Yesterday (January 18), Federal Reserve Bank of Atlanta President Raphael Bostic made a statement to the market, expressing that if inflation progress slows, it would be better to maintain higher interest rates for a longer period. However, if the inflation rate drops faster, the Fed might consider an earlier rate cut. Following this, the U.S. announced that the number of initial jobless claims for the week was 187,000 (lower than the expected 207,000), marking a new low since the end of September last year. This highlights the still robust state of the labor market and once again dampened market expectations for a Fed rate cut. U.S. Treasury yields rose in response, with the two-year and ten-year yields currently at 4.346% and 4.150%, respectively. The three major U.S. stock indices opened and closed higher, with the Dow Jones, S&P, and NASDAQ rising by 0.54%, 0.88%, and 1.35%, respectively.

Source: SignalPlus, Economic Calendar

In digital currency, after nearly a week of sideways trading, BTC experienced a short-term drop of about 5% yesterday. It briefly challenged the $41,000 mark and found support, marking a new low since the approval of the ETF. The market is closely monitoring the capital flows related to the ETF. Many analysts attribute the recent downturn of BTC to the selling pressure from Grayscale BTC. JPMorgan pointed out the importance of liquidity and market depth, noting that if GBTC loses its liquidity advantage, there could be an exit of more capital, amounting to between $5 billion to $10 billion. They also mentioned that as institutional investors gradually exit GBTC, “Bitcoin wallets from retail investors have shrunk in recent days.” It seems they are shifting from exchanges to cheaper spot BTC ETFs.

Source: Binance & TradingView

In the options market, over the past 24 hours, the distant IV for both BTC and ETH has again decreased by about 2% and 4%, respectively. BTC’s overall level has almost reached the lowest point of the past three months. Meanwhile, in trading circles, several Short Strangles of bearish volatility for ETH were observed for January and the end of June. However, the situation was opposite for BTC, where traders chose to buy low at 23 Feb 44000 Straddle, a bullish volatility position, near the lowest point of the term surface for the past three months. Additionally, trading at the end of January was most active, with a clear market tendency for buying puts and selling calls, leading to a 25-day dRR downward move of about 2% to the low point of the Vol Skew curve.

Source: Deribit (As of 18 JAN 08: 00 UTC)
Source: SignalPlus
Source: SignalPlus
Source: SignalPlus, At the end of January, BTC’s 25-day Delta Risk Reversal decreased by 2% to the low point of the Volatility Skew curve.
Source: Deribit Block Trade
Source: Deribit Block Trade

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