Last week, the cryptocurrency market experienced a remarkable rally, driven by a flurry of crypto-related news.
- BTCUSD: 30,285, +12.97%
- ETHUSD: 1,864, +7.93%
- US02Y: 4.7%, -4bps
- DXY: 102.60, +0.1%
- GOLD (USD/OZ): 1,925, -1.33%
- NDX: 14,689, -2.62%
- VIX: 14.24, +5.25%
The market sentiment was further buoyed by Federal Reserve Chair Jerome Powell’s statement, “Crypto is here to stay.”
These factors taken together laid a solid foundation for the impressive rally witnessed throughout the week.
Looking ahead to this week: although no major economic events are scheduled, we will have a couple of talks by Fed members, including Chair Powell and the PCE price index on Friday as it can provide insights into inflationary pressures and shape market expectations.
It is essential to keep a close eye on the derivatives market this week.
Deribit, in particular, is hosting the June quarterly expiration.
Market maker’s short-gamma profiles are very pronounced, with the highest Open Interest at the $30k strike, this level could exert a magnet-like effect on the spot price, potentially leading to consolidation within the $29k to $31k range.
Chart 1 & 2: Deribit BTC Open Interest by Expiration and Deribit BTC Open Interest by Strike; source: metrics.deribit.com
Analysing the spot price action, we observe that the BTC chart, using weekly candles, exhibited a textbook rally last week.
However, there is a possibility that the market overshot its trajectory.
While key resistance levels reside between $30.3k and $31.4k, we anticipate a potential retest of the $28.8k mark as we transition from a high-volatility phase to a consolidation phase.
Chart 3: BTCUSD 1w
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