This week, BTC continued with its decline, briefly reaching $42,000 last Friday before stabilising above $41,500 over the weekend. At the start of the week, a combination of weak market sentiment and Grayscale Bitcoin Trust (GBTC) sales led to a further decline, with BTC losing its $40,000 support on Monday evening. The cryptocurrency hit a low just above $38,500 during the US market opening on Tuesday. However, it partially recovered to around $40,000 by Wednesday night, fluctuating near this level ever since. Accordingly, BTC currently has its primary support level at $38,500 and resistance at $40,500. If it breaks below this level, the next short-term support is around $37,000.
ETH lost its edge against BTC, with the ETHBTC ratio falling from over 0.06 last Friday to 0.059 over the weekend. This downward trend continued throughout the week, reaching a low of just below 0.0549 in yesterday’s US session, and it is currently trading just above 0.0552. ETH fell from $2,500 last Friday to above $2,160 on Tuesday. It retested the $2,160-$2,170 range yesterday evening before recovering slightly, and is currently trading around $2,200. The first support level for ETH is at $2,150, with subsequent support at $2,000 and then $1,950, if breached.
Contrary to a lot of bearish sentiment, my current bias is that we are unlikely to see bitcoin hitting the $30-35k mark again in this cycle. I expect altcoins to bounce around and squeeze in the coming weeks, followed by a final push for liquidity, before they start to climb higher.
The significant drop in ETH’s value earlier this week was fuelled by rumours circulating on Monday and Tuesday, suggesting that the approval of Spot ETFs might be delayed, in part due to uncertainty over the classification of ETH as a commodity. As a result, when US regulators announced a delay in the review of ETH ETFs last night, it had a minimal impact on the price of ethereum, as the market had already anticipated this outcome.
This week saw a further decline in volatility, with bitcoin’s 30-day ATM implied volatility dropping to 40% (-4% WoW), and ethereum’s at 41% (-3% WoW). The 25-day delta skewness, which was negative last week on short-term time frames and accurately predicted the market downturn, remains negative for both BTC and ETH on all time frames from 0 to 90 days, with a stronger skew for ethereum.
Yesterday, the ECB kept interest rates on hold, in line with expectations. The US GDP for Q4 exceeded forecasts at 3.3%, against an anticipated 2%, and Core Durable Goods Orders also beat expectations. Attention now shifts to this afternoon’s US inflation data, particularly the Core PCE Price Index, and next week’s FOMC meeting, where 97.4% of market expectations are for rates to remain on hold.
Next week will be an eventful one with US CB Consumer Confidence and JOLTs Job Openings on Tuesday, German CPI and GDP data along with the FOMC on Wednesday, Eurozone CPI on Thursday, and the US Nonfarm Payrolls on Friday.
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