This week continued to see substantial net inflows into the spot BTC ETFs, with IBIT achieving a record USD 849 million on Tuesday, pushing total inflows over USD 1 billion across all BTC spot ETFs. Even with a USD 500 million outflow from GBTC on Monday, net inflows still exceeded USD 500 million, and Wednesday saw total net inflows of more than USD 680 million.
Last Friday afternoon, BTC flirted with the USD 70,000 mark before selling off to USD 66,000, which was promptly bought up to USD 69,000, before stabilising around USD 68,000. Over the weekend, traders anticipated Monday’s ETF inflows, pushing the price back to USD 70,000 by Sunday afternoon. However, with the CME futures opening on Sunday night and into Monday morning in Asia, BTC fell back to USD 67,000 before rallying to new all-time highs of around USD 73,000 during Monday’s session. The recent trend over the past few weeks has shown that buying dips pays off, as Tuesday’s dip to USD 68,500 was met with strong buying interest, propelling BTC to new all-time highs above USD 73,000 on Wednesday, and reaching USD 73,750 on Thursday. Nonetheless, even though the overall market conditions are bullish in the medium and long term, this leads to complacency among investors and traders, of which yesterday’s US session was a good example. BTC showed some weakness, gradually dropping to USD 68,500 (no quick leverage wick; indicating spot selling), then recovering to USD 72,300 last night, before dropping sharply to USD 66,700 in today’s Asia session and reaching USD 65,600 in the European session. It is currently trading around USD 67,700.
Accordingly, BTC has its next support level at USD 65,600, from where it can go to USD 65,000 and then USD 60,000, while it needs to reclaim USD 70,000 and then target USD 73,000 on the upside. Nevertheless, I am more inclined to believe that there will be a correction/consolidation phase over the next few weeks, with USD 73,750 being the overshoot of the local top mentioned last week, as the market looks overheated after the strong rally since January (happy to be wrong about this).
ETH successfully completed its Dencun update on Wednesday, but the price is lagging after senior ETF analyst Eric Balchunas reduced the probability of a spot ETF being approved in May from 70% in January to 30% this week. As a result, ETH peaked at around USD 4,090 on Tuesday, then dropped to USD 3,625 this morning. It is currently trading at about USD 3,775. Although the ETHBTC ratio remains in a bearish trend and is currently trading at 0.0548, there may be an opportunity to buy ETH cheaply, although I tend to expect ETH to outperform towards the end of 2024 as the market’s focus shifts to other cryptocurrencies.
On the altcoin front, SOLETH and SOLBTC are showing real strength, with traders tending to rotate some of their major holdings into SOL over the past two weeks. An important level for SOL is USD 225, which represents a USD 100 billion market cap, a threshold considered unattainable in the last bull run for Altcoins — only BNB reached it (BNB is currently ~15% shy of this milestone).
With yesterday’s move, bitcoin’s 30-day ATM implied volatility rose further this week to 74% (+7% WoW), while ETH’s remained flat at 73% (+0% WoW). The 25-day delta skew is negative for BTC in the 0–14-day range and for ETH in the 0–30-day range. Notably, BTC shows the highest positive skew between 30 and 90 days, and ETH between 180 and 270 days, reinforcing my expectation that of ether will outperform later in 2024.
On the macro side, on Tuesday it was revealed that Germany’s CPI rose slightly to 0.4% in February (as expected) from 0.2% in the previous month, bringing CPI (YoY) down to 2.5% from 2.9% in January.
Meanwhile, the US CPI for February outpaced expectations, registering a 3.2% annual increase compared to the forecasted 3.1% and January’s 3.1%. The US core CPI also exceeded predictions, with a yearly growth of 3.8%, although this was slightly lower than January’s 3.9%. It seems like inflation has bottomed out at 3%, but it does not look like the Fed is going to cause a turmoil for financial markets and the economy just to bring inflation back down from 3% to 2%.
On Thursday, the US PPI inflation (MoM) measure for February exceeded expectations, registering at 0.6% compared to the predicted 0.3%. Retail Sales (MoM) came in at 0.6% (exp. 0.8%) resulting in a slight dip in US equity indices yesterday and in today’s pre-market trading.
Looking ahead, key economic events include the Eurozone CPI on Monday, the Federal Open Market Committee (FOMC) meeting, and the Federal Reserve Interest Rate Decision on Wednesday, followed by the Swiss National Bank (SNB) Interest Rate Decision on Thursday, as well as some preliminary US PMI data.
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