Analytical review. Weekly 06.09.2021
The total crypto market capitalisation index, which started the week at just over 2T USD, showed almost “perfect” linear growth, reaching 2.355T USD (up 16.3%) by the end of the week. Obviously, with similar market dynamics, the previous ATH (2.474T) will be reached and exceeded in the near future.
The BTC gained more than 11% (58 500 at the end of the week) and finally broke through 50 000 resistance by the end of the week. At the time of publication, the main cryptocurrency is already trading above 51 000.
The ETH price movement, on the other hand, was more volatile, rising an impressive 23.9% (from 3218 to 3970) by the end of the week. The price momentarily tested the resistance level of 4000 for the first time since May, but then corrected.
Analyzing cryptocurrency financial flows between exchanges, smart contracts and users, we can see that as the BTC price exceeded the 50 000 mark, there was a shift in the BTC balance on exchanges towards withdrawal. Then the balance was back in neutral zone (perhaps there was a slight liquidation of short-term holdings).
ETH may have returned to neutral zone for similar reasons (but then shifted back to withdrawal).
The surge in open interest in BTC and ETH futures over the past week was quite expected, amid corresponding asset price movements. In the case of BTC, the trading volume is not far from its ATH, and an additional factor predetermining further growth is that the speculative volume of BTC has an extremely small share of coins acquired less than 1 month ago (market participants are determined to hold on). In the case of ETH, it is the ongoing NFT and DeFi boom and the growing interest in the second cryptocurrency from institutional investors.
Among the major news items of the past week are the following:
The SEC has launched an investigation into DeFi segments other than Uniswap. According to insider information, SEC officials are conducting an extensive investigation into a number of DeFi platforms. It is not known whether this investigation will lead to any action against Uniswap and other platforms. The Ripple case shows that such pressure can and should be fought.
Through the efforts of entrepreneur Ricardo Salinas Pliego, there are private attempts to adopt Bitcoin in Mexico. He tweeted that his company Grupo Elektra plans to integrate a Layer 2 Bitcoin solution into its payment system. In spite of this, Mexican financial authorities remain opposed to crypto-assets, discouraging such initiatives in every possible way.
Vast Bank customers will be the first in the US to be able to buy and hold cryptocurrency in insured accounts. Assets available will include Bitcoin, Ethereum, Cardano (ADA), Filecoin (FIL), Litecoin (LTC), Orchid (OXT) and Algorand (ALGO). Funds up to USD 250 000 will be insured by a Coinbase-provided policy.
The Houston Bitcoin Meetup have taken place recently, where miners and representatives of oil and gas companies in Texas discussed mutually beneficial cooperation. Texas, with its deregulated energy system, large hydrocarbon reserves, and positive attitude towards the crypto industry, is poised to become the “Bitcoin capital”. This has been the focus of much of the discussion.
According to September’s Bloomberg Crypto Outlook report, BTC will reach the $100 000 mark, while ETH will reach $5000. The report says that the cryptocurrency market is now “moving forward and upwards” after a correction. This is not the first time such a prediction of bitcoin price has been made. Crypto-enthusiasts and experts have made some seemingly bold predictions, with some even suggesting that a $1 million price might be possible.
On September 3, Ethereum briefly became a fully deflationary asset, meaning that ETH burning exceeded issuance. On September 4, however, supply recovered and the asset became inflationary again.
The NFT subject has been gaining enormous popularity on social media. Pudgy Penguins, Weird Whales and other collectibles have skyrocketed in value and demand.
As a result, sales of non-interchangeable tokens on OpenSea jumped to $3 billion in August. NFT’s daily trading volume reached $180 million.
It is worth noting that the NFT market began to see a marked increase in trading volumes at the end of July. The peak was in August, when different private NFT-collection issue were of special demand..
The mood in this market is mostly influenced by social media trends and changes very quickly. For example, CryptoPunks have been losing their popularity in recent times and the NFT project Loot is gaining the trend. In this project, a large number of different items which are the collection objects are available.
According to Bloomberg, active retail investors have switched to trading NFT instead of the major cryptocurrencies because of the higher yield prospects. For example, the price of Pudgy Penguins has soared more than 100 times recently.
OpenSea’s success is attracting new competitors to the NFT sector: the other day on Twitter, Sam Bankman Fryd announced the launch of an NFT marketplace on the FTX exchange. This NFT marketplace will be compatible with the Ethereum blockchain and Solana. With increased liquidity and access to relatively cheap and fast transactions on the Solana network, FTX could significantly increase trading volume on the NFT marketplace and attract many new users.
Options market volume increased for the sixth week in a row. The size of open interest on deals with execution date at the end of the third quarter — September 24 increased by 12.7% and amounted to 53 965 BTC. There were twice as many Call options traded as Put options. The most popular levels were at 54 000, 56 000 and 64 000, and for put options 40 000 and 42 000.
In terms of open interest, options with execution in December increased slightly, by 4%, to 48 069 BTC. The main levels that attracted attention were at 80 000, 120 000 and 200 000 for Call options.
After the expiration of August 27 options, the total market size decreased by 6.9% to 156 381 BTC. Due to the execution of a large number of trades within a monthly cycle, it will take about a week for the global distribution of interest to recover. However, at the moment there are a few levels that have clearly attracted the traders’ attention — 54 000 and 60 000 for Call options.
The volume of options open interest with an execution date of 24 September increased by 7.7% to 326 227 ETH. For Call options, the main increases in market activity were seen at the 3 500 and 10 000 levels. The levels of 1 600, 1 920, and 2 240 were popular for Put options trading.
Options with expiration date of December 31 did not enjoy much popularity trading increased by 1%, the total volume of open interest is at 430 807 ETH.
The August 27 expiration also affected the overall market, the volume of interest decreased by 5.8% to 1 197 404 ETH. There was a breakdown in activity at 3 200 and 4 500 for Call options.
In addition to standard market analysis parameters such as the volume of open positions in futures and options, which are available to a wide range of readers, under the new “PRO MODE” subheading we provide an overview of some market parameters that require special training or experience.
MarkIV for short term BTC options (via Derebit&GVOL info)
Last week was rather quiet, which did not slow down the volatility. After the price failed to quickly break the first barrier at 50 000, traders drew conclusions about the protracted nature of the move, and shifted the level of interest to short-term options. The almost complete symmetry between the Put and Call options indicates a temporary price consensus in the market. A good reason is needed to get out of it, and to increase volatility (not necessarily a positive one).
MarkIV for long term BTC options
In the longer term, the parade of Call options continues. Traders are unambiguously confident of a rising rate despite the impending withdrawal of stimulus measures and the possible start of a correction in traditional capital markets.
MarkIV for short term ETH options
For ETH options, the landscape of market volatility and thus option trading has changed slightly. In the short to medium term, traders do not expect a rapid rise and activity for Put and Call options is at parity.
MarkIV for long term ETH options
In the longer term, the expectation for growth in the last quarter of the year is still extremely high. The demand for Call options is very large, which opens up many opportunities for sellers of volatility. Try buying a Call option in October or November with a strike price of around 6,000 and you will see what we mean.
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