Analytical review. Weekly 26.07.2021

For most crypto market participants (except for short position holders), last week was a really pleasant surprise. Total capitalization started the week at 1.182T USD, grew steadily, and by the end of the week literally “shot up” from 1.385T USD to 1.513T USD. The overall increase in the total amounted to more than 27.6%.

Despite some forecasts, BTC, which had recently fallen below 30 000, did not continue to fall but recovered to a monthly high of around 36 500 and then, thanks to a sharp rise at the end of the week, has reached 38 900. All in all, the increase amounted to 30.16%.

In relative terms, ETH was even more successful, with a weekly gain of 33.22%.

Analysis of cryptocurrency financial flows between exchanges, smart contracts and users tells us that BTC withdrawals from exchanges continue. Market dynamics in recent days has reduced the level of uncertainty regarding the onset of a new growth wave, meanwhile users are confirming this by withdrawing BTC to cold wallets.

At the same time, there has been an influx of ETH and USDT to exchanges. It can be assumed that the market is in a “low-start” position waiting for the bull run.

Open interest levels for BTC and ETH futures have demonstrated a sharp gain this week, in line with an increase in the both assets’ prices. The trading volume growth was largely underpinned by a strongly positive news backdrop.

The highlight of the week was undoubtedly The B Word conference, organized by Twitter founder Jack Dorsey. The ten-hour conference featured many well-known speakers and included a discussion between Jack Dorsey himself, Cathy Wood and Elon Musk. Of course, a tribute must be paid to Jack and Katie, but most of the audience came to see what Elon Musk had to say. Elon talked about the crypto investments of Tesla and SpaceX, mentioned that he himself holds BTC, ETH and DOGE in his portfolio and commented flatteringly on the benefits of Lightning Network. In the end, all three discussants expressed optimism about bitcoin’s future. Perhaps it was The B Word that was the main news trigger for the market’s rise over the past week.

During the REDeFiNE Tomorrow 2021 virtual conference, Binance CEO Changpeng Zhao (CZ) admitted the possibility of the Binance US IPO. Binance is currently in the process of setting up structures to help facilitate the IPO process. CZ did not elaborate on specific dates or steps.

Thomas Peterffy, CEO of Interactive Brokers, previously highly skeptical of cryptocurrencies, said in an interview that he keeps some funds in cryptocurrency because “you have to consider the odds”. The comment was timed to coincide with the launch of cryptocurrency trading, which IB is set to implement by the end of the summer. As the crypto industry grows and evolves, more ‘old-school’ investors and bankers are beginning to ‘thaw’, and that is certainly a positive phenomenon.

According to SEC filings, the Common Pension Fund D of New Jersey allocated USD 7 million to buy shares in mining companies (not so much, given that there is a total of USD 30 billion under management). Prior to that, similar actions could be seen from public pension funds from California.

There is more and more news around cryptocurrencies and tech giants. This time, the subject is Amazon, in particular, information from an “anonymous insider” about the likely acceptance of bitcoin as payment by the end of the year. The corporation has also recently posted a vacancy for a “digital currency and blockchain product lead”. Let’s hope Amazon’s rhetoric regarding the cryptosphere doesn’t change as often as in case of… other companies.

Robinhood stated that users of the platform can expect an expanded list of cryptocurrency services, and that at some point it will be possible to see the company’s own crypto wallet. The platform’s long-awaited IPO is to be held on Thursday.

A recent trend of bitcoin users’ increasing demand for DeFi benefits can be seen. While bitcoin is also constantly evolving and there are similar developments in its blockchain (Bitcoin DeFi is also promised), users do not want to wait and are increasingly “wrapping” bitcoin for its use in the Ethereum network.

The strong movements on the spot market last week were also reflected in options trading. The level of open interest in options with an expiration date of September 24, 2021 increased by 9.5% to 31 220 BTC. The main activity came from call options at 56 000, 60 000 and especially 50 000, where the volume of contracts doubled. In the put options, the gains were spread at 26 000, 28 000 and 30 000 — reflecting the fears of a lower rate below 30 000 on the spot market at the start of the week. Within the global trend, the trading gains came in two major levels — 20 000 for PUT options and 40 000 for CALL options.It could be concluded — that in spite of the strong movement of the last weekend, in general the market so far assesses a movement in a channel between these levels as most likely.

Activity on the ETH market is still high. During the week, the open interest level for options with an expiration date of 30th July rose by 16% to 294 465 ETH. The main level traded was the 1700 PUT, a likely hedge against a fall into the forced liquidation zone for multiple pledge protocols. The increase in trading volume at the 3000 CALL level represents a reaction to the market rally at the end of the week. However, it should be noted that PUT option volumes far outperformed CALL option volumes reflecting uncertainty about the strength of the upward move.

Global trading volume in ETH options increased by an impressive 8% to 1 171 816 ETH. The balanced distribution of trading volume indicates that the overall positive market sentiment remains valid for the longer term. After the July 30 expiry, the next actively traded date will be September 24, the final deadline for the third quarter.

PRO MODE

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 info)

For contracts with expiration dates in August, PUT options continue to dominate, which could indicate that traders are uncertain about the upward trend continuation in the coming month. A certain equilibrium in the assessment of growth and decline is emerging only by early September.

MarkIV for long term BTC options

In the longer term, there has been no reassessment — the market remains positive about further growth.

MarkIV for short term ETH options

The movement of short-term ETH options shows that the previous valuation has been maintained. Apparently, traders are quite used to the constant downward pressure and it is difficult to catch them off guard. The lack of panic and focus on growth is reinforced by anticipation of the Ethereum’s most important blockchain update EIP 1559 launch. Until its implementation in early August, any strong moves are unlikely.

MarkIV for long term ETH options

In the longer term, the market continues to hold the view that growth is inevitable. And judging by the reaction to recent events — there is no news to shake that confidence yet.

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