OTC (Over The Counter) Weekly Trading Insights (10/25/2023)

A widely shared post on social media on Monday afternoon, US local time, claimed that BlackRock's spot Bitcoin ETF with the ticker IBTC had emerged on the DTCC website. This message was read by traders as an indication that the SEC would soon approve the BlackRock spot Bitcoin ETF.Following the post, the price of BTC surged by more than 12% and reached 34,741 USDT on the Binance spot market. On Binance, the BTCUSDT perpetual price hit an intraday high of 35,981 USDT as aggressive longs forced out the shorts.Depository Trust & Clearing Corporation (DTCC) is the clearinghouse for various exchanges in the US. The listing of ticker IBTC is part of the process of bringing the ETF to market. After the DTCC removed the ticker IBTC from the list, the price of Bitcoin fell 3% in 15 minutes to 33,200 USDT. However, after the market processed the news, bitcoin recovered to trade above 34,000 USDT. When investors were rushing into BTC, our desk saw a large increase in demand for WBTC, the wrapped BTC. WBTC can be utilised as collateral on DeFi protocols for investors to borrow assets on-chain.Additionally, our desk tracked the erratic price fluctuations of Oracle tokens. Chainlink ($LINK) was up 54.6%, and Tellors ($TRB) was up 88.0%. The strong demand for Oracle tokens may be an indication that the DeFi market is about to enter a bull market.   Overall Market  The above chart shows the BTC price in 2023.As covered in last week’s post, the technical support on the red downward trend line and the false news on BlackRock’s Bitcoin spot ETF approval confirmed that BTC has broken the downward trend since mid-July. Even though the BTC price swiftly dropped from the $30k mark following the confirmation that the ETF approval news was fraudulent, the technical structure repair was completed. The iShares Bitcoin Trust was noted as having the ticker IBTC on the DTCC website on Monday by Bloomberg Analyst Eric Balchunas. Moreover, BlackRock announced that they would be seeding the Bitcoin ETF in October in their most recent spot amendment.Both messages signal that the potential approval by the SEC on the Bitcoin spot ETF is around the corner, and reinforce the bullish mood, leading to significant short covering According to the above chart, since the start of 2023, the blue line has served as trendline support. This support line turned into a resistance line during the mid-August plunge. This resistance line stopped the price of Bitcoin from rising recently. Our desk predicts that the price of Bitcoin won't encounter any significant resistance up to the $45,000 mark if we witness a successful breakthrough and confirmation on this blue line.Options MarketThe above table shows the 25-delta skewness in BTC and ETH options.After the recent volatile movements in BTC and ETH prices, the skewness in the options market suggests that traders are less willing to buy BTC calls than ETH calls. As covered in our previous posts, ETH, which used to be a high beta asset to BTC, was traded as a low beta asset to BTC after the Shanghai upgrade. The market was bearish on the ETH price after it dropped below $2,000 in April 2023. As shown in the snapshot above, options traders start betting on ETH with a positive skewness across all ETH option expiries. The improving front-end expirations on ETH options could be a signal that ETH is about to make a big move. Combined with the recent price surge on Oracle tokens and DeFi tokens, a potential market rotation from Bitcoin to altcoins is going to take place.The above chart shows the BTC at-the-money implied volatility on various expiriesAfter the recent news on the Bitcoin spot ETF ticker listed on DTCC and the BlackRock seeding for its Bitcoin spot ETF, our desk observed the soaring implied volatility on BTC options across all expiries.  The recent retracement in the near-term options suggests that the rise on Monday was more related to the volatile short covering than a structural improvement in BTC options.If the Bitcoin spot ETF approval does not have any material clarity on the SEC side, our desk expects the implied volatility on Bitcoin options to return to the 40% range.Macro at a glance Last Wednesday (2023-10-18)September's CPI reading for the Eurozone was 4.3% year over year, which represents a 0.9% decrease from August's 5.2% reading. The core CPI readings dropped 0.8%, from 5.3% in August to 4.5% in September.Last Thursday (2023-10-19)US initial jobless claims declined further, coming in at 198k instead of the predicted 212k. According to the data, the tight US labour market is not improving, which could have upward pressure on inflation and prompt the Fed to raise interest rates further.Fed Chairman Powell cites declining inflation and improving labour market conditions in the press, signalling an extended pause in interest rate hikes.On Tuesday (2023-10-24)US S&P Global Services PMI in October is projected at 50.9, better than the estimated 49.8 and last month’s 50.1. The US PMI number has stayed above the 50 level in the last few months as the holiday season approaches.In Europe, the HCOB’s flash Eurozone Composite Puchasing Managers’ Index (PMI) fell to 46.5 in October, down from 47.2 and the lowest since November 2020. Later this week, we have the following events:Bank of Canada (BoC) is scheduled to announce its interest rate decision this Wednesday. The market anticipates BoC will maintain its interest rate unchanged at 5.00%.The European Central Bank (ECB) is scheduled to announce its interest rate decision this Thursday. The market anticipates that the ECB will maintain its interest rate unchanged at 4.50%.The US is scheduled to report its Q3 GDP growth on Thursday. The GDP growth was reported at 2.1% in Q2, and the estimated GDP growth doubled, at 4.2% in Q3.The US PCE Price Index is scheduled to be released this Friday. As the Fed uses this price index as a key indicator of inflation, a lower-than-estimated number will signal a rate hike pause. Convert Portal Volume BreakdownThe above table shows the volume breakdown of our Convert Portal. Last week, the stablecoin swap transaction volume retraced back below 10% from last week’s 14.4%.With the soaring Bitcoin price and the wave effect on altcoins, our desk observes an increase in trade volume in the crypto-to-stablecoin category. The surge is mainly due to profit-taking. After the BTC price reached its 2-year high of $34,000, many investors took advantage of this opportunity to unwind their position.Why trade OTC?  Binance offers our clients various ways to access OTC trading, including chat communication channels and the Binance Spot RFQ platform (https://www.binance.com/en/OTC-Trading) for manual price quotations, or automated price quotations via our Binance Convert and the Binance Convert OTC API. For manual price quotations, you may visit our Spot RFQ Platform, where you can RFQ (request-for-quote) and trade directly with our OTC trading team via a live chat, or reach out to us via our email at [email protected] for our trading desk to get in touch with you and get started. Alternatively, OTC trades may also be automatically quoted on Binance Convert and via API, offering users a quick and simple way to execute trades across 60,000+ pairs with one simple click. Binance Convert supports over 350 tokens listed on the exchange including fiat pairs. Begin trading from as little as 1 USD. To start, simply navigate to the Binance Convert (https://www.binance.com/en/convert), select the coins you wish to trade, preview and confirm the quote with settlement reflecting almost instantly in your wallet balance. For details and access to  Binance Convert OTC API, please refer to our Convert Endpoints (https://binance-docs.github.io/apidocs/spot/en/#convert-endpoints) and reach out to us at [email protected] if you have any questions or require assistance.Visit Binance OTC and Execution Solutions (https://www.binance.com/en/otc) to get more information on our OTC products and solutions. Experience the main benefits of Binance Convert and OTC Trading: Fast & Competitive Pricing Instant settlement Widest availability of coins Bespoke service with unique market insights Zero fees and slippage Email: [email protected] Join our Telegram (https://t.me/BinanceOTC) to stay up to date with the markets!