After testing USD 53,500 last week, BTC recovered to USD 58,500 over the weekend (rejected on the 1D 200 EMA bands) before testing USD 54,400 during the Asia session on Monday. While the German government continued to sell its BTC throughout the week (almost all sold, only 4,925 BTC left in their wallets), BTC ETF flows turned positive again (for the last five days now) and Powell hinted at possible rate cuts during his testimony. This pushed BTC to new weekly highs of USD 59,500 on Wednesday before pulling back to USD 57,200. Yesterday, US CPI data came in lower than expected (YoY: actual 3.0%, expected 3.1%). Traders are now pricing in a 90% chance of a 25bps rate cut in September. BTC attempted another breakout, but was rejected at the same level as on Wednesday, and is currently trading above USD 57,000. This reversal may be due to mixed data, with better than expected Initial Jobless Claims (actual 222,000, expected 236,000), along with general profit taking in the stock market and sell-offs in Nvidia and Tesla, which also impacted crypto.
On the lower time frames, if BTC does not regain the USD 58,300 level, there is significant potential for choppy markets. Once regained, the next resistance level is USD 59,500 and then USD 60,000. ETH, on the other hand, revisited last Friday’s USD 2,830 level on Monday, but moved back above the USD 3,000 level, reaching highs of USD 3,220 yesterday afternoon and currently trading around USD 3,070. With potential ETH ETF flows coming in, ETH is currently looking stronger than BTC, with ETHBTC currently trading around USD 0.0539. Most altcoins remain weak, with many continuing to sell off this week despite the stabilisation of the majors. Altcoins will have to wait for a breakout of majors before they can make positive gains again. With SOL giving up most of its gains after the Spot ETF application news and the SOLETH ratio showing weakness, I am leaning towards ETH and ETH-related coins outperforming in the coming weeks.
The 30-day BTC ATM implied volatility fell from 53% to 47% (-6% WoW) and the 30-day ETH ATM implied volatility rose from 67.5% to 58% (-9.5% WoW) – volatility declined but remained in contango for both BTC and ETH. For ETH, the 25-delta skew turned positive (puts more expensive than calls) on all time frames (last Friday it was negative on 0-30 days) as the approval of the ETH ETF is imminent. For BTC, the skew picture is different: it remains negative for the 0-30 day range, but is positive and higher for longer time frames. Additionally, BTC’s skew has shifted higher week-over-week following last week’s crash.
Looking ahead to the economic calendar, key events include Fed Chair Powell’s speech, and China’s GDP (YoY) (Q2) on Monday, US Retail Sales on Tuesday, UK and EUR CPI on Wednesday, and the ECB interest rate decision as well as the Philadelphia Fed Manufacturing Index.
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