Market Deep Dive: BTC and ETH Market Trends and CPI Impacts


Last Friday, BTC sold off from around USD 63,500, finding support above USD 60,000 before retesting its Friday highs during the US session on Monday. On Tuesday, US PPI data came in higher than expected (0.5% actual vs. 0.3% expected), causing BTC to test levels slightly above USD 60,000. It then climbed higher on news that the Wisconsin Investment Commission was holding IBIT. The ultimate “risk-on” support came on Wednesday when US CPI data came in lower than estimated (0.3% actual vs. 0.4% expected), leading traders to price in a more than 50% probability of a rate cut in September. Consequently, BTC rallied to USD 66,700 on Thursday night and revisited USD 66,750 before the US session on Friday, only to retrace to USD 64,600 after Fed members expressed hawkish tones despite the bullish CPI data. Nevertheless, this morning it came back and is currently trading around USD 66,200.

BTC could not immediately break out towards USD 70,000, remaining within the mid-April range, likely leading to a multi-day consolidation before the next significant move. On the upside, the first resistance is at USD 66,800, followed by USD 68,000, from where it could quickly rise to USD 70,000, with the next target being an all-time high. On the downside, the first support is at USD 64,600, followed by USD 63,400, from where it could drop to USD 61,000. Given the widespread bullish sentiment for September and the end of the year, retests between USD 62,000 and USD 64,000 might present good buying opportunities for medium-term positions. My short-term outlook remains sideways; therefore, dollar-cost averaging into spot positions over the next few weeks might be a prudent strategy.

Compared to BTC, ETH is currently very weak, with the ETHBTC ratio trading below 0.045, which is its lowest point in over two years (since April 2021). Following the CPI news, ETH pushed above USD 3,000, peaking at USD 3,040 on Thursday night, but it could not sustain this level and fell to USD 2,930. This morning it broke out again and is currently trading around USD 3,050. The recent Dencun upgrade and the reduction in fees (resulting in less ETH being burned) have caused ETH to lose its status as a deflationary asset, making it inflationary for the time being (this needs to be monitored in the future). In the short term, ETH seems to be influenced by BTC’s movements and remains generally bearish unless it reclaims USD 3,000. If it loses its recent lows around USD 2,800, it could quickly drop to USD 2,500 in an impulsive move.

After several weeks of declining volatility, the 30-day BTC ATM implied volatility increased from 49% to 54% (+5% WoW), while the 30-day ETH ATM implied volatility remained relatively flat at 56% (+0% WoW). Following the US CPI news, the 25-delta skew turned positive for BTC across all time frames (with the 180-day expiry higher than five, indicating strong bullish sentiment towards the end of 2024). For ETH, the skew is only negative for the 0-7-day range, with the 180-day expiry slightly below five.

On the macro side, Federal Reserve Chair Powell will speak on Sunday night, providing further insight into the Fed’s direction. Treasury Secretary Yellen will speak on Tuesday. Key economic events next week include the FOMC Meeting Minutes and UK CPI on Wednesday, US PMI data on Thursday, and both German GDP (QoQ) and US Durable Goods Orders on Friday.


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