OTC Weekly Trading Insights (12/12/2024)

Top Interest of the WeekBaby Doge ($1MBABYDOGE) attracted significant trading activity, witnessing a remarkable price increase of 127% and reaching a new all-time high. On December 6, the founder of Tesla shared a photo featuring himself and his son, accompanied by the terms “Dogefather” and “Dogeson,” designed in a style reminiscent of the 1972 film “The Godfather.” He also replied his tweet with “Doge & Minidoge.” Following this tweet, Baby Doge's price surged by over 75%, maintaining its upward trajectory and ultimately achieving an all-time high of 0.0067042 for $1MBABYDOGE in the spot market.Last week, decentralized exchange and infrastructure projects garnered considerable attention. Sushiswap ($SUSHI) and dYdX ($DYDX) experienced trading volume increases of 355% and 204%, respectively, on Convert. Additionally, the DEX infrastructure project 0x Protocol ($ZRX) saw a trading volume rise of 344.6%, driven by a 38% price increase last Friday. While Bitcoin is stabilizing within the range of $95k to $104k, our desk noted robust trading interest in the Ethereum ecosystem, with investors channeling their funds into DEXs and related projects.Overall MarketThe above chart is the BTC daily K-line chart.Since November 5, Bitcoin has experienced a remarkable increase, rising from $67,500 to $104,088, marking a 54.3% gain and reaching a one-month high. This surge is primarily fueled by optimism surrounding a more favourable regulatory landscape for cryptocurrencies anticipated with Donald Trump's forthcoming presidency. Many within the cryptocurrency community believe that his administration will implement policies that support digital assets, which could enhance both adoption and investment. The ongoing influx of capital into Bitcoin ETFs and the growing acceptance of Bitcoin into their balance sheets by publicly traded companies indicate that investors are aligning with this optimistic outlook.However, this Monday, Bitcoin's price dropped from $100k to $94k during the US session, resulting in a $1.5 billion liquidation across the crypto market, the largest by liquidation size since 2021. Many large-cap altcoins saw declines of around 20%, while smaller altcoins faced even steeper losses. This swift decline in Bitcoin's price has led investors to question whether the peak for this cycle has already been reached.Our team reviewed historical data to identify patterns in Bitcoin's price movements during similar circumstances and found parallels to events from a year ago. On October 23, 2023, Bitcoin surged in response to optimism regarding the SEC's approval of Bitcoin ETFs, climbing 40% from $27,100 to a peak of $37,950 before a 9% retracement. For about two weeks, Bitcoin traded within the $35,000 to $38,000 range before experiencing another 18% increase. Following that, Bitcoin spent one month trading sideways, fluctuating between $40,000 and $46,000 leading up to the final approval date of January 9, 2024. Subsequently, the market encountered a sell-the-news scenario before Bitcoin rallied and reached its previous all-time high of $73,777 in March.If the historical pattern holds, we may experience similar trading behaviours in the upcoming months before determining the peak of the Bitcoin cycle. Nevertheless, the path ahead is likely to be volatile. During this upward trajectory, we anticipate several 15% or higher corrections. Therefore, risk management is the highest priority in this exciting journey.Options MarketOn our options desk, we have seen a surge in volumes after the elections, which has sustained for over a month now. We are still seeing big moves in alts, like LTC and ATOM, which have increased 60% and 70% since the elections. BNB also saw a huge 25% uptick in a day on 3rd-4th Dec and has since dropped about 15%. We are seeing resistance/support forming on key strikes with big option open interest (OI). An increased demand for options accompanies each big move!Specifically for BTC, the DVOL levels have sustained over 55 post-elections, with IVs sitting in the top 75 percentile of last year's levels. For ETH, we have seen DVOL rising all the way from ~60 pre-election to 70+ levels now. Just shows how unpredictable the price movement has been over the last few weeks!As for the realized volatiles, we have seen both BTC and ETH realize much more volatility recently after being very muted in early December. While BTC has been rangebound in 95k-102k levels since early December, the amount of intraday volatility is at a high, signalling that a potential breakout might be on the way.For BTC, the next big resistances in terms of OI levels are at 100k, 110k, and 120k, where there are a lot of open option contracts. The level of 100k seems to be very critical, with a lot of option writers sitting on calls. On the put side, the major support levels are the round strikes again: 95k, 90k, and 85k.As for the term structure, we notice the BTC IVs drop from current levels of 63-64 to a low of 57 on the end of December expiry and then rise to a stable level of 60. We see similar drops in forward levels for most coins, indicating that people are expecting the Christmas holidays to be very quiet.Macro at a glance Last Thursday (24-12-05)US initial jobless claims rose to 224,000, up from the previous week's 215,000, exceeding the expected figure of 215,000. The central bank of India has maintained its interest rate at 6.50%, a decision that was largely anticipated by market participants.Last Friday (24-12-06)In November, the US job market made a strong recovery, adding 227,000 new jobs, exceeding the expected 202,000, after disruptions from hurricanes and strikes. However, this increase is not expected to signal a significant shift in labor market conditions that would lead the Federal Reserve to contemplate lowering interest rates in the upcoming December meeting. The US unemployment rate experienced a minor increase from 4.1% to 4.2%, which is in line with market expectations.On Tuesday (24-12-10)The Reserve Bank of Australia has opted to keep its interest rate steady at 4.35%. Governor Michele Bullock indicated that the board aims to build greater confidence that inflation will consistently align with its target range of 2%-3% before cutting rates.In Germany, the Consumer Price Index (CPI) recorded a 0.2% decrease in November after seeing a 0.4% rise in October. The annual inflation saw a slight uptick from 2.0% in October to 2.2% in November.On Wednesday (24-12-11)The US Consumer Price Index (CPI) saw a monthly rise of 0.3% in November, resulting in an annual growth rate of 2.7%. The Core CPI also recorded a 0.3% monthly increase during the same period, equating to a 3.3% annualized increase. These CPI figures aligned with economists' expectations, bolstering the likelihood of a 25 basis-point rate reduction by the Federal Reserve in the upcoming week. The Bank of Canada implemented another 50 basis point rate cut, lowering its interest rate from 3.75% to 3.25%. In the press conference, Governor Tiff Macklem indicated that the central bank will shift towards a more gradual approach to monetary policy after a cumulative 175 basis point reduction over the five consecutive meetings.Amid a favourable risk environment, all risk assets experienced significant gains, with the US stock market advancing and the cryptocurrency market recovering. Bitcoin reclaimed the $100,000 mark, while Ethereum surged past $3,800.Convert Portal Volume ChangeThe above table shows the volume change on our Convert Portal by zone. Bitcoin experienced notable fluctuations last week, peaking above $104,000 before declining to $90,500. Although it rebounded above $100,000 over the weekend, a sharp sell-off on Monday resulted in large-scale liquidations. While BTC faced a 7% retracement, a lot of altcoins suffered corrections over 30%. On Wednesday, following the release of the US CPI report, Bitcoin and the overall market surged, driven by optimism regarding a potential Federal Reserve rate cut next week.In the Fan Token market, trading volume increased by 66.2%, largely due to heightened activity around the Paris Saint-Germain Fan Token ($PSG), which saw a rally of over 40% last Sunday. The Seed sector experienced an impressive 27.6% rise in trading volume, primarily attributed to growing interest in Baby Doge ($1MBABYDOGE).The Meme sector also witnessed a significant 12.8% increase in trading activity, spurred by strong demand for Baby Doge ($1MBABYDOGE) and Pepe ($PEPE).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!