Despite last Friday’s significant BTC Spot ETF outflows, marked by nearly $500 million in GBTC outflows and $140 million in total net outflows, this week saw robust net inflows. From Monday to Thursday, the daily net inflow averaged over $500 million, despite daily GBTC outflows exceeding $300 million. This was largely due to the Gemini Earn bankruptcy case.
Last Friday saw BTC peak at $63,000, followed by a dip to $61,300 over the weekend, starting its rally on Sunday afternoon when it reached $68,000 in Tuesday’s Asia session. It fell to $64,900 before climbing again during the US session to a new all-time high at $69,100. However, it sold quickly off, which suggests significant spot and short selling at around the $69,000 mark, quickly triggering short stop losses above $69,000 before dipping.
The influx of long leverage, high funding rates, and regained retail interest created the ideal conditions for a long squeeze, resulting in over $1.18 billion in perpetual contract liquidations within 24 hours, with around $900 million from long positions. The BTC price plummeted from $69,100 to around $59,000 in a few hours — a 15% crash, erasing 12% of the open interest. After breaking below $63,000, the market sentiment cooled on low time frames, with low buying interest at those levels and many initially interested observers seemingly absent. However, buying pressure reignited around the $60,000 mark, quickly elevating prices from just above $59,000 to $67,800 overnight into the Wednesday session.
Since then, BTC has only once dipped below $65,000, establishing a resistance level at around $68,100-68,200 (just broke through) and initial support at $65,000. The strong buying interest after the crash at the $60,000 level indicates a potential local bottom at $59,000 and the recent all-time high as a local peak. The only way I see the BTC rally continuing in the medium-term is if we see continued strong ETF inflows or global liquidity picking up further. Otherwise, I am more biased towards a consolidation phase with altcoins picking up. If we go above ATH until the halving, I also hold the unpopular opinion that the BTC halving could be a sell the news event.
This week, ETH demonstrated strength, opening at $3,480 on Monday and briefly surpassing $3,800 before the Tuesday sell-off brought it down to $3,200. However, it outperformed BTC in its recovery, reaching highs of over $3,950 this morning — the highest since December 2021 — and is now approaching the key resistance level (psychological level) of $4,000. The ETH/BTC ratio also shows a bullish trend, rising from a weekly low of 0.053 to the current level of 0.0586, with the next resistance point at last week’s peak of 0.06050.
On the altcoin side, most of the meme coins took a 50% beating during Tuesday’s crash. With a strong bounce back of the major meme coins, most of them recovered too, even above Tuesday’s high. With funding rates remaining high (e.g. WIF, PEPE, FLOKI all above 100% p.a.), I would keep my eyes open for quick leverage flushes as there might be interesting opportunities to buy in cheaper when trading the coins on low time frames.
The upcoming NVDA conference on 17 March continues to fuel bullish sentiment for AI tokens, with momentum likely to persist. On another note, Solana is showing significant strength (breaking through the March 2022 highs). With a potential altcoin rally incoming and if Solana ends this week on a high note, it could potentially go for a new all-time high in the coming weeks.
Bitcoin’s 30-day ATM implied volatility rose further to 67% this week (+5% WoW), while ETH’s surged to 73% (+9% WoW). The 25-day delta skew is positive for both ETH and BTC across all time frames with a quite similar skew, with ETH having a higher positive skew across longer time frames.
Macro indicators showed mixed signals with Monday’s PMI data falling short of expectations, while Wednesday’s January JOLTs Job Openings exceeded forecasts. The USD Index declined by 1.5 points WoW, currently at 102.75, as Fed Chairman Powell yesterday affirmed the need for rate cuts within the year, aligning with market predictions.
Yesterday, the ECB held interest rates steady, as anticipated, with indications of potential rate cuts later this year, suggesting a likelihood of aligning with the Fed’s approach in the future.
Today, attention focused on US NFPs, with February’s figures exceeding expectations but January’s revisions showing a decline, further pressuring the USD. Key economic events next week include Japan’s GDP on Monday, German and US CPI on Tuesday, and US PPI and Retail Sales on Thursday.
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