FPG’s Weekly Perspective on Crypto Markets: Week of January 17th, 2023
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Market Summary
In what was one of the most surprising moves in recent months, the global crypto market gained near 20% over the weekend, once again revisiting the $1T total crypto market cap. Signs of such a move were highlighted in the past few weeks as funding rates across the board became unsustainably negative, and chances of a short squeeze increased. Some of the larger movers of the weekend include $FXS, $SOL, $GALA and $APE.
Last week’s CPI numbers came in largely within consensus. December’s CPI also represented the first month on month decline in the past year, lending hope to the market’s expectation of a FED pause getting closer. For the bulls calling for a continuation of this move, the possibility of yet another short squeeze is definitely still there, however do not rule out a retracement within the coming week as markets are generally overbought on the shorter time frame.
Notable Events and News
Tuesday 17 January
US — Empire state Manufacturing Index
JPY — BOJ Policy statement
Wednesday 18 January
US- PPI
US- Retail sales
CNY- CPI and PPI
Thursday 19 January
US- Unemployment Claims
US- US Crude storage
Friday 20 January
US- Home sales
World Economic Forum Annual meeting
Notable Events and News:
3AC founders Zhu and Davies pitch to raise $25 million for new crypto exchange
Su Zhu and Kyle Davies, the founders of collapsed crypto hedge fund Three Arrows Capital (3AC), are hoping to raise $25 million to start a new crypto exchange called GTX that intends to focus on trading claims for the recent bankruptcies of firms such as FTX, Genesis, Celsius, and Voyager.
Crypto Fraud Victims Receive Over $17 Million in Restitution from BitConnect Scheme
A federal district court in San Diego ordered today that over $17 million in restitution be distributed to approximately 800 victims from over 40 different countries due to their investment losses in BitConnect, a massive cryptocurrency investment scheme, which defrauded thousands of investors worldwide.
Bitcoin CME Futures Draw Premium for the First Time Since FTX’s Collapse
The three-month bitcoin (BTC) futures listed on the Chicago Mercantile Exchange (CME), widely considered a proxy for institutional activity, are drawing a premium over the the cryptocurrency’s going spot market price for the first time since FTX went bust. This happened just a few days before the crypto market’s recent violent upmove.
Market Insights
Market Technicals and Blockchain Analysis
With the recent rally and BTC back at levels not seen since before FTX’s collapse, it seems like the market has placed most of its fear behind, with the Crypto Fear and Greed Indicator showing a reading of 51, a marked change just from last week’s reading of 26.
BTC funding rates have started to turn positive once again, suggesting that bullish sentiment is gaining the upper hand. However do take caution if rates become overly positive and ripe for a squeeze downwards to shake out the late longs
It could be worth keeping a tab on BTC open interest levels, which compared to last week, increased from around $3.7b to $6.1b as of 17th January, coinciding with the spike in price. The jump in open interest could be the result of sophisticated investors using derivatives to speculate. A further increase in BTC options open interest together with BTC price could be an indicator of heightened volatility to come in the markets, as any retracement could be sharp.
It is also interesting to note that ETH has once again turned deflationary, which adds another catalyst for positive price movements. All eyes are currently on the progress of the much-anticipated Shanghai Upgrade, slated in March 2023. The Shanghai upgrade will finally allow staked-ETH to be withdrawn, which was a major point of concern for investors.
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About Floating Point Group:
Floating Point Group is a crypto prime brokerage platform and agency trading desk for asset managers that removes the barriers and complications to access liquidity across a broad set of markets in order to deploy advanced cryptocurrency-centric strategies at scale. The company carries insurance for custodied cryptocurrencies and is regulated in the U.S.; FPG has also secured VASP registration in the Cayman Islands.
Floating Point Group is backed by Tribe Capital, Coinbase Ventures, Anthony Scaramucci, FAST by GettyLab, Borderless Capital, CapitalX, Formulate Ventures, BoxOne Ventures, Seabury Global Markets, AngelList’s Naval Ravikant, and a host of angel and institutional investors.
For more information, visit floating.group.
Disclaimer:
This communication should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any asset in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change.
