Analytical review. Weekly 06.12.2021
Having consolidated after the drawdown in the week before the previous, the total cryptocurrency market capitalization suffered from another fall, this time towards the end of the week on November 29 — December 5. Within a matter of hours, the index dropped from 2.62T to 2.06T, recovering only to 2.28T by the end of the period. The overall drop for the week was 11.02%.
If during the previous week the market decline was caused by the manipulation of large holders, then the reason for the fall on the week of November 29 — December 5 was largely due to the “panic sale”. By the end of the week, the BTC price decreased by 14.64%, dropping at the moment to 44 000.
The dynamics of the ETH price were somewhat different from BTC. By the middle of the week, the price rised from 4350 to 4770, then corrected to 4600, and only then there was a drop similar to BTC to 3700. After the recovery, the final drop in the ETH price at the end of the week was only 3.7%.
BTC and ETH balances on exchanges have mixed upward as asset prices have fallen. Many traders sold their assets, fearing a further decline in the market. Nevertheless, many large players bought out the drawdown.
Confirmation of the above can be found by analyzing the situation with the balance of stablecoins: their inflow to exchanges increased even during a sharp drop in prices.
As for the volume of open interest in futures on BTC and ETH, this week we can witness the achievement of local lows, which is not surprising against the backdrop of price collapses and the general atmosphere of fear in the market. However, it is important to note that both price dynamics and open interest dynamics on BTC are way more different from those on ETH.
On December 8, the US Congress will hold a hearing regarding the regulation of the cryptosphere. The attendees, together with congressmen, will be the heads of leading American crypto companies, including Jeremy Alleir, CEO of Circle, Sam Bankman-Freed, CEO of FTX Trading, Chad Cascarilla, CEO of Paxos, and Dennel Dixon, CEO of the Stellar Development Foundation. Given the current level of uncertainty in the market, the outcome of these hearings may have both a sharply positive and a sharply negative effect.
Defiance launches ETF on the New York Stock Exchange with a focus on NFTs and the metaverse. The index consists of securities of global publicly listed companies, thematically related to the NTF, blockchain and cryptocurrency ecosystems.
Goldman Sachs is actively exploring Bitcoin-backed loans along with other leading banks. By modelling three-sided agreement such as repo (method of borrowing funds by selling securities with an agreement on their reverse ransom with the participation of a third-party agent) banks are trying to find ways of working with bitcoin without charging a balance with it, alike other synthetical products.
Fidelity Digital Assets will allow its institutional clients to use Bitcoin as collateral for loans. According to CEO Zach Prince, the initiative is partnered with crypto lender BlockFi, which will help manage risk by offering cash equal to 60% of the bitcoin-backed loan amount.
Perhaps the resolution in the conflict between the SEC and Ripple is already close: by Monday, the parties will have to provide additional arguments on their positions in the proceedings.
WisdomTree, the ETF and ETP asset manager, has launched 1 crypto index in the US — the RWM WisdomTree Crypto Index and 3 crypto indices in Europe: WisdomTree Crypto Mega Cap Equal Weight (MEGA), WisdomTree Crypto Market (BLOC) and WisdomTree Crypto Altcoins (WALT).
FTX is planning to raise another $ 1.5 billion in another round of funding for its FTX US division. The funding round will potentially boost FTX’s valuation at $ 32 billion and FTX.US to $ 8 billion.
For options with a strike date in December 2021, the open interest rate increased by 4.3% and was 100 884 BTC. The number of Put options has increased relatively to Call. Despite fears of further correction, traders’ vision of the end of the year remains bullish.
The growth rate of open interest for March options increased by 5.9%, reaching 23 793 BTC. The key levels for this execution date remain 100 000 for Call options and 40 000, 50 000 for Put options (however, at the end of this week’s trading, they “swapped places” in terms of volume).
As expected, the options execution with a date of November 26 was one of the reasons for the local sell-off on the crypto market. The total open interest level is now 181 827 BTC. Key levels: 20 000, 40 000, 60 000 for PUT options and 80 000, 100 000, 120 000 for Call options.
For ETH options with the expiration date on December 31, the open interest level increased by 9.1% and was 656 487 ETH. The gain was distributed evenly between Call and Put options. The Max Pain price has shifted from 1600 to 1920.
Trading in options with execution dates in the first quarter of 2022 slowed down and increased by 5.3% (versus 9.8% in the previous weekly cycle) to 366 332 ETH. The ratio of Call and Put options remained the same.
The open interest level for all options after expiration on November 26 is 1 474 412 ETH. The trading volume for Call options is more than double that for Put options. The main levels are 5000, 10000, 15000 Call and 3000, 3500 Put.
PRO MODE
In addition to the standard parameters of market analysis, such as the volume of open positions in futures and options available to a wide range of readers, under the new PRO MODE subheading, we provide an overview of a number of market parameters that require special expertise or experience.
MarkIV for short term BTC options and Options Trading map
(via Derebit&GVOL info)
The leaps in the exchange rate last week significantly influenced the landscape of the options market. An increase in the number of unbound put options traded signals an overestimation of the potential and growth rate of BTC. In general, the market is still in an upward trend — the number of call options is much higher, and the volume of trading in them is not falling. Last week, the most relevant trading level for put options was 50 000 strike with execution dates in December. For call options, it was popular to trade using the call spread strategy, where the sale of call options with expiration dates in January (at 75 000) and February (at 100 000) financed the purchase of call options with strikes of 56 000 and 58 000 with expiration dates in December.
MarkIV for short term ETH options and Options Trading map
The trading of ETH was significantly different from that of BTC. Traders reacted to the move with a massive wall of put orders at 4000 with execution date in December. The main trading activity was associated with the purchase of options with the expiration date in December and marks of 4700 and the range of 6000–8000.The dynamics of trading continues to remain positive for ETH, the number of deals with call options is three times more than the number of deals in put options
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