Crypto market performance Archives

12th December 2023

Crypto Sentiment Index Stays Bullish Despite Corrections, Report Reveals Positive Outlook

In a recent blog post, ETC Group’s Head of Research, Andre Dragosh, provided a comprehensive analysis of the current state of the crypto market. Dragosh’s findings shed light on the market’s performance dynamics, profit-taking activity, and derivative trends.

High-Risk Appetite In Crypto Market

According to Dragosh’s analysis, crypto assets showcased their resilience as they outperformed traditional assets like equities, supported by a significant repricing in monetary policy expectations and short futures liquidations at the beginning of last week.

However, this outperformance encountered some limitations in the short term due to stronger-than-expected US jobs data, which began to dampen the recent rally. The US non-farm payroll growth and unemployment rate surpassed consensus estimates, leading to a reversal in US Treasury yields and a decrease in overall risk appetite across traditional financial markets.

Notably, altcoin outperformance gained momentum during the period, with Avalanche (AVAX) and Cardano (ADA) returning over 50% each. Among the top 10 crypto assets, Avalanche, Cardano, and Polkadot (DOT) stood out as the relative outperformers.

According to Dragosh, this surge in altcoin outperformance compared to Bitcoin (BTC) indicates a “high-risk appetite” within the crypto market. On the other hand, on-chain data for Bitcoin suggests that investors are increasingly taking profits, evidenced by the rising number of coins in profit being sent to exchanges.

Crypto

ETC Group’s in-house Crypto Asset Sentiment Index remained relatively elevated compared to the previous week, indicating positive market sentiment. However, major reversals to the downside were observed in the Crypto Dispersion Index and the BTC 25-delta 1-month option skew.

The Crypto Fear & Greed Index continued to reside in “Greed” territory, reflecting ongoing market optimism. Although ETC Group’s Cross Asset Risk Appetite (CARA) measure declined slightly, it remained in positive territory, signaling a decrease in risk appetite in traditional financial markets.

Performance dispersion among digital assets decreased compared to the previous week but remained relatively high. This implies that correlations among crypto assets have decreased, and investments are driven by coin-specific factors, highlighting the importance of diversification among digital assets.

Short-Term Holders Cash In

The market remains in a strong profit environment, with a significant percentage of BTC and ETH addresses in profit. According to Dragosh, profit-taking activity, particularly among short-term holders, has increased as Bitcoin approaches recent highs, leading to higher selling pressure.

Long-term holders have also increased their transfers of profitable coins to exchanges, potentially hindering short-term price increases. However, it is worth noting that there is no evidence of older coins being spent, which would indicate a larger price correction.

On the other hand, aggregate open interest in BTC futures and perpetual remained stable, with notable futures short liquidations recorded. BTC option open interest saw a significant increase, accompanied by relative put-buying and an increase in the put-call open interest ratio.

The 25-delta BTC option skews also increased, indicating higher demand for puts compared to calls. However, overall at-the-money (ATM) implied volatilities did not change significantly.

Crypto

At the time of writing, BTC has lost its $42,000 support line, trading at $41,600, down 5% in the last 24 hours.

Featured image from Shutterstock, chart from TradingView.com

8th November 2022

Institutional Outflows From Bitcoin Paints Bearish Picture For Crypto Market

Institutional investors have been quite neutral on both bitcoin and the crypto market at large for a while now. This has translated into a mix of inflows and outflows into various digital assets, alternating with each passing week even through the bear market. However, current net flow records show that these large investors are beginning to find their chosen position in the market and it is in the camp of the bears.

Bitcoin Sees Outflows

Bitcoin had been recording minor inflows in the last month-and-a-half which had been good for the digital asset despite not having much of an impact. This has now changed completely as the figures for last week show $13 million in outflows for the digital asset.

This bearish sentiment has been more prominent in the short bitcoin that is now on to its third consecutive week of outflows. The $7.1 million brought the total outflows from short bitcoin to $28 million. These outflows show that large investors are pulling out of the market more instead of taking one side over the other, an overall bearish development.

The digital asset outflows for the week came out to $15.6 million during this time. Furthermore, it was a bearish start to the month of November with $19 million in outflows already. So even though November has been a historically bullish month for the crypto market, investors do not seem to believe this will be the case this time around.

Crypto market suffers general bearishness | Source: Crypto Total Market cap on TradingView.com

Reason For Bearishness

While it has not had as much of a profound effect as expected, the result of the FOMC meeting has been largely influencing the behaviors of investors in the market. The fourth consecutive interest rate hike by 75 bps showed that the Fed was nowhere close to backing down on its hawkish stance against the high inflation rates.

As expected, such high interest rates will have an effect on markets such as crypto, greatly limiting their ability to grow, especially during a bear market. It is also no surprise that the United States led the outflows for the week since the Fed decision has the most impact in the region.

Nevertheless, there were still some inflows from across the point. Both Switzerland and Germany saw inflows of $6.8 million and $4 million respectively, most of which were focused on altcoins. Ethereum finally put an end to its outflow trends with inflows of $2.7 million. XRP followed this trend with inflows of $1.1 million, marking its third week of inflows.

Since that time, the crypto market has taken a turn so it is expected that there might be a change in institutional investor sentiment in the coming week. However, the general crypto market sentiment continues to skew largely into the negative, which means no significant inflows should be expected.

Featured image from BitIRA, chart from TradingView.com

Follow Best Owie on Twitter for market insights, updates, and the occasional funny tweet…

27th October 2022

Bitcoin Fails To Break $21,000, Is Uptober Still In Play?

October has been a historically bullish month for Bitcoin but with the slow start to the month which proceeded into the last week of the month, it is understandable why a deviation from the norm was expected. However, this sentiment was quickly erased as the crypto market had taken a positive turn on Tuesday. By the close of the trading day on Wednesday, BTC’s price had surpassed $20,000. But what does the rejection at $21,000 say?

Bitcoin Fails To Beat $21,000

Even with the momentum of the past two days, bitcoin had met a harsh rejection at the $21,000 level. Bears had quickly mounted resistance at this point and the shorts in the market in anticipation of a downward correction had helped to fuel this resistance.

So now, even if the outlook for bitcoin remains very bullish, $21,000 is currently the point to beat, which would be easy pickings in a bull given the recent rally. However, the crypto market has stunted the growth of digital assets, and investors remain very wary despite the market gains.

The next step would be for bulls to strengthen support at $20,500 in anticipation of the next retest. Because if bitcoin faces such a strong rejection at $21,000 once more, bears will likely try to pull the price back down to $20,000. At this point, the next support level lies just below $20,200, which is not as strong as the support at $20,500.

BTC holding support at $20,500 | Source: BTCUSD on TradingView.com

What’s Next For BTC?

The rejection at $21,000 has not phased the market much given the euphoria of the digital asset finally beating $20,000 once more. Instead, the bulls have now come out of the woodwork and optimistic forecasts are flying around.

Jim Messina, ex-US President Obama’s Chief of Staff has been one of the most bullish during this time. Messina appeared on Fox News where he said that he expects the digital asset to actually reclaim the $60,000, saying he would bet his Porsche on it. It follows bullish forecasts from others in the space such as ARK Invest’s Cathie Wood who put the digital asset at a price of $1 million apiece in the next 8 years.

However, it is important to note that bitcoin’s trading volume is on the decline in the last 24 hours, which could suggest a quick burn-off of the recent spark. Such declines in momentum can be detrimental especially in periods of short-term growth as has been recorded. The next possible point for bitcoin would be to try to break above $21,000 once move. But if this does not happen, it is possible to see the digital asset below $20,000 once more.

On a more positive note, the sell-offs in BTC have receded in the last two days. Bitcoin’s move above its 50-day moving average has turned indicators for the short-term green and there is now mounting buy pressure that is expected to continue into the weekend.

Featured image from MARCA, chart from TradingView.com

Follow Best Owie on Twitter for market insights, updates, and the occasional funny tweet…

12th October 2022

Crypto Market Shows No Signs Of Positive Movement, Is ‘Uptober’ A Myth?

The crypto market woes from September look to have spilled onto October and going against the historical trend of October being a rather bullish month. September had seen the crypto market close with muted performances, but there has not been much change for the new month. Almost two weeks into the month, and it is starting to look like the much-awaited “Uptober” will disappoint investors.

Poor performances All-Around

All of the indexes in the crypto market are seeing poor performances from market participants. The first two weeks of the month have come back with negative movement and the declines have continued. The size of a cryptocurrency has not mattered either since they have all suffered closely similar fates.

The Small Cap Index came out as the worst performing for the first two weeks of October with -4.7%. This is understandable given small cap altcoins have been known to take movements a couple of steps further; recoveries run higher and declines run lower.

Large Cap coins followed as the second-worst performer in the same time period with returns of -2.4%. A bit more surprising given that they closely follow bitcoin price but it did not fall too much behind the Mid Cap Index which saw a decline of -2.1%.

Market performance remains bad | Source: Arcane Research

Bitcoin emerged as the best performer for this time period with only -1.5% in losses. It also follows the trend that investors are turning more towards bitcoin during this time and taking advantage of the decline in price.

Crypto Market Deviates From Norm

All of the performances highlighted above only go to show that the crypto market is not performing as expected. Even though investors are moving back into bitcoin, the market share of stablecoins is still on the rise, so there is still a flight to safety among investors.

Total market cap below $900 billion | Source: Crypto Total Market Cap on TradingView.com

For the last week, the crypto market dominance of bitcoin fell by another 0.20%, and ETH fell 0.24%, with recorded losses from others in the top 10 such as BNB, ADA, and SOL. Most of this lost dominance went to stablecoins such as USDT, USDC, and BUSD, all of which saw an increase in their dominance.

Crypto market sentiment still remains low in the extreme fear territory, which suggests that there is no expected recovery in the market during this time. Unless there is a reversal in this move to stablecoins, the market will continue to see negative rates.

Featured image from NASDAQ, charts from Arcane Research and TradingView.com

Follow Best Owie on Twitter for market insights, updates, and the occasional funny tweet…