Market Update - 1-29-25

Hello my tasty friends, I hope you're all having a good week.

Please find our new market update and data dashboards below.

Bitcoin Market Dominance. Bitcoin has shown some resilience in the face of cross-asset volatility to start the week. BTC dominance is back at a 3-year high, trading near 60% as everything else gets repriced, especially the heavily crowded tech/AI trade, post the China DeepSeek announcement. See NVDA down about 10% over the past week.

There will come a time to rotate from BTC to alts on a relative value basis, but no signal of that now.

Implied Volatility Contraction. Post inauguration, and post digital asset executive order, implied volatility has declined as we'd naturally expect. The unknown is known, to some extent. With lower volatility comes smaller estimated weekly ranges, but don't let this lull you to sleep.

Both bitcoin and ETH IV ranks are registering in the 30s on a three-month window, while BTC's 1-year IV Rank is at 38.

Fed on deck. We don't expect any fireworks out of the FOMC announcement this afternoon as the market is pricing in a 99.5% chance of no change in rates.

We should note the strengthening positive correlations between bitcoin's price performance and other areas of traditional markets though.

The economy is showing signs of positive growth and inflation, which has historically been supportive of BTC, but it doesn't make it immune to bouts of short-term volatility. I see these as opportunities to add back to my position within the bullish trend.

Heading into the FOMC interest rate decision, the market is pricing in a weekly BTC move of around $8,000.

The sell-off in stocks spilled into crypto, with most tokens still down 5% or more w/w.

The intermediate and long-term bullish trends remain in place, while bitcoin continues to dominate.

Volatility has contracted with IV Ranks nearing recent lows and realized vol also falling. BTC volatility premium is 36%, which isn't much juice to squeeze.

The low-end of the ETH range is now back under $3k.

There's currently a semi-strong positive correlation between bitcoin and many areas of traditional financial markets.

More volatility in the short-term and/or a VIX above 20 could quickly send BTC back towards the low end of the weekly range, towards the mid 90s.

Relative performance (weekly):

ETH/BTC -3%
SOL/BTC -5%
SOL/ETH -2.5%

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