Logotipo da Coinbase

Weekly: Bitcoin Momentum

Bitcoin’s positive idiosyncratic story in the face of a deteriorating macro trading environment

October 27, 2023

Default Article Image

Key takeaways

  • Bitcoin moved 4 standard deviations higher in the last week compared to a 2.5 to 3 standard deviation move lower for US stocks in a move largely driven by speculation around spot bitcoin ETF approvals.
  • Bitcoin has been outperforming the rest of the digital asset class, reflected in the new yearly lows of the ETH/BTC cross.

Written by

  • David Duong, CFA - Head of Institutional Research
  • David Han, Institutional Research Analyst

Market View

The size and speed of the bitcoin rally on October 16 (following an erroneous CoinTelegraph tweet) created the setup for further bitcoin strength this week, as market participants speculated on the extent to which spot bitcoin ETF approvals have (or more accurately, have not) been fully priced in. To put this into context, bitcoin moved 4.3 standard deviations higher relative to the previous three months, whereas US stocks moved 2.5 to 3.0 standard deviations lower this week. See chart 1.

That massive divergence partly reflects a deteriorating macro trading environment juxtaposed against bitcoin’s positive idiosyncratic story. Nevertheless, we believe ETF speculation was still the catalyst for the latest bitcoin appreciation, after the iShares Bitcoin Trust ETF ticker (IBTC) was spotted on the Depository Trust & Clearing Corp.’s (DTCC) website. Note that not only does appearing on the DTCC website have no bearing on an ETF’s approval, but IBTC had actually been on the DTCC website since August.

Screenshot 2023-10-26 at 6.00.54 PM

While this may have been the trigger, the net short gamma positioning of option market makers likely exacerbated the upside move. That is, leading up to October 22-23, a significant number of gamma sellers parked positions near $32,000 on bitcoin, making it an important technical level. When the BTC/USD price broke above this, market makers were forced to buy bitcoin to remain delta-neutral or risk increasing their exposure, reinforcing the move higher. Still, we think bitcoin’s ability to sustain upside despite some reverting catalysts is supporting investor confidence.

Separately, ETH market makers have been long gamma, which coupled with the market’s focus on spot bitcoin ETFs, has driven the ETH/BTC cross down for its fourth consecutive week to new yearly lows. In fact, ETH/BTC is currently trading below the levels observed in May-June 2022 following massive liquidations from Celsius and Three Arrows Capital. Although technicals suggest this could be the precursor to some mean reversion, the lack of a strong fundamental narrative for Ethereum puts constraints on our conviction.

Meanwhile, liquidity for the entire crypto complex has improved sharply in October alongside the price action, as the daily average trading volume for bitcoin and ether (across spot and derivatives globally) rose to a total $47B compared to $31B last month. A big part of that is bitcoin futures volumes, specifically perpetual swaps but traditional futures as well. In light of the elevated market activity, the premiums that futures traders are paying are the highest since October 2021 (barring a one day spike in July 2023) as the futures basis has climbed. See chart 2. CME bitcoin open interest and volumes have also reached multi-year highs in the past week, and crypto related funds have also reached their fourth consecutive week of inflows.

Screenshot 2023-10-26 at 6.40.59 PM

Crypto & Traditional Overview

(as of 4pm EDT, Sept 15)



Mkt Cap

24 hour change

7 day change

BTC correlation



















Gold (Spot)






S&P 500


















Coinbase Exchange & CES Insights

Exchange volumes have increased recently alongside hopes for a spot bitcoin ETF approval sooner than later. News reports that Blackrock’s iShares Bitcoin Trust ETF ticker was seen on DTCC’s website caused prices to spike earlier this week, leading to over $275M of short liquidations within 24 hours. This brought BTC to a new price level around $34,000. Traders playing the ETF catalyst are now trying to determine how much upside is left. Meanwhile, US fiscal issues and growing global instability are creating a new class of buyers that are also allocating to the token. ETH and altcoins traded up along with BTC this week. Our desk has seen investors add to existing ETH positions while they use the rally to de-risk their altcoin holdings. 

Screenshot 2023-10-26 at 5.55.29 PM

Financing Rates







5.00% - 10.75%


USD - 1m


5.25% - 11.00%

USD - 6m


5.50% - 11.50%


1.50% - 5.00%


3.00% - 7.00%


Notable Crypto News


  • Bitcoin Spot ETFs Could See Inflows of $14.4B in First Year, Galaxy Says (CoinDesk)
  • Grayscale launches crypto indices product with FTSE Russell (The Block)


  • Banks Must Disclose Crypto Exposures, Global Regulator Says (CoinDesk)


  • Bitcoin Is Up 100% This Year. It's Not Just Because of Spot BTC ETF Hype (CoinDesk)
  • Dydx, Decentralized Crypto Exchange, Open Sources ‘V4’ Code for Upcoming Cosmos Chain (CoinDesk)


Views From Around the World


European Union (EU) finance ministers have given their approval to a set of fresh regulations that mandate cryptocurrency companies to disclose information regarding their customers' cryptocurrency holdings to tax authorities. (Cryptonews)

Starting from November 1st, the European Central Bank will initiate a two-year undertaking to finalize a comprehensive rulebook and establish the necessary infrastructure in anticipation of a potential central bank digital currency (CBDC). (Unchained)


PetroChina will utilize the digital RMB (eCNY) to facilitate the settlement of a significant crude oil transaction involving one million barrels of oil – the first cross-border oil transaction settled via a CBDC. (Ledger Insights)

Hong Kong’s financial regulator has recently expanded its previous guidance, which restricted the sale of spot products exclusively to professional investors. This extension now permits intermediaries to provide their services to a broader spectrum of clients. (Coin Desk)

Grab has partnered with Circle to provide Singaporean users with NFT experiences that come without any transaction fees.(The Defiant)

The Week Ahead

Oct 30

Oct 30

Nov 1

Nov 2

Nov 3

Notable Macro

BOJ Rate Decision 

US Consumer Confidence

FOMC Rate Decision 

BoE Rate Decision

US Nonfarm Payrolls

Notable Earnings

Microstrategy Inc

Apple Inc

Coinbase Inc. 


OP Token Unlock


Sign up for our insights

Get the latest market insights, developments and updates, direct to your inbox.