Analytical review. Weekly 22.11.2021

At the beginning of last week, we could witness a local “collapse” of the crypto market. Total capitalization fell from 2.87T to 2.425T. The reason is the signing by the US president of the infrastructure bill, which causes a lot of controversy regarding the taxation of cryptocurrencies. Currently, the indicator is at 2.5T.

The main trigger for the capitalization changes was BTC (since it has the largest share in it). Accordingly, at the beginning of last week, the price of the main cryptocurrency fell by 15.75% (from 66 200 the price dropped below 56 000). Despite breaking through the fundamental support level of 57 653, the price is still in the “bullish channel”.

ETH’s price movement was almost identical to BTC. The relative decline was even higher — 16.9%. ETH is currently trading at around 4150.

BTC and ETH balances on exchanges have shifted to the side of withdrawal. It is obvious that the majority of large and smaller market participants are not ready to fix their positions at the current price levels and are still waiting for higher values to be reached.

In the case of USDT and USDC, over the last week, we can see the balance shift towards the outflow from the exchanges.

Open interest in BTC and ETH futures also significantly dropped. The reappointment of Jerome Powell as head of the Federal Reserve did not greatly affect the interest recovery. Obviously, we need more weighty and fundamental news feeds.

The news this week is full of controversies.

The first blow of the week was the already mentioned infrastructure bill, signed by the US president Joe Biden. It contains vague formulations of the concept of “cryptocurrency broker”, as well as controversial issues related to the taxation of crypto assets. In particular, this concerns the expansion of the powers of the Internal Revenue Service (National Tax Service).

SEC has suspended the approval process for the spot Bitcoin ETF. According to the regulator, the process will not be resumed until more detailed regulation appears. Based on price movements, enthusiasm for regulatory approval of futures ETFs has dried up.

BlockFi (the largest US retail and corporate cryptocurrency broker) has been put on hold. After receiving the subpoena, the company’s website was unavailable, despite the fact that a new partnership had been announced the day before.

Fortunately, the past week holds some positivity. We could see the launch of PayPal Bitcoin payments. Now, in millions of stores that accept PayPal for payment, you can pay with BTC. The company also has plans for NFT.

Also, payments to the affected clients of the Mt.Gox exchange are coming. According to the released statement, the 141 000 BTC in custody will soon be distributed.

Other positive news includes the $100 million Kucoin fund, new partnerships (for example, Venkman’s implementation of Polkadot’s Acala DeFi platform). It culminated in the announcement of a new $ 2.5 billion Paradigm venture fund, currently the maximum amount any blockchain company could raise in a single round.

For options with the expiration date in December 2021, the open interest rate increased by 3% to 96 715 BTC. The ratio of Call and Put options remained unchanged. The increase is noticeable at the levels 42 000–50 000 for Put options (apparently caused by the latest BTC price movement), as well as 60 000 and 64 000 for Call options.

The growth rate of open interest for March options increased by 7.4%, reaching 22 460 BTC. The Max Payne price is now 60 000. This execution date is of the least interest to traders due to the horizon’s distance and the current uncertainty in the market.

Options are expected to be executed based on the results of the third quarter with the date of November 26. The open interest for this group is 44 794 BTC.

For ETH options with the expiration date on December 31, the open interest level increased by 9.1% and was 632 654 ETH. Strong growth is observed at the 5000 and 6500 Call levels. A decrease is observed at the levels of 10 000 and 12 000 Call.

Trades on options with execution dates in the first quarter of 2022 increased by 9.8% to 347 853 ETH. The growth was evenly distributed among all levels.

The upcoming expiration on November 26, given the current uncertainty, could make traders nervous. Major Call levels of 5000, 5500, and 6000 are unlikely to be hit. For this execution date, the difference in the volume of interest between Call and Put options is minor — from 2 to 1.

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 (via Derebit&GVOL info)

After a significant drop in the spot rate last week, volatility in the options market increased proportionally over all short-term periods. On the one hand, traders actively bought put options to insure against further depreciation, on the other hand, the cost of call options with execution in the coming dates became more affordable and attractive. In general, despite the pullback from historical highs, traders in the market do not refuse to continue the upward trend this year.

Options Trading map

The main trading activity was due to the purchase of put and call options with the exercise date in November. Decrease in the spot rate, the range of options trading at around 57 000–65 000. For put options, the execution date in March was also relevant at around 44 000, while for call options on December 31, it remains the main target of attracting attention with the levels of 65 000 and 85 000.

MarkIV for short term ETH options and Options Trading map

Despite the overall price of ETH following Bitcoin, the optimism level among traders was significantly higher. The fall in value did not cause much excitement in the put market, instead, traders focused on buying cheaper call options with expiration dates in December, January, and March. The main levels were 5000 and 6500 in December, 5500–6000 in January, and 7000–15 000 in March.

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