This week, the crypto market saw bullish moves led by the 20.7% pump in BTC. The BlackRock Bitcoin Spot ETF news came while BTC had strong support at the $25k level last Thursday. BTC reclaimed the $30k level on Wednesday.
Meme coin PEPE is a top performer in the altcoin space, with an almost 70% increase in the last 7 days. STX follows closely, with over a 67% increase in the last 7 days. We also see a large increase in the volume traded on our OTC desk.
Convert Portal Volume Breakdown
This week we see over a third of the trading volume coming from crypto to stablecoin trades as investors took profit after the big pump week.
Almost a quarter of the trading volume came from stablecoin to crypto, as we see investors’ fear of missing out after the bullish news and moves in BTC.
Stablecoin swap volume percentage was slightly higher than last week as we saw USDT de-peg last Friday. USDT was trading at a discount last Friday, and the discount eased over the weekend as the market stabilised.
Overall market sentiment
After BlackRock, the world’s largest asset manager, filed an application to launch a spot BTC exchange-traded fund (ETF) last Thursday afternoon, BTC rebounded from the $25k level and reclaimed the crucial $30k level within a week. BTC price stands at less than $1,000 away from the April high of $31,000. The pump could be a sign that institutional investors are piling back to have BTC in their portfolios.
The key part of the ETF filing includes a “comprehensive surveillance sharing agreement”with the listing exchange, which could be a key differentiator in its step towards pushing for an approval.
BTC dominance, measuring the proportion of Bitcoin’s market value relative to the entire crypto market, is at a 2-year high of 51.7%, the highest since April 2021. BTC price surged higher and traded back to the April high, while altcoins underperformed during this rally. Our desk believes that a short squeeze is one of the key reasons driving such an aggressive movement in the BTC price. The liquidation volume on Binance in the last 24 hours is over $11 million on the short side, accounting for over 90% of the total liquidation amount.
Option
The 25D skew on both BTC and ETH are highly skewed to calls, over +8% on both BTC and ETH 25D skewness readings. This suggests that option traders are more willing to pay a high premium on calls rather than on puts. The bullish sentiment on BTC and ETH is at the highest level since April 2023.
Our desk also observed a reverse between realised volatility (RV) and implied volatility (IV) in BTC. The IV represents the current market price for volatility based on the current market conditions, while RV is the actual movement that occurs in a given period of time. A higher RV relative to IV suggests that traders expect lower market volatility in the future, and vice versa. From the chart below, the IV surpassed the RV this Tuesday. We expect the positive RV-IV spread to continue and expect volatility on BTC to head back to the 40%-50% range.
Macro at a glance
Last Thursday (2023/06/15), ECB raised its key interest rate by 0.25% to 4.00%, as expected. The US also reported an increase in retail sales by 0.3% MoM, higher than the estimated -0.1% but slightly lower than last month’s 0.4%. The US core retail sales increased by 0.1%, as expected but lower than last month’s 0.4%. US equity continues its bullish momentum, led by tech stocks. While BTC rebounded from the $25k level with the news that Blackrock filed for a Spot Bitcoin ETF.
Last Friday (2023/06/16), the Eurozone reported the CPI reading at 0% MoM and 6.1% YoY, as estimated, slowing down from last month’s 0.6% and 7.0%, respectively. The core CPI has dropped from the previous month’s 5.5% to 5.3%. We see CPI readings falling among most developed countries, yet the readings are still higher than the central banks’ target of 2%. BTC continues to shoot higher after the bullish sentiment on the Blackrock Bitcoin spot ETF filing. BTC price was up 3% and reclaimed the $26k level.
On Tuesday (2023/06/20), the UK released the CPI reading for May. The CPI increased by 0.7% MoM and 8.7% YoY, both higher than the estimated 0.5% and 8.4%, respectively. The CPI reading proves that inflation is stickier than most people’s expectations, and central banks might have to hold their interest rates at higher levels for a longer period in order to tickle inflation back to the 2% target.
On Wednesday (2023/06/21), Federal Reserve Chairman Jerome Powell had his testimony in front of the House. He emphasised that the inflation rate has dropped from a peak of 7% last year to 4.4% as of April, but there is still a long way to go to bring it back to 2%. The Fed remains strongly committed to bringing inflation back down to the 2% target rate, yet the stress in the banking sector eased some pressure for the Fed to hike rates. The expectation for another two rate hikes by the end of this year remains unchanged.
Email: Liquidity@binance.com
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