Market Deep Dive: BTC Rebounds, ETH’s Rollercoaster, and Macro Insights


Last Friday, bitcoin (BTC) broke above the 41,500 range, initially appearing to be triggered by a short squeeze targeting liquidity near $43,600. BTC climbed above $43,000 over the weekend, then dipped to $42,000 on Monday morning. BTC faced rejections in the $43,750-900 range multiple times on Tuesday and once on Wednesday evening, eventually falling to $41,850 post-FOMC. The Federal Open Market Committee (FOMC) held rates steady, and Fed Chair Powell’s hawkish remarks decreased March rate cut expectations from 65% to 38%. Additionally, NYCB’s stock drop, following a disappointing earnings report (acquired majority of Signature Bank), heightened concerns over a further potential mini banking liquidity crisis. Despite this, both the stock and crypto markets rebounded yesterday. BTC is now trading above $43,000, targeting resistance at $43,800 and $45,500, with support at $41,800, then $41,500, and further down at $40,000.

From a low timeframe perspective, I believe that we will rather see an upward move reaching the $44,000-$44,500 range than a drop to the $40,000 levels. I also believe that we will first reach those higher levels before the levels between $40,000 and $41,500 get swept.

ETH rebounded last Friday, surpassing $2,300 over the weekend, only to fall to $2,230 on Monday, aligning with its Friday level. Throughout the Monday and Tuesday sessions, ETH staged a recovery, encountering resistance just below $2,400 on Tuesday night, but regressed to Monday’s lows by Thursday. Currently, it is trading above $2,315. The immediate resistance stands at $2,400, with support levels at $2,230 and $2,130, while the ETH/BTC ratio is consolidating within the 0.055 to 0.053 bands this week.

In the altcoin market, the launch and airdrop of the Solana DEX aggregator Jupiter (JUP) on Wednesday generated significant buzz. Solana achieved 100% uptime, and the web3 wallet Phantom experienced record traffic. However, without pre-launch airdrop farming, the event proved disappointing from a trading standpoint. In the short term, the market turned risk-off, influenced by the FOMC meeting and a lack of interest or funds among crypto enthusiasts to take on new risks. Despite this, the Solana stablecoin market cap saw a notable increase of over $200 million in a day on Wednesday, with net inflows remaining flat. This suggests that JUP airdrops were quickly converted into stablecoins.

Regarding volatility metrics, bitcoin’s 30-day ATM implied volatility remained relatively stable at 41% (+1% WoW), while ETH’s stood at 40% (-1% WoW). The 25-day delta skewness, which accurately predicted last week’s market movement, has shifted to positive, signalling a bullish outlook for both BTC and ETH across all timeframes except for the 0-7 day range.
On the macro side, Germany’s economy showed modest improvement on Tuesday, with its Q4 GDP contracting by only -0.2% YoY. This is in line with forecasts and an improvement from the -0.4% seen in the prior quarter. In the US, a significant uptick in consumer confidence was observed in January, reaching 114.8 (compared to the expected 114.2), driven by diminishing inflation and solid economic performance. Furthermore, the US job market revealed a widening gap, with December JOLTS job openings reaching 9.026 million, surpassing expectations of 8.75 million and indicating a persistent labour supply and demand imbalance.

On Wednesday, January’s German CPI came in at 0.2% MoM, in line with expectations and surpassing the 0.1% from December. US employment data showed a deceleration, with the ADP nonfarm employment change reporting a rise of 107k in January, a decrease from 158k in December and well below the forecasts of 145K. As mentioned earlier, the FOMC concluded with interest rates holding steady at 5.50%, and Chair Powell dismissed the likelihood of a March rate cut, emphasising the necessity for more evidence of inflation easing towards the 2% goal.

On Thursday, robust Manufacturing PMI data and prices bolstered risk assets. However, higher-than-expected initial jobless claims indicated a slowing job market, potentially easing wage inflation and improving company productivity margins.

This afternoon, attention will shift to the US NFPs. And next week’s key economic highlights include the US Non-Manufacturing PMI/Prices and Services PMI data on Monday, followed by the US 10-Year Note Auction on Wednesday, and the 30-Year Bond Auction on Thursday.

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