Market Deep Dive: BTC Volatility, ETF Developments, and Global Economic Indicators

The week has seen significant volatility for BTC. Tuesday opened with a drop to the $34,750 level, indicating a cooling trend. However, by Thursday, the market observed a strong rally, with the price of bitcoin surging to a high of $38,000. This peak was also reached last Thursday, and now reflects a double top, underscoring $38,000 as a robust resistance level. Although equity and bond markets rallied on Tuesday, bitcoin initially sold off, only to rebound on Wednesday, in what appeared to be a short squeeze targeting highly leveraged short positions, accompanied by substantial profit taking by institutional investors. By Thursday evening, bitcoin had fallen back to $35,500, which resulted in over $47 million of leveraged long liquidation in the last 24 hours. The market seems choppy right now, with BTC trading below the $36,500 range.

Ethereum’s performance, while also volatile, confirmed a slightly stronger downtrend compared to BTC and last week’s price action. Tuesday and Thursday both saw ETH lows of $1,933.50, suggesting a strong support level. The week’s high was $2,118.50 on Monday, possibly boosted by news such as the Blackrock ETF, which provided support above the $2,000 threshold. Ethereum is currently trading around $1,975, generally following bitcoin’s price trajectory. Throughout the week, it experienced a decrease in its ETHBTC ratio, dropping from 0.057 at the beginning of the week to just over 0.054 now. Bitcoin’s dominance ratio is flat WoW and currently stands at 52.25%.

Looking at the volatility numbers, bitcoin’s 30-day implied volatility has fallen to 52% (-2% WoW) and Ethereum’s has also fallen to 55% (-6% WoW). Nevertheless, the 25 delta skews for both ETH and BTC have returned to positive territory on all time frames, moving away from last week’s figures and indicating an increase in bullish momentum.

On a more bearish note, the SEC’s postponement of HashDex’s spot BTC ETF filing has dampened market momentum, raising doubts about the approval of similar ETFs this year, with implications for potential decisions expected today. Meanwhile, BlackRock has escalated its cryptocurrency efforts by officially filing for a spot Ethereum ETF with the SEC yesterday under its iShares Ethereum Trust.

This week’s macroeconomic focus began on Tuesday with the release of the US CPI, which came in lower than expected (YoY: exp. 3.3%, act. 3.2% / MoM:  exp. 0.0%, act. 0.1%). The Core CPI number was also 0.1% below forecasts, and consequently the CPI dip triggered a significant uplift in risk appetite, causing indexes to surge on Wall Street. The data, indicating a deceleration in US inflation, fuelled optimism about a potential halt in interest rate hikes by the Federal Reserve. Consequently, yields dropped, and the US dollar experienced a notable decline in value, with the US Dollar Index dropping from 105.6 to a temporary low of 104 on Tuesday. It has since stabilised around the 104.4 mark.

On the same day the European Union reported its GDP growth at 0.1% (in line with estimates), Japan’s GDP contracted more sharply than expected for the third quarter, recording a YoY decrease of 2.1%, compared to the forecasted decline of 0.6%.

On Wednesday, US Retail Sales for the month exceeded expectations, registering a smaller decline of 0.1% compared to the anticipated 0.3% decrease. October’s Producer Price Index (PPI) showed a monthly decrease of 0.5%, defying expectations of a 0.1% increase and marking a downward revision from the previous month’s 0.4%. In the UK, October’s CPI remained steady MoM compared to an expected 0.1% rise, while the YoY rate decreased from 6.7% to 4.6%, underscoring a significant cooling in inflation.

On Thursday, US Initial Jobless Claims climbed to 231k, exceeding both the forecast of 220k and the previous week’s 218k, thereby reinforcing market expectations of no further rate hikes.

Attention today is directed towards the release of the EUR YoY CPI and US Building Permits figures. Looking ahead to next week, key economic events to monitor include the FOMC meeting minutes on Tuesday, followed by the German GDP (QoQ/YoY) and US November Services PMI figures on Friday.


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