Market
BTC is “still” in an upward trend as in the previous analysis and finally reached 53k. But we have arrived at a very important level. As I often mentioned on Twitter, I think 53k is the key point. People need time to refresh their valuation of their assets at these critical levels. It is difficult to predict with 100% accuracy what will happen to BTC here. At this point, it is better to consider the possibility of downside as well, rather than only thinking about the upside. One thing is clear, I’m not saying I’m bearish.
It will depend on how the candle is formed, but if BTC breaks above 53k, there is a high probability that positive movement will continue. The target is 57k as shown on the chart. If BTC goes lower from here and the overall market is bearish, it would be better to give importance to the 48k-45k-42k levels. Plan your own buying strategy because anything can happen.
Anyway, I am optimistic about 2024, so the reasonable advice I can give you is to buy on the downside/fear and do nothing on the upside. “Holding” a position requires a lot of confidence in your own view. Additionally, it is important for derivatives traders to secure profits and control excessive greed. It is necessary to understand that even in an upward trend, a 20-30% drop is inevitable and will happen.
Accumulation
I’m not sure if this is happening due to the impact on spot ETFs, but BTC is currently continuing to accumulate. Looking at the chart below, this appears to be a phenomenon of vertical accumulation. I’m sharing this because it’s an interesting phenomenon at the moment.
Source: https://x.com/ki_young_ju/status/1760114830206554495?s=20
ETF Flow
There is nothing special about ETF flows. GBTC outflows are continuing and so are the remaining ETF inflows. At some point, this flow will slow down, but for now, capital continues to flow into the market. Among them, IBIT is still in the lead.
There is a debate as to whether the current ETF inflow is Retail or not, but I think it is not Retail. The amount of capital currently flowing in is not small, and we believe that the majority of retailers will not use ETFs. This is because most people are already using exchanges with good accessibility, so there is no reason to purchase BTC through ETFs.
Options Market
IV remains elevated. There was continued call option buying, especially with ETH showing a strong rise to $3,000, which pushed IV up to 64 points. Overall, it was a good week for ETH, as ETH price changes were large.
Although demand for call options is still high, the current VRP is close to about 10%, making it a bit burdensome to purchase options aggressively. Since spot price changes are decreasing and the market is waiting for another catalyst, buyers are unlikely to be as aggressive as before. If the price action doesn’t get any bigger from here, there is a possibility that vol may have some mean reversion.
A very active two weeks have come to an end and this Friday (2/23) is the monthly options expiration date. It expires at 08:00 UTC, representing approximately 28% of all options open interest. Although I repeat the same thing every time, you don’t need to attach too much significance to the crypto options market expiration date. This is because the current options market size is so small that the impact on the spot market is not as large as the stock market.
BTC GEX is in Negative Gamma area from 50-54k. This appears to be the effect of buying call options during the spot price rise. The hedging effect of market makers can increase price volatility, but this can affect both upsides and downsides simultaneously.
Event
Currently, NVDA is the most popular AI sector leader and is leading the stock market overall. Therefore, the most important event this week will be the NVDA earnings to be announced on February 21st. Since the existing guidance and growth were very good, I am curious to see whether the company will exceed market expectations again. If earnings are announced that are disappointing compared to market expectations, there is a possibility that the AI sector and the overall market may enter a correction phase. Yesterday’s market situation appears to be reducing position risks ahead of the NVDA earnings announcement.
There remains controversy over CRE exposure, but we will address it again if it becomes an issue. Obviously, it’s common to add such bearish news to market declines. My opinion is that it will be just one event. Even if a CRE event occurs, I don’t think it will be enough to change the current upward trend into a downward trend.
Have a great week everyone!
NFA DYOR 🙂
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