Crypto Market Analytics 11th January 2023

BTC and ETH TL;DR

• Bitcoin & Ethereum are up 4.40% and 10.32%, respectively, over the past fortnight.
• Greythorn views that Bitcoin will range between $17,000 and $18,000 over the upcoming week based on our option flow model.

Bitcoin price has steadily been increasing since the beginning of 2023, partially due to the strong economic reports by the end of 2022 and falling inflation expectations in the US. Opening at a price of $17,124, Bitcoin continues its recent uptrend by trading around $17,200.

Increased volatility is expected at a series of price levels that have negative Net GEX, namely the interval between $11,000 and $15,000, $16,000, $16,500 and $20,000.

If the price decreases, $17,000 is the first significant and strong support level, followed by $15,500 as a next level support. A further drop in value past this last support would accelerate price moves to the downside. Alternatively as indicated in the Net GEX chart, an increase in the price for Bitcoin will be met with resistances zones at the $17,450 and $19,000 levels. Finally, the $21,000 and $22,000 price levels indicated in the previous figure could be deciphered as potential resistance levels should Bitcoin appreciate past $19,000 in the short-term.

The value of overall Net GEX remains to be positive, with its value doubling more than it was a fortnight ago. An indicative sign of a more forward-looking stable market for the upcoming week. The graph above can also serve as a visual aid for this demand-supply equation, whereby liquidity provision inflows are larger than its liquidity withdrawal outflows, at $17,000 and $18,000 respectively.

Changing scope into traditional markets, crude oil inventories, CPI data and Initial Jobless Claims of the US will be released on Thursday and Friday this week along with the UK GDP report that follows. These significant macroeconomic indicators can bring more uncertainties to the Bitcoin market by influencing the market sentiment and increasing market volatility in the interim. Naturally the precedence of volatility dictates the prime trend which follows, hence a trading strategy based on these limits requires one to also consider the macro and idiosyncratic risks of associated assets invested.

Greythorn believes that Bitcoin will range between $17,000 and $18,000 over the upcoming week based on our option flow model.

For an introduction to Greythorn Option Flow Model, please refer to our newsletter from 8th June 2022. https://greythorn.substack.com/p/greythorn-asset-management-newsletter

The information contained within this newsletter is purely our opinion and should not be considered by readers to constitute any form of financial or investment advice. We encourage readers to conduct their own research into any financial product that they are interested in and Greythorn will not incur any liability for potential losses.

A summary of the most relevant market insights for the fortnight to keep investors in the loop.

Highlights of the recent US economic reports

• The ISM Non-Manufacturing Index for December fell sharply to 49.6 to 56.5 previously. It was the first time the index dipped below 50 since May 2020, which indicates economic contraction.
• Although the payrolls rose by 223,000 versus forecasts for 200,000, it was the lowest number of jobs added since April 2021. The unemployment rate fell to 3.5%, lower than the anticipated 3.7%, while the YoY wage growth was 4.6%, softer than forecasts for 5.0%.
• The Fed lifted its benchmark Fed Funds rate just 50 bps as opposed to the previous 75 bps move (4.25% -4.5%) to relieve the influence of aggressive rate hikes through most of 2022. The unemployment rate fell to 3.5%, lower than the anticipated 3.7%.

DeGods & Y00ts‘s migration

Solana’s top NFT projects, DeGods and Y00ts, are to migrate chains. DeGods will go to Ethereum, while its sister project, Y00ts, will move to Polygon with support from the layer 2's partnership fund. Polygon paid both of the projects $3 millions in total in the form of a non-equity grant.

3Comma API leakage

An anonymous Twitter user leaked 100,000 3Commas API keys on Dec. 29th connected to the crypto trading service, after 3Commas repeatedly told users that they had been “phished” after widespread hacks. The FBI has started the investigation.

Crypto tax break for foreigners in the UK

The UK enforces crypto tax breaks for foreigners using local brokers starting 2023. The measures now in effect are part of the government's plans to turn the country into a crypto hub.