Weekly Crypto Market Wrap: 21st October 2024

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This is not financial advice. As always, do your own research.

Week in Review

• Over 94% of the bitcoin circulating supply is now sitting in profit, historical data tell us profit-taking should start to build up.
• Since Oct. 14, bitcoin ETFs have seen approximately $1.9 billion (21,450 BTC) in net inflows, indicating significant positive market sentiment. 
• Open interest on CME bitcoin futures reaches all-time high, driven by active and direct participants signalling bullishness. 
• The total amount of crypto-collateralized loans within 5% of their liquidation price is at its two-year high on Avalanche’s leading decentralised lending platform Benq
• Singapore-based DBS Bank has announced a new suite of tokenized banking services and smart contract-enabled capabilities for institutional clients.
• Harris leads the polls by a tight margin against Trump, but betting odds are showing a different story – pricing in a Trump win.

Technicals & Macro

BTCUSD

Key levels
53,000 / 55,000 / 66,000 / 72,000 / 73,794 (ATH!)

BTCUSD is looking incredibly strong right now on the technical front. We’ve broken the descending trendline from June, and are heading up towards the key 70 & 72K zone that was previously rejected as a double top from earlier this year. In many ways we are in a different market dynamic right now – easing interest rates from the Fed, a very tight US election that is too close to call, and a gold market that is on an absolute tear. In addition to the geo and macro environment, we have Microstrategy making plans to become a Bitcoin Bank, enormous BTC ETF inflows which have now topped US $20B, an SEC approval allowing the listing and trading of options against Blackrock’s ETF, and a market that is seeing an increasing appetite for scarce assets. We believe that institutionalisation is the short-term catalyst that gets us above all-time highs – combined with easing monetary policy into 2025 for follow through. 

Do we get above highs prior to the end of the year? We think so – the trade is really a relative value trade against gold. Gold sits at an ~$18T market cap, while Bitcoin is currently sitting at ~$1.4T. The question should be – will BTC overtake gold’s market cap at some point? We are (speculatively) a resounding yes. Clearing 70,000 should see 72,000 fairly quickly, with some chop to get through prior to the highs. 

The futures basis curve floating higher is indicative of a growing bullish sentiment, looking for some leverage.

Basis looking strong

Source: VelocData

Downside risks are centred around any wild stuff prior to the election, such as assassination attempts, or the crisis in the middle-east growing and spilling further into US political dialogue. An outlier risk is also the JPY carry trade unwind which seems to have softened based on recent Japanese data.

Despite this, gold is trading like a meme coin..

Source: TradingView

ETHUSD

Source: TradingView

Key levels
2,100 / 2,800 / 3,600 / 4,000

ETH has found its base and rallying alongside other risk assets, and continues to overtake BTC’s return profile on a 7-day and 1-day basis.

DXY rebound starts to find some resistance

Source: TradingView

All in all – going to be a big week on the crypto front! Keep a keen eye on moves, and watch the leverage!

Jon de Wet, CIO 

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Spot Desk

The Australian Dollar strengthened after the People’s Bank of China (PBoC) announced rate cuts, reducing the 1- and 5-year Loan Prime Rates to 3.10% and 3.60%, respectively. This appreciation was further supported by positive domestic labour data, which lowered expectations for a rate cut by the Reserve Bank of Australia (RBA) this year. The PBoC’s lower borrowing costs are expected to boost China’s domestic economic activity, potentially increasing demand for Australian exports.

Meanwhile, client sentiment on the desk leaned heavily toward off-ramping, with many seeing value in purchasing AUD during the recent sell-off. Major assets like Bitcoin, Ether, and Solana continued to be in demand, maintaining positive momentum from last week, while altcoin trading was minimal, though AERO attracted some interest.

GOAT, an AI-designed meme coin, made a significant buzz over the weekend, quickly surpassing a market cap of $300 million. SPX6900, a US stock market inspired meme also gained attention, while APE saw a rally following the launch of bridges to the APE chain, introducing features that enable native yield earning.

The spot desk is well-equipped to provide competitive rates for major currencies, altcoins, and stablecoin pairs against key fiat currencies, with T+0 settlement options available.

Arpit Beri, Operations Analyst

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Derivatives Desk

WHOLESALE INVESTORS ONLY

Basis rates on BTC and ETH are both at 2-month highs:

• BTC’s 90-day annualised basis rate is up 140 bps to (10.8%).
• ETH’s is up 120 bps (8.9%).

Over the past month, we’ve been tracking the forward volatility embedded in the U.S. election options expiring on November 8th (see chart):

The spike in forward volatility for this expiry is down roughly 7 vol points since last week, while the rest of the curve has remained relatively flat. This means that traders who bought the calendar spread last week would have performed well.

We still see more juice in this trade, considering the magnitude of the forward volatility spike and the tailwinds surrounding BTC and ETH as we approach year-end.

Berkeley Cox, Derivatives Analyst

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What to Watch

• Bank of England Governor Andrew Bailey to speak at Bloomberg Regulatory Forum in New York on Wednesday; volatility is often experienced during his speeches as traders attempt to decipher interest rate clues.
• Bank of Canada releases Monetary Policy Report, Rate Statement and Overnight Rate data on Thursday.
• Bank of Canada to hold a press conference on Thursday.
• US Flash Manufacturing and Services PMI figures released on Friday.
• CAD Core Retail Sales m/m and Retail Sales m/m figures reported on Friday.

* Index used:

Bitcoin	Ethereum	Gold	Equities	High Yield Corporate Bonds	Commodities	Treasury Yields
BTC	ETH	PAXG	S&P 500, ASX 200, VT	HYG	SPGSCI	U.S. 10Y

Contact Us

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