OTC Weekly Trading Insights (02/13/2025)
Top Interest of the Week Berachain ($BERA), the highly anticipated layer-1 blockchain, launched its mainnet on February 6, unveiling an innovative “Proof of Liquidity” mechanism along with one of the year's largest airdrops. This approach places liquidity at the heart of its ecosystem. The Proof of Liquidity (PoL) mechanism enables users to stake and provide liquidity at the same time, earning rewards without the asset lock-in typical of traditional staking models. This dual functionality enhances security and accessibility, offering opportunities for users to grow their holdings, particularly benefiting traders with limited capital. Following its listing on Binance, the coin reached a peak price of over $13, but many airdrop recipients, along with the project team, cashed out, leading to a significant price drop within days.Test ($TST), a meme coin launched on the BNB chain, gained attention after CZ mentioned it on the social media platform X. His post, which included the coin's contract address, sparked a viral response, causing the price to soar. The rapid listing on the Binance spot market further fueled this price increase. BinaryX ($BNX) also capitalized on the excitement surrounding TST, as it was introduced as a trading pair on four.meme, a meme token launchpad on the BNB chain, last year. The strong link between BNX and the meme launchpad served as a conduit for investor enthusiasm, directing interest towards the BinaryX project. Over the course of seven days, BNX's price skyrocketed by 474.2%, attracting more investors and creating a positive feedback loop that further propelled its price upward.Overall MarketSource: TradingViewThe above chart is the BTC price in the daily candle chart at the log scale.In our last post, we demonstrated our base case for the BTC path projection. We highlighted the importance of rekindling bullish momentum for BTC to surpass the $100k level, pointing out that the RSI needs to break above the red trendline to enable this. The price increase on Monday showed early signs of regaining bullish momentum; however, it encountered a setback with a price drop on Tuesday.On Wednesday, BTC initially reacted negatively to the unexpectedly high CPI figures in the US, causing its price to fall below $95k. During US trading hours, Fed Chair Powell continued his testimony, and his positive outlook on crypto assets helped restore market confidence. Consequently, BTC managed to recover all its early session losses and traded above the $97.5k mark.The current BTC price is at a pivotal juncture. Should it close higher tomorrow, it would indicate a breakthrough on the RSI trendline, potentially marking the beginning of a bullish recovery. Our focus will be on reclaiming the $100k level initially, followed by the possibility of reaching a new all-time high by the end of February. Conversely, if the price declines again tomorrow, it would result in a second rejection at the trendline. This could lead to BTC trading sideways or even experiencing further declines in search of liquidity. The tariffs implemented by US President Trump have created a precarious investment landscape, prompting investors to favor more stable assets over those with high growth potential. This risk-averse sentiment is evident in the Bitcoin spot ETFs, which played a significant role in the BTC rally of 2024. Despite a net inflow of $204 million into Bitcoin spot ETFs last week, there were two consecutive days of outflows. With no new developments regarding the BTC Reserve narrative from the US, the market is in a wait-and-see mode. This period calls for patience and effective risk management, as BTC prices may oscillate within a range before establishing a clear direction.We lean towards the first scenario between the two discussed earlier. Our analysis indicates that the current range-bound phase is nearing its conclusion, and we maintain our stance that the peak has yet to be reached. Our team anticipates that the price of BTC will be much higher by the end of March.Options MarketThe above table is the at-the-money implied volatility on BTC and ETH options.The implied volatilities (IVs) of Bitcoin (BTC) options have seen a significant decline recently, as highlighted in the table above. Currently, the 7-day expiry BTC options are exhibiting an IV of 45.3%, which is notably low when compared to historical averages. This trend of subdued IVs is not limited to short-term options; longer-dated BTC options also reflect a similar pattern of reduced volatility expectations.In contrast, the IVs for Ethereum (ETH) options are considerably higher than those for BTC options. The data in the accompanying table reveals that short-dated ETH options are trading at a substantial 24% IV premium over BTC options. This premium, however, tends to diminish as the expiration dates of the options extend, indicating a potential convergence in volatility expectations over time.This current landscape of volatility presents a variety of trading opportunities for options traders. With the historically low IVs in BTC options, traders who anticipate a forthcoming increase in BTC's implied volatility might consider employing a straddle strategy. A straddle involves buying both a call and a put option at the same strike price and expiration date, allowing traders to profit from significant price movements in either direction. This strategy is particularly appealing in a low IV environment, as it positions traders to capitalize on potential volatility spikes.Alternatively, traders may choose to implement a strangle strategy, which involves purchasing a call and a put option with different strike prices but the same expiration date. This approach can be more cost-effective than a straddle, as it typically requires a lower upfront investment while still allowing for profit from large price swings.Another attractive strategy that traders might explore is to take a long position in a BTC straddle while simultaneously shorting an ETH straddle. Given the higher IVs associated with ETH options, this strategy allows traders to exploit the volatility differential between the two cryptocurrencies. By maintaining equal notional exposure, traders can potentially benefit from the relative movements in implied volatility, capitalizing on the disparity between BTC's lower IV and ETH's higher IV. Macro at a glance Last 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.In the United States, initial jobless claims reached 219,000, surpassing the market's expectation of 214,000.Canada's Ivey PMI fell into contraction territory in January, registering at 47.1, significantly below the predicted 53.0 and December's 54.7. This disappointing PMI figure may be attributed to the tariffs implemented by US President Donald Trump.Last Friday (25-02-07)US nonfarm payrolls increased by 143,000 jobs in January, falling short of the anticipated 169,000. However, the December figures were adjusted upward from 256,000 to 307,000. The US unemployment rate decreased to 4.0% in January, an improvement from December's 4.1%. Canada's unemployment rate slightly declined, moving from 6.7% in December to 6.6% in January.On Tuesday (25-02-11)In his testimony, Fed Chair Powell highlighted that the Federal Reserve is not in a hurry to reduce interest rates, indicating that inflation must decrease before any cuts can be considered. He did not offer additional insights on potential rate cuts, reiterating the points made during the most recent FOMC meeting.On Wednesday (25-02-12)US CPI and core CPI both reported higher-than-expected figures for January. The headline CPI increased by 0.5% month-over-month, translating to a 3.0% year-over-year growth, surpassing the forecasts of 0.3% and 2.9%, respectively. Similarly, core CPI rose by 0.4% on a monthly basis and 3.3% annually, exceeding the anticipated 0.3% and 3.1%. These robust CPI results exerted some pressure on risk assets, leading to a swift sell-off in the US stock market and cryptocurrencies following the announcement. Nevertheless, as the market had already priced in a hawkish stance from the Fed regarding rate cuts, it rebounded from the decline, with Bitcoin recovering to the $97.5k mark before the US trading session concluded.Convert Portal Volume ChangeThe above table shows the volume change on our Convert Portal by zone. Last week, the excitement surrounding memes transitioned from the Solana network to the BNB Chain. The price of Test ($TST) skyrocketed after CZ shared its contract address on X. This rapid listing of Test ($TST) ignited investor interest in meme coins within the BNB chain. This enthusiasm quickly spread throughout the BNB ecosystem, creating ripple effects that boosted the overall valuation of the BNB ecosystem.In the Megadrop sector, trading volume surged by 90.9% last week, largely driven by the impressive performance of Lista DAO ($LISTA), which drew many users to trade this token on Convert.In the Gaming sector, trading volume increased by 57.8% last week, with BinaryX ($BNX) playing a pivotal role in this notable rise.In the BNB Chain sector, trading volume saw a 49.9% increase last week, also fueled by the excitement surrounding BinaryX ($BNX).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. 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