Crypto Macro Market Update – December 26, 2022

Last Week Summary

• Grayscale released letters to investors about possibilities for 2023.
• Paypal working on Metamask integration & its own smart contract for direct payments.
• Gary Gensler warns crypto that the SEC is coming after the FTX fraud.
• Caroline Ellison and Gary wang plead guilty and are cooperating with law enforcement in hopes of lighter sentences.
• SBF gets extradited to the US and is currently free on a 250M bond.
• DeGods announces moving from Solana to the Ethereum NFT ecosystem.
• Bitcoin reached a historical low in volatility last week.

Legacy Markets - VIX

VIX is currently consolidating around 21. With crypto holding relatively stable, while equities (especially tech & TSLA) were dropping quite fast last week, the chances are high that VIX can drop below 21 and stay there - especially now that we see quite a push. As always, another rotation upwards and another run from here (like we’ve seen all year), will create quite the de-risk further, and would probably nail AMZN and AAPL lower.

Legacy Markets - DXY

DXY is still consolidating on the lower end after the sharp selloff we’ve seen in the last quarter of the year. Any sharp move from here will move equities & crypto in the opposite direction. The DXY is still, however, not back to its previous strength after the epic run it saw earlier this year.

BTC Weekly View

Last week, BTC reached a historical low in volatility. As the market has shown time and time again, volatility always contracts before large expansions happen. So it’s quite likely that this week, we’ll get more significant volatility. Seeing how big tech and TSLA are trading, let's keep in mind that DXY and VIX are moving up or down and will be correlated throughout all these markets.

ETH Weekly View

ETH is still sitting on support, with the range also contracting just like BTC. In the next impulse, if it’s upwards, we’d like to see ETH/BTC pick up and take the lead over BTC to finally clear the range (see next slide). If ETH would break under the recent FTX lows ±1065 the probability of breaking the summer lows would increase exponentially. FTX blowup couldn’t push ETH lower than that. So if it breaks, it will most likely correlate to some macro event.

ETH/BTC

ETH/BTC is still unchanged and also trading tight. With most of the price structures nearing completion, and volatility dying out a large expansion is on the horizon - we’d like to see ETH pick up over BTC and for ETH/BTC clear this range to the upside.

TOTAL2 – USD Market Strength

TOTAL2 is consolidating on the lows, which usually isn’t the best thing. The market has shown the last couple of weeks that only a select few alts have some real strength going for them. While all the rest has been bleeding and can’t handle even the slightest bit of volatility on BTC. As trading confidence shook the market, the only way strength will return to more alts will be if BTC & ETH can make a definitive push upwards.

TOTAL2BTC - BTC Market Strength

TOTAL2/BTC has been losing steam with alts, and therefore losing its strength in general. As mentioned in the previous slide this correction on TOTAL2/BTC will likely keep going till BTC and ETH have pushed to more stable levels and consolidate higher.

Summary

• The US equities market closed on Monday.
• Volatility is likely to pick up soon after crypto had a historically low volume week.
• Quarterly futures expiring this week (30DEC).

DISCLAIMER:

The information in this report is for information purposes only and is not to be construed as investment or financial advice. All information contained herein is not a solicitation or recommendation to buy or sell any digital assets or other financial products.