Market Deep Dive: Geopolitical Tensions, Economic Indicators, and Cryptocurrency Trends

This week, BTC reached its peak last Sunday night, hitting approximately USD 71,500. Despite several attempts throughout the previous week, it failed to break through this range, indicating a significant resistance level for further upward trends. A shift in sentiment on low to medium time frames became apparent, as evidenced by the peak in positive funding rates over the weekend and a quartering after the drop from USD 71,000 to USD 68,000. This shift, coupled with net ETF outflows in Monday’s session, led BTC to plummet to USD 64,500 by the beginning of the US session on Tuesday. A retest of this level occurred on Wednesday night before the price rebounded. Throughout the week, funding rates continued to decrease, signalling potential for more volatility and consolidation ahead of the halving. Furthermore, the short-term negative skew in the options market once again provided a reliable forecast of the reversal. In yesterday’s session, the Coinbase BTC spot premium widened significantly above the prices on major perpetual exchanges, suggesting the possibility of a short squeeze. With Federal Reserve officials adopting a more cautious stance, BTC reached its high at USD 69,300 yesterday evening and is currently trading above USD 67,00. Its first support lies at USD 66,400, followed by USD 64,500, below which it could quickly drop to USD 60,000. On the upside, the first resistance is at USD 68,400, followed by USD 69,300, and then last week’s highs in the USD 71,500-700 range.

ETH, however, continues to underperform, appearing weak as the ETH/BTC ratio dipped to just above 0.048 this morning, currently standing at 0.049. Over the weekend, prices fell from USD 3,650, finding support at USD 3,200, with the next support level at USD 3,050. Although the 25-delta skews remain negative, they have increased from a week ago, indicating that options traders are revising their outlook (perhaps betting on an ETF approval in May). Given ETH’s relatively low price, now may be a good moment to switch some BTC to ETH, especially considering that the 0.048 level offered robust support back in January. However, negative news regarding the Spot ETF approval may send the ETHBTC ratio much lower and break the 0.048 support.

The 30-day BTC ATM implied volatility fell further from 72.5% to 70.7% (-1.8% WoW), while the ETH 30-day ATM implied volatility dropped from 74% to 70% (-4% WoW). Looking at the 25-delta skew, it remains negative for BTC for the next two weeks and for ETH until the end of May.

On the macro side, the preliminary release of Germany’s CPI on Tuesday for March was forecasted to decelerate, coming in at 0.4% (exp. 0.5%) and annualized growth at 2.2%, reflecting a cooling in inflation. US JOLTs Job Openings came in slightly lower than forecast, indicating stable labour market demand.

On Wednesday, projections for the Eurozone indicated a CPI growth rate of 2.4% annually for March, with core CPI growth at 2.9%, both slightly below estimates. The US ADP nonfarm employment change for March showed a robust increase to 184k, exceeding the expected 148k. However, the ISM non-manufacturing PMI came in at 51.4, below the forecasted 52.8, signalling weaker service sector activity. This, in turn, buoyed US equity and crypto markets by suggesting reduced inflation pressures. However, Powell’s speech in the evening indicated a more hawkish stance, leaving investors unclear about future rate cuts and leading to a reversal of most gains sparked by the PMI data.

This afternoon, all eyes are on US NFPs, with key economic events next week being US CPI data and FOMC Minutes on Wednesday, ECB Interest Rate Decision with its press conferences, and US PPI data on Thursday, as well as UK GDP (MoM) and revised German CPI data for March.

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