Market Deep Dive: BTC Navigates Sideways Trends Amidst Market Volatility

For the last three weeks BTC has been in a sideways trend and ranges between $40,200 and $44,700. Over the weekend, BTC lost 1500 points reaching a low on Monday, a bit above the $40,500 level, before reversing relatively strongly and reaching it’s high on Wednesday, slightly above $44,300, while trading currently around the $43,600 level. This price moves can be mainly attributed to falling US yields and consequently a weakening USD over the course of the week, while risk assets got some headwind. The DXY and US yields reached their low on Thursday evening before slightly recovering and sending BTC in the opposite direction of around 1000 points from its peak. Overnight, BTC recovered, hit the $44,300 range, and is currently trading around $43,700.

I maintain the view that during the festive season, BTC will continue its sideways trend with occasional short-term volatility, eyeing a potential breakout around 10 January (possibly 8 January) in anticipation of the SEC’s decision on the spot ETF approval.

ETH also began the week on a downward trend, dropping over 100 points over the weekend to a low of $2,115 from last Friday. It then experienced a volatile recovery, marked by lower lows and higher highs, culminating in a peak of $2,280 on Thursday afternoon and then shortly retesting the $2,200 level. Overnight, ETH rebounded, climbing to just under $2,300, before pulling back, and did break out now trading currently at $2,315. The ETHBTC ratio continued its negative trend this week, starting at 0.0535, then dipping below the 0.05 mark on Wednesday, and with the recent breakout now just moving above the 0.053 level.

In terms of volatility figures, bitcoin’s 30-day implied volatility increased to 55% (+2% WoW) and Ethereum’s slightly rose to 56% (+1% WoW). Despite choppy markets, the 25-delta skewness for BTC options has risen WoW across all timeframes, signalling a bullish outlook due to declining yields and anticipated spot ETF approvals. Meanwhile, ETH’s figures remain positive, but unchanged from the previous week.

With ETH’s subdued performance this week, the stage was set for other altcoins, especially Solana (SOL), which saw a notable 26% week-over-week increase. Peaking just below $100 this morning and currently trading around $95, SOL has hit its highest point since May 2022. This surge is attributed to its vibrant network activity and thriving Solana Program Library (SPL) token launches. Furthermore, SOL surged ahead of Ripple (XRP) in terms of market capitalisation, securing the fourth spot (excluding stablecoins) among cryptocurrencies. Analysts ignited debates about ETH’s market stance as SOL, known for its efficient transactions, gains ground.

On the macro side, on Tuesday, Eurozone CPI numbers rose by 2.4% annually in November, aligning with forecasts and marking a deceleration from October’s 2.9% rise. Moreover, the annual core CPI growth rate also slowed, dropping from 4.2% in October to 3.6% in November.

On Wednesday, the most recent US CB Consumer Confidence soared to 110.7, exceeding expectations of 103.8 and the prior 101.0. This rise reflects enhanced views of present business conditions, employment opportunities, and a brighter six-month forecast for business, labour markets, and personal earnings. Market sentiment suggests a 15% chance of a rate cut in January, with an 85% likelihood of unchanged interest rates.

This afternoon, traders are focusing on the US Core PCE Price Index, the final significant inflation measure of the year, with an expected annual rate of 3.4% and a monthly rate of 0.2%. With the Christmas holidays approaching next week and a pause in major global macroeconomic data, notable events to watch include Tuesday’s Bank of Japan Core CPI data and Thursday’s US Pending Home Sales for November.

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