Crypto Market

BTC and ETH Market Insight

The price of BTC dropped below $40,000 in the past week, and Grayscale is still selling Bitcoin as investors leave the GBTC ETF. Over the last few days, ETH has experienced significant selling pressure, possibly due to conflicting opinions regarding the approval of a spot Ethereum ETF. The SEC has postponed its decision on BlackRock’s Spot ETH ETF. Stablecoins' total market capitalization has slightly increased, and USDT is still maintaining its dominance.

Options Market

The excitement around the BTC ETF cooled down further, pushing realised volatility down back to the 40 vols range. Implied volatilities continued to decrease steadily in BTC after the ETF reset, while ETH experienced a larger decline due to substantial overwriting of upside calls. The volatility spread between ETH and BTC collapsed this week to nearly flat ,making investment into volatility spread appealing again given realised volatility in ETH is still 5 points higher. Skew on BTC was steadily around neutrality whereas weekly skew on ETH rose to 10 vol put premium on the pullback shortly before returning to neutrality.

Altcoins and Blockchain News

• Binance's hot wallet (address starting with 0xb32) collected RON tokens for the first time on January 26th.
• FloorSwap, an NFT platform, successfully raised over 10,000 ETH in its first launchpad project called SkyArk.
• The Starknet ecosystem's derivative trading protocol, ZKX, announced that it will launch its mainnet on January 30th. Users participating in the OG Trade Clans and community activities will have the opportunity to participate in the second phase airdrop.
  LSD protocol Puffer Finance announced on social media that it will open staking for ETH, stETH, USDT, and USDC next week. Users will receive Puffer and EigenLayer token rewards.
• Gamified Bitcoin accelerator 10n8 Little Dragon announced the completion of a $1.5 million financing round, with participation from Centauri Digital Asset Group, Mirai DAO, New Tribe Capital, 3M Capital, and others.
• EigenLayer, the Ethereum re-staking protocol, announced the introduction of three new LST tokens (sfrxETH, mETH, and LsETH) in the EigenLayer re-staking ecosystem. The individual limit of 200,000 ETH for LST tokens will be removed.
• Scene Infrastructure Company, the software development team under the creative collective Friends With Benefits (FWB), completed a $3 million seed funding round, led by a16z crypto.
• IBC infrastructure provider Polymer Labs completed a $23 million Series A funding round, with Blockchain Capital, Maven 11, and Distributed Global leading the round, along with participation from Coinbase Ventures.

Macro

The equity market ended another week with solid gains, with the DJIA and S&P 500 marking their new all time high: the DJIA added +0.6%, the S&P 500 +1.1%, and the NASDAQ +0.1%. The benchmark 10-year U.S. Treasury note yield was slightly changed.