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The past week in the cryptocurrency market was marked by volatility, particularly in Bitcoin (BTC) and Ethereum (ETH). This article provides a comprehensive recap of the key developments and insights from the week of September 2nd to September 9th, 2024.

Key Indicators

The BTC/USD pair experienced a decline of 4.1%, dropping from $57,400 to $55,080. Similarly, the ETH/USD pair saw a 4.9% decrease, moving from $2,440 to $2,320. In terms of volatility, the December (year-end) ATM volatility for BTC/USD increased by 1.6 v, rising from 60.8 to 62.4. The 25-day risk reversal volatility for December also saw a slight increase of 0.2 v, moving from 2.3 to 2.5.

Spot Market Technical Indicators

The spot price of Bitcoin continued to decline, challenging the $53.6k support level. Although it briefly broke below this level, it subsequently recovered. This suggests that the market is rejecting further declines and is likely to build a bottom before resuming its upward trend. The market appears to be testing the lower end of the key price range, with a potential break above the $58-60k area leading to increased volatility.

Market Events

Several significant events influenced the cryptocurrency market during the week:

  • Rektember Arrival: The arrival of Rektember brought a rise in implied volatility, particularly in the cryptocurrency market.
  • Cross-market Risk Aversion: Cryptocurrency prices struggled to gain traction due to cross-market risk aversion. BTC/USD challenged the $53-65k price range’s lower end, finding some support. ETH/USD also tested a local low of $2,150 before experiencing a brief reprieve.
  • U.S. Presidential Election: The U.S. presidential election remained closely contested, with betting odds near 50-50. The upcoming presidential debate on September 10th in Philadelphia garnered significant attention.
  • FOMC Meeting Expectations: The market was divided on the expected decrease in the FOMC meeting, with some expecting a 25 bp or 50 bp decrease. The cryptocurrency market’s reaction to this remained muted, primarily influenced by U.S. stock market and VIX price movements.

ATM Implied Volatility

The actual volatility remained relatively calm at 40% on a high-frequency and fixed-term basis. However, with increased risk aversion and upcoming significant events, the front-end implied volatility gradually rose to 50%, while the far-end implied volatility climbed further due to election-related uncertainty.

Skew/Convexity

The market’s performance in terms of price skew and convexity remained relatively stable, with a focus on local option demand related to upcoming events. While the short-term skew saw a sharp decline due to 52-54k price range bearish option demand, this change did not affect the long-term skew. The market continues to focus on potential upside tail risks, particularly as the Federal Reserve enters a rate-cutting cycle and former President Trump remains a slight favorite in the election.

Conclusion

The week of September 2nd to September 9th, 2024, was marked by volatility in the cryptocurrency market, with Bitcoin and Ethereum experiencing significant price movements. Key events such as Rektember, the U.S. presidential election, and the FOMC meeting influenced market sentiment. As the market moves forward, investors will continue to monitor these events and their potential impact on the cryptocurrency market.


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