OTC Weekly Trading Insights (02/07/2025)
Top Interest of the WeekLitentry ($LIT) experienced a remarkable surge over the weekend, achieving a price increase of more than 250%. However, a significant portion of these gains was reversed due to a broader selloff in the cryptocurrency market on Monday morning in Asia. This price spike coincided with the network's rebranding to Heima, with the new token designated as HEI. The developers have indicated that this rebranding is a key step in Litentry’s development. The revamped network aims to enhance interoperability across different blockchain platforms, allowing users to use token A for services on chain B, for instance.PAX Gold ($PAXG) is a token that is backed by physical assets, with each token representing one fine troy ounce of a London Good Delivery gold bar, securely stored in professional vaults. Ownership of PAXG grants individuals rights to the gold held in custody by Paxos Trust Company. Being a commodity-backed stablecoin, PAXG's performance is significantly affected by the price of gold. In times of market volatility, particularly influenced by political events, gold serves as a safe haven asset, attracting investors with low-risk tolerance who seek to safeguard their assets. This demand has contributed to gold reaching record-high prices recently, and so has PAXG.On Monday morning, during a market selloff, Ethereum plummeted to $2100 before quickly rebounding to around $2500. Our analysis suggests that this sharp decline was primarily driven by on-chain liquidations rather than those occurring on centralized exchanges. It is likely that one or more large borrowers utilizing ETH as collateral through DeFi protocols faced liquidation due to the price drop. The long wick on the candlestick created panic in the market, leading to a broader downturn.Overall MarketSource: TradingViewThe above chart is the BTC price in the daily candle chart at log scale.Our previous discussions outlined two potential scenarios for Bitcoin's trajectory over the coming months. The primary scenario anticipated that the price would hit a new peak on the day of Donald Trump’s inauguration, followed by a correction down to approximately $90k. Once that low was reached, we expected Bitcoin to initiate its next upward movement. The alternative scenario proposed that, after reaching a high on inauguration day, Bitcoin would not retreat to the $90k mark for a correction but would instead trade sideways before beginning its next upward move.Last week, our analysis indicated that Bitcoin was more likely to move sideways rather than decline and complete the correction phase. With the price stabilizing around $106k, we believed Bitcoin was poised for its next upward movement. The RSI indicated market strength was building up, and overall market sentiment remained optimistic and bullish.Last Friday, US President Donald Trump declared a 25% tariff on imports from Mexico and Canada, alongside a 10% tariff on China, effective Saturday, February 1. He also hinted at the possibility of imposing tariffs on the European Union in the near future. This announcement sparked strong opposition from neighboring countries, prompting both Mexico and Canada to retaliate with their own tariffs on US goods. The intricate trade dynamics raised concerns in the market, leading to a withdrawal of capital from riskier assets, including stocks and cryptocurrencies. As the Asian market opened on Monday, a widespread sell-off commenced. Ethereum's price plummeted, reaching the $2100 mark, dragging the entire crypto market down with it. Bitcoin's price fell to $91k, aligning with our base case target range, before swiftly bouncing back to $94k. The total liquidation in the crypto market was estimated to exceed $10 billion across centralized and decentralized exchanges.The market quickly recovered following a temporary agreement between the US and its neighbors, resulting in a 30-day postponement of the tariffs. During the US trading session on Monday, Bitcoin's price surged past $100k amid the shifting risk landscape. However, our team observed a shift in market sentiment towards bearishness, leading to a decline in market strength. In the subsequent days, the overall crypto market retraced, with Bitcoin's market cap dominance increasing, indicating that investors were moving away from altcoins in favor of Bitcoin and other safer assets.The chart above illustrates that the red trend line is currently acting as a support level, despite the ongoing decline in BTC price. Our analysis indicates that a retest of the recent low may happen in the coming days. Historically, BTC has shown a pattern of revisiting previous capitulation lows prior to starting a recovery. Notably, there was a single V-shaped rebound last year on August 5, when BTC dropped to $49k and swiftly climbed back above $60k without revisiting that low. However, the range low was tested again a month later on September 6. The chart suggests that market sentiment is less optimistic compared to August 2024, when BTC initially surged after capitulation but then experienced a downward trend.Our team believes that the BTC correction will be considered complete once the RSI crosses back above the trendline. After this correction, we expect the price to start rising again, targeting the $110k level before reaching the peak of this cycle.Options MarketThe above chart is the 25-delta skew change on BTC options last week.Following the capitulation on February 2, the skew on 7-day expiry options experienced a notable shift, moving closer to the zero mark. This adjustment indicates a recovery in market sentiment, suggesting that traders may have begun to feel more optimistic about the short-term prospects of the market. This change in sentiment could be linked to a temporary agreement reached between the United States and its neighboring countries concerning tariffs, which may have alleviated some of the economic uncertainties that had been weighing on market participants.However, the optimism was short-lived, as evidenced by a significant shift on Tuesday when the skew fell below zero. This decline indicates that options traders started to pay higher premiums for put options, which are typically used to hedge against potential declines in asset prices. The increased demand for puts suggests that traders are becoming more cautious and are actively seeking downside protection, reflecting a growing concern about potential market volatility.In recent observations from our trading desk, we have noted a marked increase in the purchase of large blocks of Bitcoin (BTC) put options within the options market. This trend highlights a bearish outlook among institutional clients regarding the future prices of BTC. The substantial interest in these put options indicates that many investors are positioning themselves for a potential decline in BTC prices, further underscoring the prevailing negative sentiment in the market.Moreover, the long-term skew has decreased considerably, which is another indicator of declining market confidence in BTC. A lower long-term skew suggests that traders are less willing to pay a premium for calls compared to puts, reinforcing the notion that the market is leaning towards a bearish perspective.As we discussed in the Overall Market section, it is essential to consider the possibility of a retest at the range low in the near future. The insights gleaned from the options market further bolster this view, as investors are actively accumulating puts for downside protection. This behavior indicates that market participants are bracing for potential downward movements, and the accumulation of puts serves as a strategic measure to mitigate risks associated with a possible decline in asset prices. Overall, the current dynamics in the options market reflect a cautious and bearish sentiment among traders, suggesting that vigilance is warranted as we navigate the evolving market landscape.Macro at a glance Last Thursday (25-01-30)The European Central Bank has reduced interest rates by 25 basis points to 2.75%, aligning with market expectations, following a series of disappointing reports indicating that the largest economies in the region—France and Germany—are experiencing a deceleration in economic growth.In the United States, GDP growth is now estimated at 2.3% for Q4 2024, a decrease from the earlier forecast of 2.7%.Initial jobless claims in the US have remained low at 207,000 this week, which is below the anticipated figure of 224,000.Last Friday (25-01-31)German CPI experienced a 0.2% decrease in January, contrary to the anticipated 0.1% increase. The annual CPI rose by only 2.3%, falling short of the expected 2.6%. In the United States, the PCE price index met market expectations, showing a 2.6% annual increase in December. The core PCE price index also aligned with forecasts, reflecting a 2.8% annual growth. These persistent PCE price index figures reinforce the Federal Reserve's cautious stance regarding interest rate reductions.President Trump enacted a 25% tariff on imports from Mexico and Canada, along with a 10% tariff on China, leading to some fluctuations in the market.On Monday (25-02-03)In January, the Eurozone experienced a 2.4% year-over-year increase in the CPI and a 2.7% rise in core CPI, both slightly exceeding market predictions.The US ISM Manufacturing PMI rose to 50.9 in January, surpassing the anticipated figure of 49.3. This robust PMI performance may be linked to the tariffs implemented during the Trump administration.On Tuesday (25-02-04)The US JOLTS report indicates that job openings have increased by only 7.6 million, falling short of the anticipated 8.01 million positions.On Wednesday (25-02-05)ADP's nonfarm employment change indicates an increase of 183,000 jobs in January, surpassing the anticipated rise of 148,000. The US ISM non-manufacturing PMI was reported at 52.8, falling short of the expected 54.2.On Thursday (25-02-06)The Bank of England has aligned with the European Central Bank by reducing its interest rate by 25 basis points to 4.50%, a move that was largely expected by the market.This week, we will receive the nonfarm payroll figures and the unemployment rate from the United States, providing valuable insights into the current state of the US labor market.Convert Portal Volume ChangeThe above table shows the volume change on our Convert Portal by zone. During a turbulent weekend, our desk experienced heightened trading activity across various sectors as investors and traders sought liquidity amid market volatility. By leveraging our Convert platform, investors can access improved liquidity for their trading needs. The automated quoting system operates around the clock, enabling users to execute large trades outside the spot market without drawing attention from other market participants.In the Polkadot sector, trading volume increased by 198.4% last week, primarily fueled by the strong performance of Litentry ($LIT), which attracted numerous users to trade this token on Convert.In the Liquid Staking sector, trading volume rose by 58.4% last week, with Binance Staked Solana ($BNSOL) being the key driver of this significant volume increase.In the Infrastructure sector, trading volume experienced a 26.7% rise last week, also spurred by investor enthusiasm for Litentry ($LIT).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!
