CryptoBits: Crypto Unfazed by Choppy Dollar; but Long Wait for CPI

Written by
Adam Farthing


February 6, 2023

Key Takeaways

  • Majors remain in the same ranges, some alts threatening key resistances above
  • BTC and ETH both made marginal highs post-Fed, slightly weaker since NFP
  • Futures basis little changed; persistent demand to borrow USD/stables OTC
  • Vol surfaces undecided between rangy spot and downside concerns
  • With USD strong elsewhere, market may test support levels at $21,800 and $1,500

Looking back

Ultimately, it has been another sideways week with the Fed offering hope to bulls by noting that the disinflationary process was well underway, but then a bumper US payrolls report forced markets to question the plausibility of only ‘one more rate hike’ this cycle.  Yet while currency markets and precious metals reacted hard to the payrolls print, crypto has remained relatively immune so far.  

BTC remained largely within the same $22.5-$24k trading range, though it did make marginal fresh recent highs to around $24.25k immediately post-Fed.  ETH also made a marginal fresh recent high to around $1,715, and despite failing to hold those levels, has made back some recent underperformance against BTC, with the cross rallying back from 0.068 to the 0.071/72 area.  Elsewhere, SHIB managed to rally 25% over the weekend; LTC did break $100 briefly, while MATIC and DOG are both threatening important resistance levels at $1.30 and $0.10 respectively.

Strong buying flow for SOL, XRP, ADA, XTZ, XLM, and UNI; strong sell flow for DOGE, MATIC, and DOT

Futures markets remained stable, with March basis remaining around +4% and +3% respectively for BTC and ETH on major exchanges.  In OTC lend/borrow markets, while we have been seeing interest to borrow USD/stables for a few weeks now, we feel that the interest may have firmed somewhat in the last week.  

Option markets have been toying with two themes: at times we have seen vol selling off and curves steepening, and at other times, we have seen risk reversals going better bid for puts in the front end, especially for ETH where underperformance into the Shanghai upgrade has become somewhat of a consensus call: March BTC riskies at 0.5vol for calls, while March ETH riskies are very different at 3.2vol for puts.

Looking ahead

With little data out this week, the market will have one eye on currencies and metals all week, because next week we will have Jan CPI data coming out, and that data will have a huge impact on the outlook for US rates.

Risk bulls will definitely be a little more cautious after Friday’s payrolls data, so short-term supports at $21,800 and $1,500 would be the areas to focus on this week.

Buy/Sell Ratio by Category

Saw better buying from exchanges and banks again

Buy/Sell Ratio by Region

Better buying from APAC and EMEA, and better selling from the Americas again

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