Market Deep Dive: BTC Surges Past $38,000 Resistance, ETH Breaks Through $2,300, and Spot ETF News Dominates Headlines

Last Friday, BTC surged past the $38,000 resistance mark and extended its rally over the weekend, peaking at just under $44,500 on Tuesday night. Over the week, we saw a retracement to $42,900 by Thursday, with the current price now hovering around $43,300. This pullback seems largely driven by profit-taking and a shift of capital into Ethereum and other altcoins. BTC’s strong rally since last Friday can again be mainly attributed to Spot ETF news, initiated by the SEC’s announcement on 1 December. This announcement set 5 January 2024 as the deadline for final feedback, paving the way for a possible approval the following week. Bitcoin’s dominance mirrored its price increase, reaching 55.35% on Tuesday. It currently stands at 53.90%, reflecting the shift towards ETH and other altcoins.

When compared to BTC, ETH underperformed between the weekend and Thursday. The ETH/BTC ratio dropped from 0.0555 on Sunday night to a low on Wednesday, then rebounded, and is currently at 0.0545. ETH seems to be lagging behind BTC and started its breakout on last Saturday evening to $2,180; it flirted with the $2,300 mark on Wednesday and saw a break above $2,300 on Thursday to trade at $2,370 in the early Asian hours today- It is currently trading above the $2,350 range.

In terms of volatility figures, bitcoin’s 30-day implied volatility increased to 48% (+1.5% WoW) and Ethereum’s also rose to 51.5% (+4% WoW). The 25-delta skewness for BTC and ETH options has maintained positive across all time frames, with the 30–60-day period exhibiting notable momentum for ETH relative to BTC.

On another note, the rising popularity of BRC-20 and Ordinals tokens has spurred greater demand for them. This, in turn, may have further contributed to bitcoin’s price increase, driven by the heightened utilisation of BRC-20 tokens.

On the macro side, Tuesday’s US JOLTs data showed that job openings fell to 8.733 million in October, down from 9.350 million previously and below the anticipated 9.300 million. This decline to the lowest level in 2.5 years points to a stabilising US labour market. In light of these developments, coupled with diminishing inflation, markets have a higher anticipation of the Federal Reserve making an earlier policy shift in 2024. Since Monday, 10-year US Treasury yields have declined by 13 basis points, dropping from 4.30% to 4.17%.

On Wednesday, November’s US ADP nonfarm employment change was at 103k, below the predicted 130k, further fuelling the market’s optimism for rate cuts due to the slowing job market.

This afternoon, all eyes will be on the US Nonfarm Payrolls, which will give further indication for the USD and the Fed’s policy stance.

Key economic events next week include the US CPI data release on Tuesday, the FOMC’s December meeting and interest rate decision on Wednesday, followed by the ECB and SNB interest rate decisions on Thursday.

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