Market Deep Dive: Bitcoin Price Fluctuations and Market Insights

From Monday to Thursday, bitcoin traded between $36,700 and $38,450. It approached the $38,400 mark on both Tuesday and Wednesday, after hitting highs last Friday afternoon, influenced by falling yields and a weakening USD. A weakening US dollar and positive market sentiment in December could trigger a breakout, possibly spurred by the expected change in Federal Reserve policy at the December FOMC meeting. This morning BTC broke out and is currently trading around the $38,600-38,800 range (new yearly high).

After peaking at $2,130 last Friday, ETH retreated over the weekend, hitting a low of $1,985 on Monday. It recovered to touch $2,075 on both Tuesday and Wednesday, and today it breached the $2,100 mark and is currently trading above this level.

In terms of volatility figures, bitcoin’s 30-day implied volatility fell further to 46.5% (-2% WoW) and Ethereum’s also fell to 47.5% (-1.5% WoW). The 25-delta skewness for BTC and ETH options remains stable across all time frames, with the short-term showing significant weakness for both ETH and BTC, with ETH showing stronger upward momentum.

On the altcoin front, DYDX, which has emerged as the leading DeFi token with a 205% increase since the beginning of the year, outperforming ETH’s 70% rise. This surge has been largely influenced by key events such as the announcement of a lock-up extension in January and the recent market rally. Today marks the end of this lock-up period, releasing approximately $480 million worth of 150 million DYDX tokens.

This week’s macro news began on Monday with the release of Japan’s core CPI, which rose 3.0% YoY, down slightly from 3.4% in the previous month. However, the inflation rate is still above the Bank of Japan’s target of 2%. The Bank of Japan continues to maintain a negative interest rate of -0.1% and is sticking to its yield curve control policy.

On Tuesday, the US Conference Board reported a Consumer Confidence Index of 102.0, beating both the forecast of 101.0 and the previous month’s reading of 99.1. Furthermore, in a speech on Tuesday, Fed Governor Christopher Waller expressed his growing confidence that the Central Bank’s current benchmark interest rate is sufficient to bring inflation down to the Fed’s 2% target. Following his comments, 10-year US Treasury yields fell to 4.28%.

On another note, the financial and diplomatic worlds lost two giants this week: investment legend Charlie Munger, who died on Tuesday at the age of 99, and former US Secretary of State Henry Kissinger, who died on Wednesday at the age of 100.

German CPI data for November experienced a significant drop in inflation to 2.3% YoY, beating expectations of 2.6% and the lowest since June 2021, signalling a possible earlier rate cut by the European Central Bank, while Eurozone inflation data released on Thursday also eased more than expected (YoY: act. 2.4%, exp. 2.7%).

The revised estimate for the US GDP growth in the third quarter was 5.2%, higher than the 4.9% expected, largely driven by increased business investment and inventory accumulation. However, a decline in consumer spending growth signals a potential slowdown in economic momentum.

On Thursday, China’s manufacturing activity diminished for the second consecutive month in November, with the actual reading coming in at 49.4, below the expected figure of 49.7.

The US PCE Price Index reported a 3% annual inflation in October, in line with market expectations and down from 3.4% in September, while the core PCE price index, the Federal Reserve’s main measure of inflation, rose by 3.5% (exp. 3.5%). Following the inflation data and the release of the weekly jobless claims report, the US Dollar Index initially fell but then rebounded to near highs above 103.35.

This afternoon, the focus will be on global PMI data, with China’s PMI coming in at a lower than expected 49.8, below the expected 50.7.

Next week’s key economic events are JOLTs Job Openings, Global Services PMI data on Tuesday, Japan Q3 GDP (QoQ), Nonfarm Payrolls, and US Unemployment Rate on Friday.

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