if it retraces to the normal range soon. As the bulls failed to hold their ground and keep the ETH price above the $3,000 critical level, our desk expects to see both bulls and bears push forward and crash on the other side.
Given the high IVs on ETH front-end options, selling covered calls and covered puts can yield nice returns. For example, selling an ETH-3000 call expiring March 1 will collect an 86.4 USDT premium, a 119% annualized yield, with a spot reference of 2940 USDT.
Macro at a glance
Last Thursday (2024-02-15)
In January, US retail sales fell 0.8% month on month, more than the expected 0.2% drop. The retail sales growth rate in December was revised to 0.4% from 0.6%. Core retail sales fell 0.6% on a monthly basis in January, compared to the expected 0.2% increase.
US initial jobless claims remained in the low range, with 212k new claims reported last week, slightly exceeding the expected 219k.
British retail sales increased by the most in nearly three years in January as consumers regained their appetite for spending, implying that the economy could recover more quickly than expected from its recession in the second half of last year. Retail sales increased by 3.4% in January, far exceeding the estimated 1.5% increase and December's 3.3% decrease.
Last Friday (2024-02-16)
The US PPI increased by 0.3% on a monthly basis in January, surpassing both the previous month's -0.1% and the estimated 0.1% increase. The rising PPI will put upward pressure on inflation and could lead to a later rate cut by the Fed.
According to Statistics Canada, Canada's CPI fell to 2.9% year on year in January, down from 3.4% the previous month. This reading came in lower than the market's expectation of 3.3%. On a monthly basis, the CPI remained unchanged, despite the expected 0.4% increase. The annual Core CPI increased by 2.4% during the same period, down from 2.6% in December. The disinflationary numbers in Canada raise the possibility of an early rate cut by the Bank of Canada.
On Tuesday (2024-02-20)
China's central bank cut the 5-year loan prime rate by 0.25 basis points to 3.95%, while leaving the 1-year rate unchanged at 3.45%. This rate cut is regarded as the latest effort to relieve pressure on the country's struggling real estate market.
Convert Portal Volume Change
The above table shows the volume change on our Convert Portal by zone.
This week our desk observed massive trading demand on AI and Fan Token zones.
The impressive 374.5% volume increase in the AI zone is mainly due to the strong demand for Worldcoin ($WLD). The newly released OpenAI product Sora renewed the market's enthusiasm for Worldcoin, an iris biometric cryptocurrency project founded by Sam Altman, OpenAI's CEO.
The trading volume in the Storage zone also doubled. The main drivers of increased demand are Arweave ($AR) and Filecoin ($FIL). Filecoin ($FIL), a peer-to-peer file storage network, announced on Sunday that it will collaborate with smart contract platform Solana (SOL) to develop decentralized blockchain storage solutions. The announcement caused Filecoin to rise from $5.8 to $7.4 in three days.
Why trade OTC?
Binance offers our clients various ways to access OTC trading, including chat communication channels and the Binance OTC platform (https://www.binance.com/en/otc) for manual price quotations, Algo Orders, or automated price quotations via Binance Convert and Block Trade platform (https://www.binance.com/en/convert) and the Binance Convert OTC API.
To access manual price quotations, you may visit our Binance OTC platform (https://www.binance.com/en/OTC-Trading/spot), where you can RFQ (request-for-quote) and trade directly with our OTC trading team via a live chat.
To utilise our Algo orders features, you may visit our Binance Algo Orders platform (https://www.binance.com/en/OTC-Trading/AlgoTrading).
For any other inquiries on OTC trading, please reach out to us via our email at trading@binance.com for our trading desk to get in touch with you and get started.
OTC trades may also be automatically quoted on Binance Convert and via API, offering users a quick and simple way to execute trades across 60,000+ pairs with one simple click. Binance Convert supports over 350 tokens listed on the exchange including fiat pairs. Begin trading from as little as 1 USD. To start, simply navigate to the Binance Convert & Block Trade platform (https://www.binance.com/en/convert), select the coins you wish to trade, preview and confirm the quote with settlement reflecting almost instantly in your wallet balance. For details and access to Binance Convert OTC API, please refer to our Convert Endpoints (https://binance-docs.github.io/apidocs/spot/en/#convert-endpoints) and reach out to us at trading@binance.com if you have any questions or require assistance.
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