OTC Weekly Trading Insights (05/02/2024)

Wormhole ($W) is the native token of the Wormhole platform, a multi-chain protocol that enables the transfer of assets and data between blockchains. Wormhole ($W)'s price increased by 19.9% last week due to high demand for cross-chain assets. Ether.fi ($ETHFI) saw strong demand on Saturday, coinciding with the ETH strong rebound. ETHFI's price increased by more than 45% in 36 hours over the weekend. However, the majority of the gains were reversed after the Asian market opened on Monday. Arweave ($AR) is a decentralised storage network that focuses on storing data indefinitely. It functions as a collectively owned hard drive that hosts the "permaweb" - a permanent, decentralised web. It also ensures data integrity and accessibility for future generations, ushering in a paradigm shift in digital preservation. The AR price fell over 18% when BTC broke below $60k on Wednesday, and it has returned -16.7% in the last seven days. Optimism ($OP), a layer-2 Ethereum scaling solution, has recently seen strong demand, rising by more than 9% in the last 24 hours. According to a report published on Tuesday by Unchained crypto, A16z, one of the largest cryptocurrency venture capital funds, purchased $90 million in OP tokens. The VC firm's investment has a two-year vesting period, according to sources. Overall Market The above chart shows the BTC price movement in the last two months. As we discussed in previous posts, the $60k - $61k range was a strong demand zone that was tested several times after the BTC price traded above it. However, following recent sell-offs due to geopolitical conflicts, buying power in that range dwindled, and BTC fell below this level. As stated in our April 17 report, if BTC falls below the $60k/61k support range, the next strong support range will be $56k/57k. It is also the 350-day moving average. This moving average served as a solid support level during the Silicon Valley Bank collapse.  BTC price has formed a bear flag since April, and the upper level has been tested several times and rejected. The $56k/57k support level is also around the lower trendline. If BTC recovers from here, this does not mean that the price will reverse and return to an all-time high. Unless the BTC price breaks above the downward channel, we believe the BTC momentum will continue to trade within the downward channel. If the BTC price falls below the downward channel, the next strong support level will be the $51k/52k range, as shown in the chart.  Options Market The above table shows the 25-delta skew of BTC and ETH options. As shown in the table above, both BTC and ETH options have extremely negative skews for short and intermediate tenors. The negative skew indicates that options traders are more likely to buy puts rather than calls.  The most recent one with such negative skews occurred on April 16, when the Middle East's geopolitical conflicts escalated. BTC recovered the majority of its losses over the next few days, but then continued to decline. This time, our desk noticed a more significant skew shift to the negative side than on April 16. One of the reasons could be the FOMC meeting held this Wednesday. Although the market expected the Federal Reserve to keep interest rates unchanged, it is more important to know whether the Fed will raise interest rates again given the sticky inflation backdrop.  Following the FOMC meeting today, Fed Chairman Powell indicated that no interest rate hike is being considered, but he did not provide any indication of when the interest rate cut will occur. The slowdown in the pace of balance-sheet reduction benefited the market, but the postponed rate-cut action cast a cloud over investors' heads. Our desk believes that the negatively skewed BTC and ETH options will move back towards the zero line in the next few days, but they may remain negative for an extended period if the downward momentum on the BTC price continues. Macro at a glance  Last Thursday (24-04-25) The US GDP growth rate was 1.6% in the first quarter of 2024, lower than the expected 2.5%. The lower-than-expected GDP growth rate raised market concerns about the potential failure of the Federal Reserve's proposed soft landing. US initial jobless claims fell further last week, from 212k to 207k, indicating that the US labour market remains tight. US Treasury Secretary Yellen stated that US economic growth was likely stronger than the weaker-than-expected market data, and inflation continued to rise despite the Q1 flare-up. The Bank of Japan maintained its interest rate at 0.1%, unchanged, and continued its bond purchase. BOJ Governor Kazuo Ueda stated that if data confirms the BOJ's price view, it will raise interest rates, but he did not give clues on when the rate hike will start. Last Friday (24-04-26) The US PCE price index rose 2.7% year on year in March, exceeding the estimated 2.6% and February's 2.5%. The core PCE price index rose 2.8% on an annual basis in March, exceeding the expected 2.6% and remaining consistent with February's 2.8%. The higher-than-expected PCE price index demonstrated that inflation is stickier than the market expected, potentially postponing the Federal Reserve's rate-cut decision timeline. On Tuesday (24-04-30) In April, the Eurozone's CPI growth rate was 2.4% year on year, which was consistent with economist forecasts. The core CPI growth rate was 2.7%, slightly higher than the expected 2.6% but lower than March's 2.9%. Unlike the data in the United States, the Eurozone's CPI continued to fall, drawing closer to the ECB's 2% inflation target. According to the data, the ECB is more likely to cut interest rates for the first time this cycle at its June meeting.  In April, US CB consumer confidence was 97.0, significantly lower than the estimated 104.0 and March's 103.1. Worse-than-expected consumer confidence suggests that consumer spending may slow in April, easing upward inflation pressure. On Wednesday (24-05-01) The Federal Reserve maintained its interest rate at 5.50%, unchanged. The FOMC statement cited a lack of progress toward the Committee's 2% inflation target. Meanwhile, the Federal Reserve will reduce its balance-sheet reduction from $65 billion to $25 billion, beginning in June. According to Federal Reserve Chair Jerome Powell, raising interest rates is unlikely to be the central bank's next step. The dovish comment boosted all three indices by more than 1%, with the BTC rising from $57.4k to $59.3k. However, all gains were reversed before the US session ended. When the US market closed, Bitcoin was trading at $57,000.   Convert Portal Volume Change The above table shows the volume change on our Convert Portal by zone.  This week, the Monitoring zone saw a 3.4% increase in trading volume, while the Fan token zone experienced an 8.2% decrease on Convert. Over the last seven days, Loom Network ($LOOM) and aelf ($ELF) have contributed the most to the Monitoring zone's volume increase. The BNB Chain zone saw a 5.8% decrease in trading volume on Convert. Nonetheless, several tokens were highly demanded in this zone. Polkastarter ($POLS) and COMBO ($COMBO) saw the highest increase in trading demand among tokens in the BNB Chain zone. During the same period, volume in the Fan Token zone fell by 8.2%. FC Barcelona Fan Token ($BAR) and FC Porto ($PORTO) are the two most popular tokens in this zone. The demand for Manchester City Fan Token ($CITY) fell the most dramatically. Why trade OTC?   Binance offers our clients various ways to access OTC trading, including chat communication channels and the Binance OTC platform (https://www.binance.com/en/otc) for manual price quotations, Algo Orders, or automated price quotations via Binance Convert and Block Trade platform (https://www.binance.com/en/convert) and the Binance Convert OTC API.  Email: [email protected] for more information. Join our Telegram (https://t.me/BinanceOTC) to stay up to date with the markets!