This week, our desk noticed that BTC market activity was muted while volatility increased. The BTC price was easily influenced by random movements and quickly reversed back to its previous level.
Radiant Capital ($RDNT) saw a stunning 33.7% increase last week while the market remained muted. Radiant Capital recently submitted RFP-44, a proposal to refine the distribution strategies initially outlined in RFP-35. The proposed RFP-44 seeks to optimise RDNT token emission and cross-chain liquidity. It features a weekly rebalance and a 24-hour grace period for RDNT holders. RDNT price surged following the news.
The price of the popular meme coin Floki Inu ($FLOKI) was down 21.1% last week after on-chain analysts spotted a large deposit into the exchange. The address had been inactive for two and a half years, accumulating the stash in early 2022. The FLOKI market was therefore alerted to a potential market sale from this transaction, and our desk saw a lack of demand supporting the market after the deposit.
Overall Market
The above chart shows the BTC price movement in the 1-day chart.
As we discussed in mid-August, our desk expected the market to remain muted until the end of August. We expect market activity to pick up in September.
BTC has been trading sideways for the past five months, with lower highs and lower lows, as shown in the chart. The market momentum is more skewed toward bears.
Following August 5, a new support range formed around the $57k level, which was breached in Thursday's US session. The next strong support level will be the $50k/52k range, which the market tested during the August 5 crash caused by the USD/JPY carry trade unwind.
On Tuesday, September 3, Bank of Japan Governor Ueda reiterated that the central bank would continue to raise interest rates if market conditions were met. The hawkish statement boosted the JPY while prompting another round of risky asset sales. BTC sold-off below $56k but quickly recovered its losses after.
The FOMC meeting will be held in two weeks, and the market anticipates a 25 basis point rate cut from the Fed at this meeting. However, given the worse-than-expected labour market and PMI data released this week, the odds of a 50 basis point cut are increasing. Our desk believes that if the Fed cuts interest rates by 50 basis points on September 18, risky assets may experience another round of panic selling. It has the potential to send Bitcoin's price into the mid-40s, effectively ending this bull cycle driven by spot ETFs.
Options Market
The above table is the 25-delta skewness on BTC and ETH options.
A 25-delta skew on options is commonly used as an indicator of market sentiment. A negative skew means that put premiums are higher than call premium, which suggests that the market is more bearish.
As shown above, the indicators show strong bearish sentiment on BTC and ETH options in the short term, but it remains positive in the long run. This market observation corresponds to the recent bearish momentum observed in BTC and ETH prices.
As the Fed's interest rate decision approaches, investors and hodl-ers can use options to mitigate downside risks while maintaining their positions and riding out the volatile market.
Binance users can use our Options RFQ platform to trade options without worrying about market liquidity on the order book. Users can also reach out to our OTC desk for live quotes for larger sizes that may not be 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 (24-08-29)
Germany's monthly CPI fell by 0.1% in August, compared to the estimated 0.0% and 0.3% increase in July. The annualised CPI rose by 1.9%, less than the expected 2.1% and the 2.3% seen in July. The inflation in Germany serves as a proxy for measuring inflation in the eurozone. Germany's lower-than-expected inflation raises the prospect of another rate cut by the ECB at its September meeting.
In Q2, the US GDP is expected to grow by 3.0% QoQ, exceeding the previously estimated 2.8% growth rate. The stronger-than-expected GDP growth eased some market concerns about a hard landing for the US economy.
This week's initial jobless claims in the US were 231k, similar to the number reported last week.
Last Friday (24-08-30)
In August, the CPI reading in the Eurozone increased by 0.2% month over month. The annualised CPI rose 2.2%, which was lower than the 2.6% increase in July. The eurozone's slowing inflation paved the way for the ECB to cut interest rates again in September.
The US inflation rate, based on changes in the Personal Consumption Expenditures (PCE) price index, remained at 2.5% per year in July, lower than the market expectation of 2.6%. The monthly personal consumption expenditure price index rose by 0.2%, as expected.
The core PCE price index increased by 2.6% over the same period, matching the increase in June but lower than the market forecast of 2.7%. The core PCE price index increased by 0.2% month over month, as expected.
The July PCE data were in line, paving the way for the Fed's first rate cut of the cycle in September.
On Tuesday (24-09-03)
Bank of Japan Governor Kazuo Ueda reiterated on Tuesday that if the economy and prices perform as expected, the central bank will continue to raise interest rates.
The US ISM manufacturing PMI came in at 47.2, below the forecasted 47.5.
On September's first trading day, GPU chipmaker Nvidia experienced a 10% selloff. After the market closed, the headline revealed that the US Justice Department (DOJ) had issued subpoenas to Nvidia Corp. and other companies in an ongoing antitrust investigation.
On Wednesday (24-09-04)
The Bank of Canada reduced its benchmark interest rate by 25 basis points to 4.25%, marking the third consecutive rate cut since June. Following the decision, its governor, Tiff Macklem, stated that it was "reasonable to expect further cuts" if inflation kept returning to the central bank's target of 2%.
US job openings fell from 7.910 million in June to 7.673 million in July, far below the forecasted 8.090 million. The weak job opening data increased the likelihood of a 50 basis point cut by the Fed in September. Following the news, the US dollar fell and the Bitcoin price rose above 58k.
Convert Portal Volume Change
The above table shows the volume change on our Convert Portal by zone.
Throughout the last week of August, our desk observed a general slowing of market activity. While BTC traded sideways below $60k with low volumes, our desk did not observe a selloff in altcoins with high volumes.
Last week, the Payments Zone experienced a 34.4% volume drop. The main reason for the volume decrease was the low trading demand for BTC.
The volume of the POW zone decreased by 34.9% over the same time period. The Bitcoin ($BTC) volume decrease had the greatest impact in this zone.
In addition, the Metaverse Zone dropped by 38.8%. The volume decrease was primarily driven by Mines of Dalarnia ($DAR).
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.
