Market Deep Dive: BTC’s Rollercoaster Ride & Macro Factors Impacting Crypto Assets


On Monday night, BTC experienced a drop exceeding 8%, declining from approximately $44,000 to a low of $40,300. It then partially recovered to $42,500, followed by another retest of levels just above $40,000. Throughout this steep decline, the $40,000 mark remained a robust support level. This fluctuation was not primarily driven by any specific news but appeared to be a short-term correction (cooling off) and profit taking following the recent strong performance, leading to significant liquidation as stop losses were activated. This overheated sentiment was also reflected in the funding rates, which were twice as high as usual. 

During the week, BTC experienced fluctuating shifts, regaining some territory from the last weeks that had been influenced by bullish macro factors for risk assets, such as a weakening USD and declining yields. It approached the $43,500 mark on Wednesday night and Thursday evening and is now trading above the $42,600 level. On a weekly basis, bitcoin’s market dominance dropped by 1%, currently standing at 53.15%. Concurrently, after ETH’s strong reversal last Thursday, it failed to surpass the 0.055 ETHBTC ratio, slightly receding over the week and presently trading above 0.053. ETH hit its weekly low on Wednesday morning at $2,145, peaked last night at $2,330, and is now trading above the $2,260 range. 

In terms of volatility figures, bitcoin’s 30-day implied volatility increased to 53% (+5% WoW) and Ethereum’s also rose to 55% (+3.5% WoW). Despite the recent volatility, the 25-delta skewness for BTC and ETH options has consistently remained positive across all time frames. 

This period could mark the beginning of a new altcoin season, as ETH and BTC remain 111% and 60% below their all-time highs. Meanwhile, altcoins such as AVAX, RNDR, DOT, and ATOM are hundreds of percent below their all-time highs. Notably, the Solana-based memecoin BONK saw a substantial increase of 250% week-over-week, achieving a market capitalisation exceeding USD 2 billion following its Coinbase listing. Similarly, Celestia recorded a 50% weekly gain, reaching a market cap close to USD 2 billion. 

However, I maintain a bias towards a choppy market for the rest of the year, envisioning BTC forming a range between $40-45k, similar to gold, which I anticipate will hover between $2,000-$2,150. This outlook hinges on variables like the emergence of positive spot ETF developments or an improvement in global liquidity and macroeconomic sentiment early next year, all elements which could pave the way for the next significant breakout. 

On the macro side, this week started with the US CPI report on Tuesday showing a slight MoM increase above expectations at 0.1%, while the YoY figure was 3.1%, matching predictions. 

On Wednesday, the Federal Reserve kept interest rates unchanged, as markets had expected. In the FOMC meeting, Powell highlighted the risk of economic harm from high rates and indicated possible rate cuts in 2024. Following this, equities surged, and US 10-year rates declined from 4.30% at the week’s start to a Thursday low of 3.88%, later rebounding to 3.9%. Anticipating interest rate cuts next year, the USD depreciated, thereby elevating risk assets and subsequently lifting crypto assets. 

Yesterday, the interest rate decisions from the SNB and the ECB were notable. Both institutions decided to keep their key interest rates unchanged (SNB at 1.75% for CHF and ECB at 4.50% for EUR). Additionally, Switzerland reported a significantly lower and deflationary Producer Price Index (PPI) (MoM) at -0.9%, much below the expected +0.1%. As a result, the Swiss franc (CHF) lost ground against the euro (EUR), with EURCHF briefly touching the 0.955 level, and is currently trading just above 0.9505. 

US Core Retail Sales and Retail Sales exceeded expectations, with figures at +0.2% and +0.3% respectively, against a predicted -0.1% for both. Similarly, Initial Jobless Claims were slightly higher than forecasted, at 220K compared to the expected 202K. Nevertheless, these better-than-expected results did not lend much support to the USD, as the Dollar Index (DXY) is still down by 40 basis points since yesterday’s announcement. 

Key economic events next week include EUR CPI (YoY) data, US Building Permits on Tuesday, UK CPI and US Consumer Confidence on Wednesday, revised US GDP (QoQ) (Q3) and US Core PCE Price Index (YoY, MoM) on Friday. 


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