Market Deep Dive: Positive days this week in the crypto market

 
The crypto market continued to print positive days this week. BTC$ and ETH$ are up 11.8% and 12.6% WoW.

CPI rose 6.5% YoY, which is the lowest level since October 2021. MoM saw the largest decrease since April 2020.

  • CPI MoM at -0.1% (forecast: 0.0%; previously: 0.1%)

  • CPI YoY at 6.5% (forecast: 6.5%; previously: 7.1%)

  • Core CPI YoY at 5.7% (forecast: 5.7%; previously: 6%)

  • Core CPI MoM at 0.3% (forecast: 0.3%; previously: 0.2%)

The 25 bps rate increase set for the FOMC meeting on February 1st seems set, with a 94% probability. While the Dot Plot median target rate from FOMC participants suggests rate cuts in 2024.

Shortly after the CPI numbers were released, Biden spoke in what seemed like a victory lap. He reiterated that consumer prices are still high, but that the pace at which the rates are rising is sufficient in slowing inflation.

Altcoin dominance led the new year; BTC took over this week.

BTC dominance declined until the beginning of this week. Since Monday, BTC dominance rose 2%. The total crypto market cap is now at levels seen on November 8th. The risk-on attitude is surprising and likely not sustainable in the mid- to short term. A healthy market usually consists of a rally in BTC and ETH, followed by investors rotating into altcoins.

Some of the top gainers this week benefited from a strong market, resulting in short squeezes.

FTX-backed coin Aptos (APT) and Immutable X (IMX) were victims to short liquidations, and are up 71% and 28.5% this week. Concurrently, the high beta Metaverse sector came to life this week. MANA and SAND are up 37% and 29%.

The Avalanche (AVAX) and Amazon Web Services partnership caused the coin to explode 25% on the day it was announced, regaining a spot in the Top 20. This is the largest move we have seen from a large cap in a while. AWS will contribute credits to projects looking to deploy subnets on Avalanche. In short, subnets are custom application specific networks built on Avalanche.

FTX recovered $5 bn in cash and liquid cryptocurrencies.

According to a bankruptcy attorney, FTX has recovered more than $5 billion worth of assets. Among the assets are liquid cryptocurrencies, of which the holdings are so large relative to the total supply that positions cannot be sold without affecting the market. This substantially raises the total FTX claims it holds, after the company’s new leadership said it could only find $1 bn on December 20th.

 
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