Recurring market commentary on what’s happening in the crypto markets, summarized by the Crypto Broker team at Crypto Finance AG.
Market commentary
Good Morning!
Bitcoin remained at about the same level this week as last week (+0.9% in 7 days) and is now trading just slightly above USD 23,000. Meanwhile ETH is trading at USD 1.65k (+5.0% in 7 days) and therefore the ETH/BTC spread is 0.0714 (+4.14% in 7 days).
Last week was action packed with FOMC, Megacaps Financials reporting, US Jobs, and ETH Shanghai updates:
- BTC: USD 22,896 (+0.27% WoW)
- ETH: USD 1,631 (+4.11% WoW)
- SOL: USD 23.16 (-3.34% WoW)
- Crypto Total Market cap: USD 1.016T (+2.52% WoW)
Events in relation to the macro side
On Wednesday, the FOMC saw a 25 bps hike and sent the markets risk-on. Nevertheless, when I go through the word-by-word release there are some statements that I find particularly interesting, as highlighted in the image:
- Inflation has eased somewhat but remains elevated.
- There is elevated uncertainty.
- The committee anticipates that ONGOING INCREASES […] will be appropriate.
- The committee will continue reducing its holdings […] as described in its previously announced plans.
Then, on Friday US Job Numbers arrived way hotter than expected with NFP at 517k vs. exp. 185k and unemployment at 3.4%, but risk assets did not really retrace back, just USD inched higher with DXY now at 103.57 (+1.46% WoW). The DOT-PLOT still sees by End of Year the target rate at 475-500 bps (meaning one 25 bps hike), while median projection are 500-525 bps and US 2Y Yield is at 4.423% (+22.5 pcts WoW). This has not changed much.
To me, the market seems too optimistic so far and not really pricing the fact that the Fed will maintain interest rates at 5-5.25% (for longer) unless the strong labour market leads to increased wages and inflation (i.e. unemployment >4%). Nevertheless, you always need strong nerves to bet against the market as “Markets can stay irrational longer than you can stay solvent.” All eyes are now on Powell's speeches and the Valentine’s Day CPI release.
TradFi related developements
Megacaps ($META, $AAPL, $GOOG, $AMZN) reported their financials last week, and one thing was clear: investors like FCF. Most of the companies are seeing revenue growth deceleration and are very focused on stock buybacks. Investors are cheering for cost cutting (just look at $META: +52% YTD). Extending these concepts to digital assets, I believe that companies/foundations/projects that rethink their business models, focus on delivering projects, cutting costs, and buying back their tokens, will find some fertile ground.
On the crypto derivatives side
Correlations across the board have started decreasing, with alts trying to find their own path. ATM IV term-structure is back to contango for both BTC and ETH. BTC 7-day trading 49v and ETH at 64v, while 90-day at 52v for BTC and 65v for ETH. VRP keeps being large, especially in the short-term (7-day BTC VRP): 23v and 30v for ETH.
Should the spot price keeps being range bounded the both the term-structures are going to be more steep, leaded by 7-day and 30-day dropping. As last week, as long as BTC and ETH do not break clear supports and resistances, I am a better seller of volatility. If there is a break above $25k for BTC and $1.7k for ETH, I would better go long delta, and a break below $22.5k for BTC and $1.5k for ETH I would better go short delta.
25-delta skew (put minus call) faded into positive territory, and we are now trading close to the historical median values for most of the expiries. This is fair to me, as I won’t get any directional bet on the market at this stage.
It is gold cross time for BTC! 50-day MA just crossed the 200-day MA at USD 19,800; this has historically always been the case for a BTC bull run. Nevertheless, the price is currently trading way above the cross, also RSI is still at 60, but is heading towards neutrality. Therefore, I would expect to see some consolidation above $20k.
Happy Trading!
All intellectual property, proprietary and other rights and interests in this publication and the subject matter hereof are owned by Crypto Broker AG including, without limitation, all registered design, copyright, trademark and service mark rights.
Disclaimer
This publication provided by Crypto Broker AG, a corporate entity registered under Swiss law, is published for information purposes only. This publication shall not constitute any investment advice respectively does not constitute an offer, solicitation or recommendation to acquire or dispose of any investment or to engage in any other transaction. This publication is not intended for solicitation purposes but only for use as general information. All descriptions, examples and calculations contained in this publication are for illustrative purposes only. While reasonable care has been taken in the preparation of this publication to provide details that are accurate and not misleading at the time of publication, Crypto Broker AG (a) does not make any representations or warranties regarding the information contained herein, whether express or implied, including without limitation any implied warranty of merchantability or fitness for a particular purpose or any warranty with respect to the accuracy, correctness, quality, completeness or timeliness of such information, and (b) shall not be responsible or liable for any third party’s use of any information contained herein under any circumstances, including, without limitation, in connection with actual trading or otherwise or for any errors or omissions contained in this publication.
Risk disclosure
Investments in virtual currencies are high-risk investments with the risk of total loss of the investment and you should not invest in virtual currencies unless you understand and can bear the risks involved with such investments. No information provided in this publication shall constitute investment advice. Crypto Broker AG excludes its liability for any losses arising from the use of, or reliance on, information provided in this publication.
