Analytical review. Weekly 29.11.2021

The last week seemed to be quite difficult for the crypto market. Influenced by news, there was a sideway movement of the total capitalization in the 2.48T — 2.65T range for most of the week. There was a sharp drop to 2.37T on November 26. From November 28 — November 29, there was a sharp recovery (by more than 60%) to the level of 2.56T.

As soon as it recovered from the fall of November 15–22, in the week of November 22–29, there was another sharp decline in the asset price (from 59 500 to 53 600). This time it was triggered by news of a new strain of coronavirus infection found in South Africa. There was a sharp recovery at the end of the week. At the time of publication, the BTC price will be around 57 000.

The movement of the ETH price was almost identical to BTC, with the only difference that the fall occurred after the ETH price reached a weekly maximum at 4550. At the end of the week, the price of the asset remained practically unchanged.

BTC and ETH balances on exchanges mixed towards withdrawal as the prices fall. This gives us reason to believe that the so-called “Whales” bought BTC and ETH on a drawdown. After the price recovery by the end of the week, the outflow from the exchanges decreased.

The situation with the balances of stablecoins only confirms the above assumption: market participants more actively introduced them to exchanges during a drawdown.

The volume of open interest in futures on BTC and ETH this week reached its lowest values for the last month. There is uncertainty in the market and market participants are afraid to enter new positions. However, the BTC price is showing strong support and did not drop below 50 000.

Friday was indeed “black” for the markets (including cryptocurrency): there was a collapse of various assets in the range from 5% to 25%, depending on the sector of the economy. The main reason for this was a new strain of coronavirus infection “omicron”, which was discovered in South Africa and parts of Southeast Asia. Some countries (for example, Israel) have already closed their borders. No one had a chance to study how negative the omicron’s effect on production and international trade will be. The crypto industry continues to evolve no matter what.

Metaverse continues to be the main trend in the cryptocurrency market. The Canadian company token.com bought one of the leaders of this trend — the Decentraland platform. The trade costed 618 000 MANA tokens (about $ 2.5 million).

Large companies are increasing their presence in the crypto market. This time, Adidas announced a partnership with Coinbase and then bought land in another metaverse, the Sandbox. This decision was most likely prompted by Nike (the main competitor) in this area, which previously announced its plans in the field of NFT.

Analyst Plan B reported that Bitcoin will not hit $ 98 000 in November (which should have happened according to his earlier forecast). However, he considers the Stock-to-Flow model to be valid and expects to hit the $ 100 000 mark in the upcoming months.

The new German coalition government in its program has emphasized the need to ensure equal access to the capital market for various forms of digital assets on a par with traditional banks. The question remains the perspective of the implementation of this initiative.

Tether printed another billion USDT. This usually results in an increase in the price of bitcoin. Will this be an additional factor supporting the price from a further fall? Answering this question it is necessary to bear in mind the claims of regulators against the issuer of stablecoins # 1.

Sherrod Brown, head of the Senate Banking Committee, has sent open letters to major stablecoin issuers (Tether, Circle, Paxos, and others). He turned to companies with a request to describe the mechanisms of issuance, formation of reserves and storage of stable digital assets. These circumstances open a window of opportunity for cryptocurrency issuers (to establish a constructive dialogue with the authorities), but at the same time create risks of criticism and prosecution (if the activities of companies did not comply with the existing legal regulation).

Morgan Stanley, a large American investment bank, has increased its stake in BTC by purchasing shares of the Grayscale Bitcoin Trust. According to SEC data, the Morgan Stanley Insight Fund increased its Grayscale Bitcoin Trust, or GBTC, by more than 63%, from 928 051 in the second quarter of 2021 to 1 520 549 as of September 30.

On December 2, SEC will hold an open panel discussion about its potential role in the cryptocurrency market. Among the speakers, not only officials are expected, but also leading lawyers, bankers and crypto-investors. It is obvious that the results of this meeting can significantly affect the market participants mood in one direction or another.

For options with the execution date in December 2021, the open interest rate increased by 4.3% and was 100 884 BTC. The number of Put options has increased relative 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).

The execution 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 the execution dates at the end of the first quarter of 2022 slowed down and increased by 5.3% (against 9.8% at the end of 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 doubled 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)

Despite the high volatility in the spot market over the past week, options trading was quite varied — with no predominance of puts or calls. Compared to the week before, the number of put options has almost doubled, reflecting the weakness of the upward trend. Risk management in global markets has led higher purchases of put options to hedge a potential price decline. The most popular date was December 31, in a wide range from 36 000 to 62 000, with concentrated interest levels at 48 000 and 50 000. For call options, the actual dates were — December 10 with levels 58,000 and 64,000 and December 31 with 60 000 and 75 000–85 000. For calls, these levels were well suited for linked (block) trades within the call spread strategy, while the put options were traded separately.

MarkIV for short term ETH options and Options Trading map

Ethereum options trading dynamics differed from Bitcoin, while most Bitcoin traders were looking for options to insure their positions, overall optimism about ETH has hardly diminished. December 31 is still the main reference point for receiving gifts from the Ethereum Santa. The 5000 and 6500 levels are currently the priority for call options. Put options are bought only as short-term insurance (with a strike date on December 10) at around 3600–3800.

If you have any questions, you can contact us as follows

via Telegramm — @DeltaTheta_Research

via email — Research@deltahteta.tech

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Analyses, reviews, news articles of DeltaTheta Inc are internal documents of the company, as well as for the purpose of informing clients. They are not advertisements for securities. Information is based on public sources deemed reliable, but DeltaTheta Inc is not responsible for its accuracy. Investing in securities involves significant risk and decisions about investments should be made by the investor.

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