OTC Weekly Trading Insights (01/16/2025)

Top Interest of the Week Grayscale Investments, a leading digital currency asset management company, has recently announced plans to consider adding 39 alternative cryptocurrencies to its already extensive range of investable digital assets. Among the standout altcoins being evaluated are THORChain ($RUNE) and Pendle ($PENDLE), both of which have attracted attention due to their innovative features and growth potential. The potential inclusion of these exciting projects in Grayscale's portfolio could indicate a broader acknowledgment of their significance within the cryptocurrency landscape. The idea of Grayscale launching a dedicated trust fund for these newly considered altcoins is creating a buzz in the market. Investors are closely monitoring this situation, as it could enhance the legitimacy and visibility of these altcoins, possibly leading to an increase in their value and adoption. The excitement surrounding Grayscale's possible actions is already influencing trading activity for these promising tokens as traders and investors prepare for any forthcoming announcements.Real World Assets (RWAs) is one of the innovation spaces for blockchain applications. MANTRA ($OM) is a purpose-built Layer 1 blockchain for real-world assets, capable of adherence to real-world regulatory requirements. Recently, UAE-based DAMAC Group announced partnering with MANTRA blockchain to tokenize $1 billion worth of real estate and business assets, with the initiative set to launch in early 2025. Ripple ($XRP) experienced a remarkable 29.9% increase in price last week, crossing the $3 mark for the first time. Despite the US Securities and Exchange Commission (SEC) appealing a district court's decision regarding Ripple Labs' XRP sales, investor sentiment remains positive. This optimism is fueled by the upcoming departure of SEC Chair Gary Gensler on January 20, 2025. Additionally, President Trump has put forward Paul Atkins, a pro-crypto advocate, as his nominee to head the agency, leading investors to believe that the new SEC leadership may not pursue the XRP lawsuit with the same vigour.Overall MarketSource: TradingViewThe above chart is the BTC price in the daily candle chart at long scale.Our team remains optimistic about the future of the Bitcoin (BTC) bull market, anticipating a series of positive developments in 2025 that could significantly impact the cryptocurrency landscape. Despite experiencing a notable decline in BTC's price from $102,000 to $91,000 last week, we firmly believe that there is substantial potential for another upward movement in the first quarter of 2025.The trajectory of BTC has been tumultuous, particularly following the collapse of the FTX exchange at the end of 2022, which sent BTC to a cycle low. However, 2023 marked the beginning of a new bull run for Bitcoin, characterized by a series of ups and downs. The journey has not been without its challenges; for instance, the bankruptcy of Silicon Valley Bank in March 2023 and the FUDs (fear, uncertainty, doubt) caused by the legal actions from the U.S. Securities and Exchange Commission (SEC) against major players like Binance and Coinbase have created a complex environment for investors. Despite these hurdles, the crypto market has demonstrated remarkable resilience, managing to navigate through these obstacles effectively.By October 2023, a surge of bullish sentiment swept through the market, propelling BTC's price to $40,000. This rally was largely fueled by optimism surrounding the potential approval of spot ETFs by the SEC, which many investors viewed as a significant milestone for the cryptocurrency market. This optimism led to a five-month rally, culminating in a notable correction that began on January 11, coinciding with the launch of the long-anticipated spot ETFs. The market exhibited typical “sell the news” behaviour, resulting in a sharp price decline that shook out many investors across both the crypto and traditional markets. However, following this correction, BTC rebounded impressively, nearly doubling its price in under two months and reaching a new all-time high above $73k.Looking ahead, we believe that a similar pattern may unfold in the near future. In our base case scenario, we anticipate that the BTC bull run was triggered by a shift in market sentiment, driven by impactful headlines and developments. Trump’s increasing odds on the US presidential election back in October 2024 was the trigger. This shift has led to higher highs in BTC price, while the RSI shows lower highs. It suggests a divergence that could signal a potential reversal. Once the anticipated event occurs, which is the inauguration day on January 20, we expect that the initial wave of bullish sentiment will begin to wane. This could set the stage for a market correction as participants adopt a classic “buy the rumour, sell the news” strategy. In this context, traders who entered positions based on speculative news may look to lock in profits, leading to a pullback in prices. Following this correction, we predict that Bitcoin will set its sights on the 1.618 Fibonacci extension level, a common target for bullish trends, which could serve as a significant psychological and technical milestone for traders.This scenario outlines our core perspective on the market's trajectory, and our team will remain vigilant in tracking developments that could influence this outlook. We are committed to staying informed and ready to adjust our forecasts as new information becomes available, ensuring that our analysis remains relevant and accurate.Our base case may be put to the test if the BTC price experiences a significant spike following the inauguration day, which could indicate a stronger-than-expected bullish momentum. Conversely, if a more substantial correction occurs, particularly if prices fall below the $84,000 mark, it could signal a shift in market dynamics that warrants a reevaluation of our current projections. In either case, we will continue to monitor the situation closely, adapting our strategies to align with the evolving landscape of the cryptocurrency market.Options MarketOn our options desk, we have noticed very interesting trading patterns for the last 2 weeks or so. With the BTC price move being rangebound, albeit volatile, we have seen both bullish and bearish positions being taken up, which signals uncertainty and perhaps continued volatility in the markets. For the coins having breakouts, like XRP which has gone up about 25% this week, we have seen protective positions forming in the breakout direction and a general buying trend for options. Overall, we see traders reacting to the price movements a little more quickly than usual.Specifically for BTC, the DVOL (currently ~60) levels have sustained over 55 for almost 2 months now, with IVs consistently sitting in the top 75 percentile of last year's levels. The realized volatility has been high as well, with the spot touching highs of about 102k this month while also touching <90k levels. This has been quite a volatile period for the crypto space, where we’ve seen the high beta with NASDAQ in effect. For ETH, the DVOL currently sits at around 70 levels. This too is about the 70th percentile in the last year, indicating uncertainty in the price. For ETH, however, the price movement has been pretty one-directional in the last month, dropping from highs of about 4100 to currently at the 3300 level.XRP takes the spotlight this week though, moving almost 30% from 2.4 to above 3. The volatility smile for this is pretty flat now (with an elevated IV of about 120 for the 17th expiry), indicating that the market makers are cautious of a breakout on either side and have hedged their bets on both sides, with the option sellers being more cautious and asking for a much higher premium than usual.The market did anticipate some movement on the CPI release on the 15th, with IVs dropping from about 55 to 45 levels for the liquid Friday (Jan 17th) expiry. The release was followed by a sharp 2% increase in BTC and ETH, with the spots already on the uptrend since the major backlash last week.For both ETH and BTC, we notice that the implied vols sit at a bit of a premium compared to the realized, as is the tendency. Currently, the 15-day realized vol for BTC is around 45, while that for ETH is around 60.For BTC, the spot has already crossed the major pain point of the 96k strike for the 17th expiry. The next major resistance in terms of open interest is the 100k strike. On the downside, there’s no major support in terms of OI till 90k levels, but given the positive CPI print and a lack of major news expectations till the end of this month, the possibility of a sharp downtick seems unlikely in the near future. For ETH, the next major resistance is formed between 3400 and 3450.As for the term structure, we notice the BTC IVs rise from current levels of 47 for Friday to a stable region of ~60 starting 31st Jan expiry. This is typical of the option chain, with option sellers asking for a little more premium on far expiries. We don’t see any discernible kinks in the curve; the market doesn’t anticipate any major surprises in the near future.Macro at a glance Last Tuesday (25-01-07)Eurozone Consumer Price Index (CPI) recorded a 0.4% increase in December, resulting in an annual growth rate of 2.4%, surpassing November's figure of 2.2%. Core inflation held steady at an annual growth rate of 2.7% in December, unchanged from November.In the United States, the Job Openings and Labor Turnover Survey (JOLTS) revealed the addition of 8.098 million job openings in November, significantly exceeding the anticipated 7.730 million. The strong labour market data increased the market's fear of a pause on the Fed's rate cut pace in 2025.Last Wednesday (25-01-08)US ADP nonfarm employment reported an increase of 122,000 jobs in December, falling short of the anticipated 139,000 and November's figure of 146,000.Initial jobless claims in the US reached a multi-month low of 201,000, maintaining a downward trajectory that indicates a strengthening labour market.The FOMC Meeting for the December meeting revealed concerns among officials regarding the inflation impact of Trump's tariff policies, and the minute affirmed expectations for a more gradual approach to rate cuts in 2025.Last Friday (25-01-10)US nonfarm payrolls reported an addition of 256,000 jobs in December, significantly surpassing the anticipated 164,000. The unemployment rate in the US experienced a slight decline, falling to 4.1% in December from 4.2% in November. This robust labour market data heightened concerns among investors regarding the possibility of slower interest rate cuts by the Federal Reserve and thus tighter global liquidity conditions. As a result, risk assets encountered considerable selling pressure, with the S&P 500 index finishing down 1.54% and the Nasdaq index declining by 1.63%. Meanwhile, the yield on the US 10-year Treasury continued its upward trajectory, closing at a one-year high of 4.755%.On Tuesday (25-01-14)In December, the US Producer Price Index (PPI) experienced a monthly increase of 0.2%, while the core PPI remained unchanged with a 0.0% monthly variation. Both figures fell short of the anticipated estimates.In the UK, the Consumer Price Index (CPI) recorded an annual growth rate of 2.5% in December, a slight decline from the 2.6% observed in November.On Wednesday (25-01-15)US CPI data indicated a monthly increase of 0.4% and an annual rise of 2.9% in December, aligning with market expectations. The Core CPI reflected a slight deceleration in inflation, recording a 0.2% monthly increase and a 3.2% annual increase, which was slightly below the anticipated 0.3% and 3.3%, respectively. As a result of the December inflation figures, market sentiment turned optimistic, leading Bitcoin prices to surpass $100,000 again. Additionally, the US stock market experienced gains, with the S&P 500 index rising by 1.83% and the Nasdaq index increasing by 2.45%.Convert Portal Volume ChangeThe above table shows the volume change on our Convert Portal by zone. Bitcoin has seen significant fluctuations in trading since the start of 2025. A sharp decline from $102k to $91k occurred within just three days. Moreover, a long needle candle was formed this Monday, with the price plunging to a low of $89,250 before rebounding above $94,000 in the US trading hours, leading to substantial liquidations on both sides. Last week, trading activity was relatively quiet, largely due to worries about the Federal Reserve's slower rate cut projection in 2025. Strong labour market data weighed heavily on the performance of risk assets. However, this Wednesday, the CPI data came in as expected, slightly boosting the chances of a 25 basis point rate cut in March, which reignited investor interest in crypto assets. Additionally, with inauguration day approaching, optimism grew around potential crypto executive orders expected on Trump’s first day in office.In the Payments sector, trading volume fell by 2.8% last week, primarily driven by Bitcoin's lackluster performance and the overall subdued trading environment. This decline also impacted volume in the POW and Layer1/Layer2 zones.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!