OTC Weekly Trading Insights (12/18/2024)

Top Interest of the WeekTravala ($AVA), a platform aiming to tokenize the concept of loyalty reward programs using blockchain technology, played a big role in cryptocurrency adoption. Last week it announced the platform has hit the milestone of $100 million in annual revenue. CZ also tweeted the announcement and revealed that Binance invested in this crypto project before the COVID pandemic. The price of AVA skyrocketed over 240% after the news, with a significant increase in the trading volume. Our desk saw a crowded trading demand for this token, and the trading volume surged over 146 times on Convert.US President-elect Donald Trump's positive stance on cryptocurrency is evident through his family's crypto project, World Liberty Financial. Recently, World Liberty Financial invested millions in various altcoins, motivating other investors to engage in these projects as well. Following several on-chain purchases, Aave ($AAVE), the token associated with the decentralized lending and borrowing platform, has risen to become one of the top five assets in World Liberty Financial’s wallet. Additionally, the utilization of the CoW Protocol for these swaps has boosted trading activity for the decentralized exchange's native token, $COW.Overall MarketThe above chart is the BTC 8H K-line chart.Our previous discussion underscored our expectation for Bitcoin (BTC) to sustain its upward trajectory, with a projected breakout anticipated by the end of the year. This forecast is underpinned by several key factors, including the ongoing capital inflows from exchange-traded funds (ETFs), the historical performance of BTC during the Christmas season, and a trading pattern influenced by a series of optimistic events.Recently, Bitcoin achieved a remarkable milestone, surpassing the $108,000 mark, a feat largely driven by substantial capital inflows from spot ETFs in the United States. This surge in investment reflects growing institutional interest and confidence in Bitcoin as a viable asset class. However, the market sentiment experienced a significant shift following indications of persistent inflation in the U.S. economy. Such inflationary pressures could result in fewer interest rate cuts by the Federal Reserve in the coming year, which has raised concerns among investors. The Fed's tight monetary policy has notably constrained global liquidity, creating hurdles for Bitcoin's upward momentum. Furthermore, the hawkish remarks made by Federal Reserve Chair Jerome Powell during the recent FOMC meeting triggered a selloff in risk assets, impacting the broader market landscape. As a result, many altcoins have retraced back to their November price levels, erasing much of the gains accrued during the recent rally.Despite these fluctuations and the challenges posed by macroeconomic factors, Bitcoin continues to trade within a defined upward channel. Our analysis indicates that buyers remain active, particularly around the $100,000 mark, which we believe will serve as a robust support level. This level of support is critical, as it reflects the confidence of investors in Bitcoin's long-term potential, even in the face of short-term volatility.Looking ahead, we maintain an optimistic outlook for Bitcoin's prospects through 2025, although we do anticipate some pullbacks along the way. These pullbacks are a natural part of market dynamics and can provide opportunities for accumulation. We anticipate that the next significant pullback, potentially ranging from 20% to 30%, may occur around the inauguration day on January 20. The correction could be triggered by profit-taking from investors to embrace the political and economic developments that follow Donald Trump's assumption of the administration.Options MarketThe above table is the 25-delta skew on BTC and ETH options.Following the recent widespread selloff in the cryptocurrency market, the options market is currently reflecting a bearish outlook for both Bitcoin (BTC) and Ethereum (ETH) in the near term. This sentiment is particularly evident in the 7-day expired options, which exhibit a negative skew. A negative skew indicates that traders are favouring put options—contracts that give the holder the right to sell an asset at a predetermined price—over call options, which provide the right to buy. This preference for puts suggests that many market participants are hedging against further declines in the prices of BTC and ETH, anticipating potential short-term weakness.However, when we shift our focus to longer-duration options, the landscape begins to change. The skew for BTC options with longer expiration dates remains above zero, signalling a level of market optimism regarding Bitcoin's price trajectory over the next month. This positive skew indicates that traders are still willing to bet on BTC's potential for recovery and growth, despite the recent downturn. In contrast, the sentiment surrounding Ethereum's price appears to be more neutral for the same timeframe, suggesting that traders are less certain about ETH's immediate prospects compared to BTC.When we analyze options with 60-day, 90-day, and 180-day expirations, we observe a consistent positive skew for both BTC and ETH options. This trend serves as a reminder that the bull market is far from over. Traders are increasingly placing bets on the potential for upside in both assets, indicating a belief that the current market conditions may be temporary and that a rebound could be on the horizon. This data strongly supports our analysis that there is significant upside potential heading into 2025. The willingness of traders to engage in longer-term bullish positions suggests growing confidence in the recovery and future appreciation of both Bitcoin and Ethereum. As the market continues to evolve, these insights highlight the importance of monitoring options activity as a barometer for investor sentiment and potential price movements in the cryptocurrency space.Macro at a glance Last Thursday (24-12-12)The European Central Bank has reduced interest rates by 25 basis points to 3.00%, while also softening its previously aggressive stance and indicating that economic growth is likely to be weaker than earlier predictions. In the United States, initial jobless claims rose to 242,000 this week, up from 225,000 the previous week, surpassing the anticipated figure of 221,000. Additionally, the US Producer Price Index (PPI) experienced an unexpected increase of 0.4% in November, exceeding October's 0.3% and analysts' expectations of 0.2%. This stronger-than-expected PPI growth may intensify inflationary pressures in the US economy and potentially limit the number of interest rate cuts by the Federal Reserve in the coming year.On Monday (24-12-16)S&P Global's US Manufacturing PMI is expected to reach 48.3 in December, indicating a persistent contraction in the manufacturing sector. This follows a reading of 49.7 in October, with analysts predicting a December figure of 49.4. Conversely, the S&P Global Services PMI is anticipated to be 58.5 in December, significantly surpassing the analysts' forecast of 55.7.On Tuesday (24-12-17)US retail sales experienced a monthly increase of 0.7% in November, surpassing the anticipated growth of 0.6% and the previous month's increase of 0.5%. However, core retail sales figures indicated a more modest monthly growth of only 0.2%, matching October's performance and falling short of the market's expected 0.4%.In Canada, the annual inflation rate, as indicated by the Consumer Price Index (CPI), fell to 1.9% in November. Furthermore, the Bank of Canada's core CPI saw a monthly decrease of 0.1%, resulting in an annual core CPI inflation rate of 1.6%, down from 1.7% in October. This decline in inflation data suggests that the Bank of Canada made a prudent decision by proactively implementing interest rate cuts and easing its monetary policy.On Wednesday (24-12-18)In November, the UK experienced an increase in its inflation rate, as indicated by the Consumer Price Index (CPI), which rose to 2.6% year-on-year, up from 2.3% in October. Similarly, the Eurozone's CPI also showed a rise in November, reaching a 2.2% annual increase compared to 2.0% in October. The Core CPI remained unchanged from October, holding steady at 2.7%.The Federal Reserve has implemented a 25 basis point reduction in its interest rate, now set at 4.50%. The dot plot indicates that only two additional rate cuts are anticipated in 2025, followed by two more in 2026, which is fewer than what the market had predicted. Fed Chair Powell's hawkish remarks during the press conference, coupled with concerns over persistent inflation linked to Donald Trump’s tariff policies, led to a risk-off sentiment in the market. Consequently, the US stock market closed lower, with the S&P 500 declining by 2.95% and the tech-heavy Nasdaq falling by 3.56%. The S&P 500 VIX surged over 74% to reach 27.62, a level not seen since early August, when the Bank of Japan raised interest rates, triggering a significant market selloff. Bitcoin fell below the critical $100,000 mark, while altcoins experienced even steeper declines.Convert Portal Volume ChangeThe above table shows the volume change on our Convert Portal by zone. Bitcoin experienced a period of sideways trading last week, achieving an unprecedented peak of $108,353 USDT on Tuesday. However, following the FOMC meeting on Wednesday, market sentiment shifted dramatically. The Federal Reserve's hawkish stance regarding future interest rate cuts led to a downturn in the cryptocurrency market, causing Bitcoin's price to fall below the critical $100,000 threshold, while altcoins suffered even greater losses. In the Megadrop market, trading volume surged by 105.8%, primarily driven by the increased activity surrounding BounceBit ($BB), which exhibited significant volatility over the weekend. The Launchpool sector saw a decline of 15.3% in trading volume, largely attributed to a notable decrease in trading activity within the projects in the TON ecosystem.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 updated with the markets!