Market Deep Dive: BTC Consolidates, ETH Surges, Nvidia Earnings Drive AI Momentum


Over the last volatile weekend, BTC found support above $50,600, and opened on Monday at $52,100, maintaining the same level as it closed at on Friday. With US markets closed for Washington’s birthday, Monday saw both reduced buying pressure and volumes. Despite this, open interest levels (in USD terms) reached their highest since November 2021, leading to a squeeze on Tuesday before the US session. However, this surge was strongly rejected around the $53,000 level, finding support instead at $50,700. This movement was likely influenced by concerns over the overheating of US equity markets and fears of an AI bubble burst, highlighted by Nvidia’s upcoming earnings announcement on Wednesday. BTC rallied to $52,500 on Wednesday but then relinquished some gains, fluctuating between $50,600 and $52,000 for the rest of the week. It found robust support at the weekly low, which was quickly bought up twice on Wednesday afternoon and evening. Given these factors, I am leaning towards a consolidation phase for BTC (also considering ETF inflows slowing down, with net negative inflows on Wednesday) before its next upward move, foreseeing a maximum medium-term downside at $48k. I believe any dip to this level would be swiftly bought up, bringing it back to the $50k range.

ETH continued to outperform BTC, breaking above last week’s high on Sunday night following the CME futures opening. It surpassed the $3,000 mark twice (on Wednesday night and Thursday morning), finding its low at last week’s high of $2,870. The ETH/BTC ratio began at approximately 0.055 on Monday, peaked at around 0.058 on Thursday, and is currently trading at 0.0575. With sustained momentum, it is aiming for the 0.06 level.

On the altcoin side, this week was all about AI. With Nvidia beating its estimates on Wednesday, it fuelled the upward momentum of the AI industry and subsequently boosted AI-related cryptocurrencies. Traders seeking exposure to Sam Altman projects pushed WLD over 130% WoW. However, considering the tokenomics of the project (only 1.33% in circulation yet) and the significant open interest, I would not short but prefer to remain sidelined and observe how things develop.

Bitcoin’s 30-day ATM implied volatility stayed at 53% this week (+0% WoW), while ETH’s increased to 58% (+1% WoW). The 25-day delta skewness is positive for ETH across all time frames, while BTC’s is negative around time frames from 0-7 days, indicating some bearish momentum.

On the macro side, Wednesday’s Federal Reserve minutes revealed concerns about premature rate cuts but also sparked optimism about tapering QT. Market attention was primarily on Nvidia’s earnings, rendering the statements from the meeting of secondary importance to traders. Consequently, Nvidia’s surge propelled equity markets, setting all-time highs for both the S&P 500 and Nikkei, with the Nikkei index surpassing the peak not seen in 35 years.

On Thursday, January’s EUR CPI (YoY) matched expectations at 2.8%, slightly down by 0.1% from December, while Germany’s GDP (QoW) fell by -0.3% this morning, aligning with forecasts.

Looking ahead, key economic events next week feature US GDP data on Wednesday, followed by German Retail Sales and US Core PCE data on Thursday.

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