Market

The market continues to show a gradual decline. Finally tested 40k and BTC is reaching near 38k, the level expected last week. I still think the 38k level is the first important level for BTC. If there is no bounce from this level, market conditions will become very difficult. But I’m expecting a good bounce from the 38-39k level with high probability. The bearish tweets continue to increase and Hopium is disappearing.

Currently, GBTC outflows are still occurring in the BTC ETF market, and the amount of BTC being outflowed is continuously increasing. But there is nothing surprising about it. Rotating from GBTC to other low-fee ETFs and liquidating existing BTC exposure is a very common situation. I think this process will continue and will continue for the next few weeks. Additionally, I believe that the Coinbase premium remains negative due to the GBTC passive selling flow rather than any other reason. Therefore, I do not attach much significance to the Coinbase negative premium that is currently occurring.

The BTC spot ETF is clearly showing good trends, but the Chinese market conditions are very poor and the Q1 macro is clearly unstable, so we recommend taking a long look at the market. Let’s watch carefully to see that GBTC flows stabilize in the coming weeks and ETF inflows continue to maintain and increase. As always, don’t be too sure.

1st – 38k / 2st – 35k / Up Target – 42k

Volatility

Market IV showed a slight decline compared to last week, reaching levels of 45 for BTC and 43 for ETH.

In particular, ETH IV fell faster and a lot. Short-term options show a clearly different form than before. As mentioned in many other great options analysis articles, ETH call sellers are back (FEB 2700, MAR 2900). Perhaps the overall market atmosphere has cooled down and the delay in the ETH spot ETF may have had an impact. Buyers of BTC and ETH call options clearly suffered as premiums disappeared quickly.

Continuing from last week, the options market has a bearish sentiment, centered on short-term options. Demand for OTM put options remains high. put skew > call skew.

The options market currently has 36.5% open interest for January. The 42k level is the highest negative gamma level, and BTC fell below that level on Monday, making the situation even more unstable than before. Currently, BTC is at oversold levels according to various trading indicators and is near 38k, an important level that people are interested in. I expect BTC to proceed slowly in the form of bleeding, even if there are further declines, so unless there is a sharp drop below 38k this week, I expect volatility to remain low.

I can’t say that Arthur Hayes’ purchase of 35k put options expiring in March is 100% good timing-wise, but I don’t think it’s bad if the purpose is portfolio protection. At the time of purchasing the put option, Mar ATM IV was 47.

News

This Week’s Market Outlook (1/22-1/28) – Greeks.live

The impact of the BTC spot ETF is basically over, the core of the recent market game is the gray scale selling pressure and the buying of new investors, the market is likely to happen mostly during the trading session of the ETF. after the ETF, compliance regulation is back on the horizon again, and the Coinsecurity hearing needs extra attention from investors. On the macro front, it’s still the usual few data items with little impact on crypto.

1/23 Tuesday *

  • European Banking Authority publishes consultation paper on the assessment of the appropriateness of crypto entities
  • US SEC court hearing with Binance

1/24 Wednesday *

  • Bank of Canada interest rate decision

1/25 Thursday *

  • ECB main refinancing rate
  • US initial jobless claims for the week

1/26 Friday *

  • US core PCE price index for December

The volatility that BTC spot ETFs have brought to the market is nearing its end, with both major term options IV and RV falling significantly, with most term IVs now below 60%, which is in line with our repeated predictions. Currently short-term IV fell to 40%, the cost-effectiveness of long volatility back, pay attention to our bulk of the podcast, and the big players synchronized to do the direction or a miraculous effect.

Some FUDs that are being talked about again in the market right now:

+To add something about macros:

  • Stock market earnings(Big Tech)
  • January 26: PCE
  • January 20 ~ February 1: Fed Blackout
  • January 31: Treasury QRA
  • February 1: FOMC interest rate decision (economic outlook will not be announced at this FOMC)
  • China discusses large-scale liquidity injection to restore market

There are a lot of events this week and next week, including the first FOMC, Big Tech Earnings, and QRA in the new year of 2024. It is likely that this will be a very unstable period for the market. Recently, DXY and bond yields have started to rise again. This affects the current unstable macro situation. Since BTC has become more closely related to the US session since the ETF, it will be helpful to keep an eye on it for the time being.

Planning and Patience.

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