OTC Weekly Trading Insights (06/06/2024)

My Neighbor Alice ($ALICE) gained 72.5% last week, with an 81x volume increase on Convert. The price increase was driven by rising interest from traders. Large-size trades on the order book became more risky due to the volatile price change and a spike in volume. Investors and traders use our Convert and OTC desk for large-size trades to reduce market impact. Trading on Convert not only reduces the trader's intention to other market participants, but it also reduces market risk by securing the price for the entire order in one trade. Linear ($LINA) is a decentralised delta-one asset protocol that can instantly generate synthetic assets with limitless liquidity. The project enables cryptocurrency users to access traditional assets such as commodities, forex, market indices, and other thematic sectors by facilitating the creation of "Liquids" — Linear's synthetic asset tokens. The recent increase in trading demand on LINA was caused by a volatile price change on the LINA price due to large market purchases. In less than two months, Notcoin, a play-to-earn game and token that is integrated as a Telegram Mini App, has attracted over 30 million Telegram users, ushering in a new wave of mainstream cryptocurrency adoption. The large user base and recent hype surrounding GameFi fueled $NOT's price increase. The price of $NOT increased 400% in less than 8 days before falling 20% after some profit-taking.  Overall Market The above chart shows the BTC price movement in the last three months. After falling to $58k due to rising geopolitical tensions, the Bitcoin price recovered and found support in the red area around the $60/61k range. It is currently on an upward trend (the red trend line) and has encountered strong resistance (the green zone).  The first attempt to test the resistance zone in May was led by a 20% increase in Ethereum, which was fueled by the potential approval of ETH spot ETFs. After the SEC approved the 19b-4 applications for ETH ETFs, we saw a "sell the news" reaction in the ETH price, and the BTC price fell in tandem. In early June, BTC attempted another test of the resistance zone, this time with BNB as the primary driver. BNB's price increased by 20% in two days, from $596 to $716, setting a new all-time high. As BNB reached a new all-time high, our team noticed that investors and traders were converting their BNB holdings to BTC for profit. Furthermore, Bitcoin spot ETFs have seen consistent inflows over the last few weeks. Spot Bitcoin ETFs in the United States experienced their second-best-ever joint net inflow day on June 4, totalling $886.6 million.  On the macro level, recent data on the US labour market indicate that the imbalance is continuing to ease. The PCE price index, released last Friday, showed that prices remained stable in April, increasing the likelihood of a rate cut by the Federal Reserve later this year. With strong inflows from traditional finance via ETFs, bullish market rotations within the large market cap coins ($ETH and $BNB), and a less tightening liquidity backdrop, our desk anticipates that the 3-month consolidation of the BTC price will come to an end. Once the BTC price clears the resistance level between $71k and $74k, we expect it to be volatile and quickly reach the $85k level. Options Market The above chart shows the at-the-money implied volatility of BTC options with different tenors in the last two weeks. After the SEC approved 19b-4 applications for ETH spot ETFs two weeks ago, the IVs of BTC options reversed. The front-end IV was trading in the sub-40 range, which we had seen in November/December 2023 and late January/early February 2024. The BTC price has gradually increased over the last two periods, followed by a rally. Historically, front-end BTC IVs have remained in a higher range (50% - 60%) during bull markets. When the front-end IV remains below 50% for an extended period of time, the BTC price is likely to become volatile. That being said if the IVs of the front-end BTC options remain in the current range or even fall lower, we should expect something big to happen soon and prepare for the upcoming volatile move. Macro at a glance  Last Wednesday (24-05-29) The German CPI growth rate was 0.1% in May, lower than the estimated 0.2% and 0.5% in April. The annualized CPI growth rate was 2.4%, up from 2.2% in April. Last Thursday (24-05-30) The US GDP growth rate was 1.3% in the first quarter, lower than the estimated 1.6% and 3.4% growth rates in Q4 2023. The lower-than-expected GDP growth rate indicates a cooling US economy and increases the likelihood of the Federal Reserve cutting interest rates this year. US initial jobless claims were 219k, slightly higher than the estimated 218k. The increase in jobless claims suggests that the imbalance in the US labor market is easing. Last Friday (24-05-31) The Eurozone CPI growth rate was 0.2% in May, down from 0.6% in April. The annualised growth rate of the CPI is 2.6%, which is higher than the expected 2.5%. The market anticipates that the slight increase in CPI in May will not change the ECB's view on its first rate cut at the upcoming June meeting. The US PCE Price Index rose 0.3% in April, with an annualised rate of 2.7%. Both numbers are consistent with market expectations. However, the core PCE price index, excluding food and energy, increased only 0.2% month on month, compared to the expected 0.3%. On Tuesday (24-06-04) US job openings fell from 8.355 million in March to 8.059 million in April, a surprising decrease from the expected 8.370 million figure, indicating that US labour market imbalances continue to ease. On Wednesday (24-06-05) In May, US ADP nonfarm employment increased by 152k, falling short of the estimated 173k and April's 188k, also signalling that the US labour market imbalance is easing. The Bank of Canada announced its first rate cut after 2020 at its June meeting. The Bank of Canada cut its interest rate from 5.00% to 4.75%, making it the first central bank in G7 countries to reduce interest rates.  The US equity market closed with gains, with the S&P 500 index and the Nasdaq index both reaching all-time highs. Nvidia is the primary driver of this rally, as it reached $1,200 and its market capitalization surpassed $3 trillion. Convert Portal Volume Change The above table shows the volume change on our Convert Portal by zone.  This week, our Convert trading volume increased significantly, with the Gaming zone experiencing the greatest percentage increase. Last week, My Neighbor Alice ($ALICE) and Notcoin ($NOT) performed extremely well, with surging volumes. These two tokens accounted for a significant portion of the volume increase in the Gaming zone. Last week, the Launchpool zone saw a 134.0% increase in trading volume on Convert. Notcoin ($NOT) is the main driver of volume growth in this zone. During the same period, the volume in the Monitoring zone increased by 102.4%. JasmyCoin ($JASMY) and Linear ($LINA) are the two main drivers of the high trade demand. 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!