This week, Bitcoin regained momentum as it crossed the $100,000 mark again, reaching as high as $103,620 during mid-week trading. Meanwhile, Ethereum showed resilience with steady trading around the $3,600 level. Both assets reflect a cautious but optimistic sentiment as 2025 begins.
Macroeconomic Overview: The final week of 2024 saw muted activity with BTC consolidating near the bottom of its one-month range before rallying into the New Year. BTC ended Q4 up 48%, while ETH gained 30%. Despite these gains, year-end liquidity dynamics and spot ETF outflows created temporary headwinds.
Spot ETF outflows totaled $1.8 billion from Dec 19 to Dec 31, reflecting institutional repositioning, while MicroStrategy reduced its BTC purchases in December. However, the outlook remains optimistic as regulatory clarity under the new administration is expected to drive institutional interest in 2025.
Looking ahead, this week’s key focus is the U.S. jobs report, with Non-Farm Payrolls data due on Jan 10. Fed Funds Futures currently imply a 70% chance of a 25 basis point rate cut, with market participants watching for any macroeconomic developments that could impact asset allocation.
Crypto Market Dynamics: BTC crossed the psychological $100,000 level again on Jan 5, triggering a short squeeze and $90 million in liquidations. Unlike the December rally, funding levels remain stable this time, reducing the likelihood of immediate upward momentum.
However, the market remains in a price discovery phase as investors gauge the significance of BTC’s six-figure milestone. ETH followed a steadier path, trading within a narrow range around $3,600. With BTC dominance softening, ETH’s performance continues to reflect a gradual rotation of interest into altcoins.
Options market activity also highlighted investor optimism for 2025. Flows featured aggressive buying in March and June topside strikes, with BTC call spreads at $120,000-$130,000 and ETH at $4,000-$5,000 for March 2025. January’s average returns are historically subdued (+3.3%), and spot prices are expected to trade in a range before picking up in February.
Flows and Market Activity: Paradigm flows showed significant activity, with BTC call spreads ($105,000/$115,000 for Jan 2025) dominating volumes. Notable trades included:
● A custom BTC structure involving Jan 10-17 calendars around the $100,000 strike.
● ETH flows were concentrated in Jan 31 call spreads ($3,800/$4,300), reflecting confidence in ETH’s trading range.
The options term structure steepened as implied volatility dropped slightly in the front end while longer-dated contracts remained firm. BTC implied volatilities were observed at 52v for front contracts and 62v for longer maturities, while ETH vols hovered around 62v-72v.
Outlook: With BTC now broadly adopted across institutional portfolios, Q1 2025 is expected to feature increased allocations, which could stabilize spot movements and compress volatility.
The upcoming U.S. jobs report and Trump’s Jan 20 inauguration are key events that could catalyze further market moves. While BTC appears well-supported above $100,000, immediate upside remains capped by persistent selling pressure. On the other hand, ETH’s steady inflows and lower volatility suggest a favorable setup for a potential move toward its all-time high of $4,868.
In summary, BTC’s return above $100,000 has solidified its dominance as a macro asset, while ETH remains a favored choice for investors rotating into altcoins. As the crypto market enters 2025, institutional positioning and regulatory clarity are expected to drive sustained growth. The first test of the year will be Friday’s jobs report, which could set the tone for markets in the months ahead.
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