Market Deep Dive: BTC Surges Amidst Lunar New Year, ETH Outperforms, and Macro Factors Drive Volatility


Last week, spot BTC ETFs experienced significant net inflows – $405M on Thursday and $541.5M on Friday – surpassing the $47,800 resistance level over the weekend amid low liquidity due to the Lunar New Year holiday in Asia. The momentum continued this week, with daily inflows of approximately $500M, bullish sentiment across risk assets, and rising global liquidity levels. The $47,800 level acted as a support level on Monday before BTC surpassed $50,000, reaching levels last seen on December 2021. However, on Tuesday, worse-than-expected US CPI data led to declines in equities and cryptocurrencies, with BTC dropping to $48,350, before recovering sharply due to declining bond yields as the market is anticipating rate cuts of 25bps or more with over a 75% probability by mid-June. Consequently, BTC peaked slightly above $52,800 yesterday before falling to $51,350. It is currently trading around the $52,000 mark.

The primary support level for BTC is positioned at $51,300, followed by a secondary support at $50,000, below which a decline to $47,800 is likely. On the bullish side, the initial resistance is at $52,800, marked by significant liquidation points, followed by a resistance at $54,800, above which a rapid rise to $59,000 is possible. However, the increasing institutional adoption of BTC and the strategic rebalancing of portfolios to adhere to risk limits amid rapid price surges could cool off any sharp rises, and conversely, if prices drop sharply.

ETH opened above $2,470 on Monday, mirroring its position from the previous Friday morning, and began ascending, peaking at $2,870 last night. It is currently trading above $2,800, which serves as its primary support level, followed by $2,700, with a potential drop to $2,480. On the upside, the key resistance range is $2,870-$2,880, where there is significant liquidity, with the next resistance level at $3,000. This week, ETH has outperformed BTC, and Monday was a good time to move from BTC to ETH, as the ETH/BTC ratio hit a low of 0.05115, just above my target entry range of 0.05-0.51. It is currently trading at around 0.0545. The ratio’s trend is bullish and could continue as excitement for an ETH ETF heats up, and selling pressure stays low, with more than a quarter of ETH supply now staked.

On the altcoin side, SOL is showing short-term swing trade potential as long as it stays above $107, targeting its December high of $125. Beyond the target, I am biased towards a leveraged flush due to its appeal to retail FOMO with leveraged positions in bullish trend phases.

Bitcoin’s 30-day ATM implied volatility rose to 53% (+9% WoW), while ETH’s jumped to 57% (+12% WoW). The 25-day delta skewness is positive for both BTC and ETH across all time frames, with ETH showing a higher positive skew than BTC, supporting its bullish trend.

On the macro side, US January CPI numbers on Tuesday beat estimates, coming in at 3.1% YoY (exp. 2.9%), with shelter prices rising the most at 0.6%. On Thursday, US retail sales significantly underperformed expectations, recording MoM a 0.8% decline versus a forecasted 0.2% decrease. This weaker-than-anticipated data led to a dip in yields and the USD, while positively influencing market sentiment. As a result, the major indices saw gains, supported by strong manufacturing numbers and lower than expected jobless claims numbers.

This afternoon, attention will turn to the US PPI figures. Next week’s key economic events include the FOMC meeting minutes on Wednesday, followed by EUR CPI and US PMI data on Thursday, and German GDP numbers on Friday.


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