Top Interest of the Week
Stella ($ALPHA) is a protocol that employs leveraged strategies without borrowing costs. Its innovative "Pay-As-You-Earn" model enables borrowers to leverage supported DeFi strategies without incurring any borrowing fees, while lenders benefit from the real yield generated from borrowers, reflected in the lending annual percentage yield (APY). This advancement meets the demand for enhanced leverage systems, which are crucial for fostering greater adoption of decentralized exchanges and money markets—integral elements of the DeFi landscape. The "Pay-As-You-Earn" model has attracted significant market interest in this protocol, leading to increased demand for its native token, $ALPHA.
ApeCoin ($APE) saw substantial market interest over the weekend, with its price surging from $0.71 to $1.75 within four days, marking a remarkable 145% increase. This impressive rise was attributed to the introduction of ApeChain, a Layer-3 blockchain built on Arbitrum Orbit. However, the price subsequently plummeted to $1.13 in just two days following the transfer of 5 million $APE from the ApeCoin treasury wallet to a market maker. This price volatility has prompted traders to leverage our Convert platform to execute large trades.
Overall Market
The above chart shows the BTC price movement in the 8-hour chart.
Our earlier analysis indicated that our team recognized the upward potential of Bitcoin (BTC) as it established support at the $59,000 mark. The recent surge enabled BTC to reclaim the $69,000 level, which has been a significant resistance point over the past eight months. However, this resistance proved to be robust, causing the BTC price to retreat to $66,000 for support. The chart above illustrates that BTC has found support along the upper boundary of the blue channel. If this upper trend line remains intact, we can anticipate another leg up for BTC, potentially reaching $74,000 and achieving a new all-time high before the year ends.
Moreover, with the US presidential election approaching in two weeks, market sentiment appears optimistic for BTC and the broader market, especially with former President Donald Trump in the lead and his prominent supporter, Elon Musk, voicing favourable opinions on cryptocurrency.
Last week, the European Central Bank (ECB) reduced its interest rate by 25 basis points. Today, the Bank of Canada (BoC) followed suit with a 50 basis point cut. Both central banks indicated that inflation within their regions was manageable, prioritising the enhancement of their economies. In contrast, officials from the Federal Reserve presented a different perspective regarding the interest rate cut. After the Federal Reserve's first 50 basis point rate cut in September, economic indicators showed ongoing expansion in the US economy, alongside a strong labour market. The increase in retail sales and the resilience of the labour market offer the Federal Reserve a chance to reassess economic conditions and consider future rate-cut decisions more carefully.
As US Treasury yields increased following the September rate cut and with the strengthening of the US dollar, risk assets such as US equities and cryptocurrencies face significant challenges. Despite a steady influx of cash into Bitcoin Spot ETFs over the past few days, the price of BTC has decreased and tested the upper limit of the previously identified blue channel. Should the Federal Reserve opt to maintain its current rate in the upcoming months, it could negatively impact the price of BTC and the overall cryptocurrency market could face some headwinds.
Our team maintains a positive outlook on BTC, anticipating that the next upward movement will occur in the near future. We are optimistic that BTC will reach a new all-time high by the end of the year.
Options Market
The above chart is the 25-delta skew on BTC options.
Our team maintains an optimistic outlook on Bitcoin's price following the support level of $59,000. BTC options with intermediate expirations exhibit a positive skew, reflecting a bullish sentiment regarding Bitcoin's price movements in the near term.
Bitcoin's price has risen from the $59,000 mark, reaching over $69,000 on Monday. During this time, the 25-delta skew for the 7-day expiry BTC options shifted from -5 into positive territory, peaking above +5.
Although the spot price of Bitcoin has decreased from $69,500 to $65,260 over the past three days, the skew for the 7-day expiry BTC options remains above zero. This indicates that options traders are exercising caution regarding Bitcoin's price movements, as there is little difference in premiums between call and put options. This situation suggests that Bitcoin is currently at a crucial support level. Should Bitcoin continue to decline and fall below the $66,000 support, we anticipate that the 25-delta skew for the 7-day expiry options will turn negative, indicating that traders would be willing to pay higher premiums for downside protection rather than for potential upside.
Nonetheless, the positive skew observed in intermediate to long-term options suggests that our team believes the market remains optimistic about Bitcoin's performance over the next one to two months.
Macro at a glance
Last Thursday (24-10-17)
Eurozone consumer price index (CPI) fell from 2.2% in August to 1.7% in September, below the anticipated 1.8%. The monthly CPI change reflects a decrease of 0.1% in September, contrasting with a 0.1% increase in August.
In its October meeting, the European Central Bank (ECB) announced a 25 basis point reduction in interest rates, bringing the deposit facility rate down to 3.25%, aligning with market expectations.
In the United States, retail sales experienced a monthly increase of 0.4% in September, surpassing the projected growth of 0.3%. Additionally, core retail sales rose by 0.5% for the month, exceeding the estimated growth of 0.1%.
On Tuesday (24-10-22)
The yield on the US 10-year Treasury rose above 4.2%, marking its highest point since last July. This increase comes as Federal Reserve officials advised a careful approach regarding interest rate reductions. Minneapolis Fed President Neel Kashkari indicated that the long-term outlook for interest rates may be higher than historical levels, while Dallas Fed President Lorie Logan emphasised the need for a patient strategy in reducing rates. Additionally, Kansas City Fed President Jeff Schmid remarked on Monday that a "cautious and deliberate" method for rate cuts is warranted following the Fed's half-percentage-point reduction in September.
Meanwhile, the US dollar strengthened from 100.2 at the end of September to 104.1 on Tuesday, driven by robust economic data in the US. This strong dollar, coupled with rising US Treasury rates, has resulted in some headwinds on risk asset pricing with both US equities and cryptocurrencies struggling to rally.
On Wednesday (24-10-23)
In its October meeting, the Bank of Canada revealed a 50 basis point reduction in its interest rate, lowering the benchmark from 4.25% to 3.75%. This decision aligns with market predictions. Tiff Macklem, the governor of the Bank of Canada, noted that inflation in Canada has returned to the target rate of two per cent, and the central bank aims to maintain it near this level. The central bank's current focus is shifting to bolstering the Canadian labour market and supporting the overall economy.
Convert Portal Volume Change
The above table shows the volume change on our Convert Portal by zone.
BTC is currently trading below the critical resistance level of $69,000, while numerous altcoins have shown stronger performance than the broader market. As highlighted in the Top Interest of the Week section, meme coins and NFT-related assets garnered significant attention last week.
In the NFT sector, trading activity experienced a notable surge, with trading volume rising by 158%. This impressive increase was largely attributed to the success of ApeCoin ($APE). The growing enthusiasm for ApeChain, a layer-3 chain on Arbitrum Orbit, reflects heightened interest from traders and investors in this area.
The Metaverse sector also witnessed a significant rise in trading volume, which grew by 38.8%. This increase was primarily fueled by Smooth Love Potion ($SLP), the reward token earned by Axie Infinity players through battle or adventure mode.
Furthermore, the Storage sector saw a considerable boost in trading volume, climbing by 13.6%, with Filecoin ($FIL) being the key contributor to this uptick in activity.
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.
