As a change of tune, the International Monetary Fund (IMF) alludes to how crypto-assets like Bitcoin (BTC) have transformed from an obscure asset class to an integral part of the digital asset revolution.
In a statement, the IMF noted that cryptocurrencies are a notable part of the financial system because they are no longer on the fringe, given that their market value skyrocketed to $3 trillion in November 2021 from $620 billion in 2017.
“There’s a growing interconnectedness between virtual assets and financial markets,” per the report.
The IMF research pointed out that the pandemic triggered the correlation between crypto-assets like Bitcoin and Ethereum with major stock indices. This relationship was made possible by the extraordinary central bank crisis responses in early 2020.
The IMF stated:
“Returns on Bitcoin did not move in a particular direction with the S&P 500, the benchmark stock index for the United States, in 2017–19. The correlation coefficient of their daily moves was just 0.01, but that measure jumped to 0.36 for 2020–21 as the assets moved more in lockstep, rising together or falling together.”
The research also noted that the strong connection between cryptocurrencies and equities boosted crypto adoption. For instance, the correlation between Bitcoin and the MSCI emerging markets index increased 17-fold in the 2020-21 period from the preceding years.
Nevertheless, the financial institution also highlighted that caution should not be thrown to the wind because the high correlation between cryptocurrencies with traditional holdings like stocks raised the risk of contagion across financial markets.
Last year, the IMF raised its concerns about El Salvador’s decision to make Bitcoin legal tender because it raised a number of macroeconomic, legal, and financial issues that necessitated careful analysis.
As big moves in both Bitcoin and equities lead investors to question whether market bubbles are about to burst, macro investor Raoul Pal says he’s looking at things from a different angle.
In a new video, Pal says questions about bubbles may miss a bigger picture of what’s happening in certain sectors of the economy.
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“As you know there’s an incredible amount going on and it’s becoming increasingly difficult to make sense of it all. What’s real, what’s not. And the question we’re all asking is ‘Is this a bubble?’ And I don’t even know if that’s the right question to ask…
Our own perceptions can become our investment biases as well, where ‘I don’t like crypto, therefore it’s a bubble,’ or ‘I don’t like US equities because they’re very expensive right now. They’re a bubble.’ But mostly, these things are shades of grey and many reflexive trades that many identify as bubbles can go on a lot longer than many of us can imagine or maybe we’re at secular shifts. Those things happen too.”
The Real Vision Finance co-founder notes that in the past, there have also been many market conditions that looked like classic bubbles. Eventually though, such as with Amazon, what looked like a bubble was just a genuine paradigm shift in capital.
“We’ve seen the massive explosion of the rise of companies like Tesla off P/E ratios that were unprecedented. But then again in the past, Amazon traded off P/E ratios of 800 and it never really corrected. The business caught up. So I don’t know how much is speculation is how much is a true shift, how much is the game changing.”
Pal also says markets are getting natural boosts from millions of millennials who are now entering the investment world.
“It could be speculative activity just because of the sheer numbers of millennials entering the investment place means that the numbers go up anyway.
Because before, it was traditionally the baby boomers who were driving the activity and now you’ve just brought in another 80 million people into the investment world so maybe valuation is changing again on demographics.”
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
BTC well above the 10-hour and the 50-hour moving average on the hourly chart, a bullish signal for market technicians.
Bitcoin trading on Bitstamp since Feb 6.
Source: TradingView
Bitcoin’s price is in mega-bull mode again Tuesday. For the second day in a row, the price per 1 BTC hit a new all-time high, $48,226, according to CoinDesk 20 data.
“Bitcoin’s rush from $38,000 to a high of $48,000 marks a new all-time high, blasting through the previous all-time high set a month ago, and reignites the recent bull run,” noted Jason Lau, chief operating officer for San Francisco-based cryptocurrency exchange OKCoin.
Bitcoin’s historical price the past three months.
Source: CoinDesk 20
“Elon [Musk] and Tesla’s [bitcoin] purchase of $1.5 billion and accepting bitcoin as payment is now the largest confirmation of a trend months in the making – corporations are worried about their cash reserves losing value and are taking concrete actions to diversify into bitcoin,” added Lau.
Read More:Bitcoin Could Rally Further as Tesla Leads Corporates on Treasury
“Tesla’s $1.5B boost provides us a great example of leadership that will eventually push other S&P 500 companies to allocate part of their treasury reserve into bitcoin,” predicted Constantin Kogan, partner at crypto investment firm Wave Financial.
Kogan made an extremely optimistic forecast to CoinDesk. “If all S&P 500 companies allocate at least 1% of their treasury, the price of bitcoin would increase by about $40,000.”
Top 10 publicly traded companies by bitcoin holdings.
Source: Bitcoin Treasury Reserve
Interestingly enough, with all this bullish bitcoin activity, the ETH/BTC pair has gone bearish. It’s a sign traders are selling ether for bitcoin, with a particularly large red selling candle at 12:00 UTC Monday when BTC jumped on the Tesla news.
The spot ETH/BTC pair on Coinbase since Feb 6.
Source: TradingView
“Bitcoin having just hit all-time highs again, we might have a bit of a pullback for all tokens,” noted Andrew Tu, an executive at quant trading firm Efficient Frontier. ”In general though, the market looks bullish. It seems like bitcoin dominance is due to make another brief run upwards again as it’s hard to see alts (especially DeFi) continue to perform like they have recently without a break.”
On Tuesday, bitcoin’s dominance, its percentage of the larger crypto market share, has jumped. At one point it was up 2% for February and as of press time it is sitting at 0.94%.
Bitcoin dominance in February.
Source: TradingView
Jean-Baptiste Pavageau, partner at ExoAlpha, told CoinDesk not to dismiss ether (ETH), the native asset of decentralized finance (DeFi) network Ethereum, during this run because it is also making gains Tuesday. “DeFi definitely fuels up the use of the Ethereum network and its leadership as one of the pillars of the future of finance.”
Ether futures volume $33 million first day on CME
Ether (ETH), the second-largest cryptocurrency by market capitalization, was up Tuesday, trading around $1,769 and climbing 3.1% in 24 hours as of 21:15 UTC (4:15 p.m. ET). The digital asset hit a fresh all-time high Tuesday of $1,824, according to CoinDesk 20 data.
“We expect some exhaustion on ether coming from the price itself, above $2,200, but also from the fees to use the network itself while solutions are being built to tackle this issue,” said Jean-Baptiste Pavageau, partner at quantitative trading firm ExoAlpha.
Read More:Ether Hits $1,800 for First Time as Market Cap Passes $200B
Monday was the first day for ether futures contracts on the commodity bellwether Chicago Mercantile Exchange. In total, there were 388 ether contracts traded by volume on the day. Each contract is 50 ETH each. At CME’s closing reference rate Monday of $1,732, there was $33.6 million in volume the first day, with $19.7 million in open interest at the close.
Investors will be keeping an eye on this market. Outside of CME, ether futures are already an almost-$6 billion market, with Binance leading the way with $1.3 billion in open interest Monday.
Ether futures open interest the past month.
Source: Skew
“This is a big milestone for Ethereum and ether from several different angles,” noted Stefan Coolican, chief financial officer of Ether Capital, of the CME launch. “First, it provides clarity on ether as a commodity like bitcoin; second, it gives institutions a well-known and accessible way to access ether exposure; third, it provides another tool for price discovery that helps investors and regulators better assess market dynamics.”
Other markets
Digital assets on the CoinDesk 20 are mostly green Tuesday. Notable winners as of 21:15 UTC (4:15 p.m. ET):
Notable losers:
Read More:BlockFi’s Bitcoin Trust Takes Aim at GBTC
Commodities:
Oil was up 0.52%. Price per barrel of West Texas Intermediate crude: $58.38.
Gold was in the green 0.33% and at $1,836 as of press time.
Silver is gaining, up 0.30% and changing hands at $27.22.
Treasurys:
The 10-year U.S. Treasury bond yield fell Monday to 1.155 and in the red 1.4%.
The CoinDesk 20: The Assets That Matter Most to the Market
Bitcoin’s price is getting closer to Mars thanks to Elon Musk while ether moons to a new record. Investors are pulling BTC out of DeFi, likely to diversify their profits.
Bitcoin (BTC) trading around $44,023 as of 21:00 UTC (4 p.m. ET). Climbing 14.5% over the previous 24 hours.
BTC well above the 10-hour and the 50-hour moving average on the hourly chart, a bullish signal for market technicians.
Bitcoin trading on Bitstamp since Feb 5.
Source: TradingView
Bitcoin’s price hit a record-high price Monday, soaring to $44,801 at around 13:00 UTC (8 a.m. ET). It’s one month to the day since hitting the previous record of $41,375, according to CoinDesk 20 data.
Bitcoin’s historical price the past month.
Source: CoinDesk 20
One catalyst for the price run-up: Entrepreneur Elon Musk’s Tesla (TSLA) plowed $1.5 billion into the cryptocurrency. The company also said it would accept bitcoin for goods and services rendered.
Read More:Tesla Invests $1.5B in Bitcoin, Plans to Accept Crypto Payments
“All bets are off the table now. I was worried that [at] around $35,000-$40,000 we were not seeing a huge amount of institutional flows, and over the weekend the market moved higher in a fairly weak fashion,” noted Chris Thomas, head of digital assets for. Swissquote Bank. “But Tesla would have bought over the last few weeks, a little every day.”
Since the start of 2021, bitcoin spot exchange volumes by eight major exchanges tracked by the CoinDesk 20 have been higher than its six-month average.
This year so far, average trading on these exchanges has been $4.4 billion per day; going back to Aug. 8, 2020, the daily average has been $1.7 billion. As of press time Monday, volume is also higher than that 2021 average, at over $6.7 billion.
Major spot bitcoin volumes by exchange the past six months.(Shuai Hao)
Source: CoinDesk Research
“Bitcoin is at new highs today in ‘frenzied’ buying, clearing minor resistance from January,” said Katie Stockton, a technical analyst at Fairlead Strategies. Stockton also noted bitcoin has lost steam since its Musk-motivated rally, at $44,023 as of press time. “Signs of exhaustion are associated with today’s steep rally from an overbought/oversold perspective,” she said.
However, the trend remains bullish, Stockton added. “Despite the potential for additional short-term volatility, the long-term uptrend appears healthy behind bitcoin from a momentum perspective.“
While some may be skittish about bitcoin’s rise in 30-day volatility over the past three months, other types of traders are certainly enthusiastic about it.
30-day bitcoin volatility over the past three months.(Shuai Hao)
Source: CoinDesk Research
“Tesla buying bitcoin was a mostly predictable move, given the vocal support it has seen from CEO Elon Musk,” said Guy Hirsch, U.S. managing director at eToro.
Read More:Ex-OCC Chief Brooks Calls Tesla’s Bitcoin Buy a Bit ‘Scary’ for Rest of World
“If more companies begin making similar announcements, $50,000 could potentially be within reach during the next few months,” Hirsch added.
“We think we’re only just scratching the surface when it comes to corporate and institutional participation in the world of bitcoin and cryptocurrencies,” Joel Kruger, cryptocurrency strategist at LMAX Digital, told CoinDesk. “We suspect that moves from visionaries like Tesla will only serve to reinforce the tremendous value proposition that decentralized assets have to offer.”
Ether at new high as BTC investors pull out of Ethereum protocol
Meanwhile, ether (ETH) is also hitting records and the asset’s correlation with bitcoin has cropped back up to levels not seen since December.
Bitcoin and ether 90-day correlation the past six months.(Shuai Hao/CoinDesk Research)
Source: CoinDesk indexes
The second-largest cryptocurrency by market capitalization was up Monday trading around $1,720 and climbing 8.5% in 24 hours as of 21:00 UTC (4:00 p.m. ET). The price hit a fresh all-time high Monday, hitting $1,776, according to CoinDesk 20 data.
Read More:Ethereum Futures Are Now Trading on CME
The amount of bitcoin held in Ethereum-based decentralized finance, or DeFi, has dropped almost 3.5% Monday, going from over 50,000 to 48,344 BTC as of press time, according to data aggregator DeFi Pulse.
Bitcoin locked in decentralized finance the past three months.
Source: DeFi Pulse
Swissquote’s Thomas notes that Monday may be a day for larger players to start moving some bitcoin around because a fresh bitcoin price high might induce some investors to diversify their profits.
“Larger hedge funds, etc., [that] had got into bitcoin between $15,000-$20,000 would naturally want to take profits around $45,000-$50,000″ for a profit of 2.5-3x. “I’ve always viewed that as a hard challenge,” Thomas told CoinDesk.
Other markets
Digital assets on the CoinDesk 20 are all in the green Monday. Notable winners as of 21:00 UTC (4:00 p.m. ET):
Commodities:
Oil was up 1.9%. Price per barrel of West Texas Intermediate crude: $58.03.
Gold was in the green 0.95% and at $1,830 as of press time.
Silver is gaining, up 1.9% and changing hands at $27.32.
Treasurys:
The 10-year U.S. Treasury bond yield climbed Monday to 1.169 and in the green 0.15%.
The CoinDesk 20: The Assets That Matter Most to the Market
BTC below the 10-hour but above the 50-hour moving average on the hourly chart, a sideways signal for market technicians.
Bitcoin trading on Bitstamp since Feb 2.
Source: TradingView
The price of bitcoin is now in the fourth day of an upward trend, going as high as $38,332 at 14:00 UTC (9 a.m. ET) before losing some steam heading into the weekend. It was down to $37,751 as of press time.
“Similar to the last bull run, we are seeing bitcoin initially steal the attention as retail adoption pours in through mainstream attention,” said Michael Gord, chief executive officer for trading firm Global Digital Asset.
However, Gord told CoinDesk traders are rotating out of bitcoin to high-flying digital assets. “Bitcoin then cools off and profits generated from bitcoin find themselves first in ether, then in other high market-cap digital assets,” Gord said.
Nevertheless, fresh interest such as from Ray Dalio’s Bridgewater Associates, which manages $150 billion in investor money, has some including quantitative trading firm QCP Capital highly bullish on bitcoin.
“Bridgewater’s piece out last week had a sensitivity analysis which showed their estimates of BTC price, should private holders of gold switch to BTC,” states QCP’s weekly investor note Friday. “They forecasted that should 50% of capital in gold move into BTC, that would result in a price of $85,000 per 1 BTC.”
Comparing bitcoin with traditional asset classes.(Shuai Hao/CoinDesk)
Source: CoinDesk Research, St. Louis Fed, Yahoo Finance
Investors are certainly looking to crypto as an asset class, but bitcoin is still quite volatile; its 30-day volatility from Thursday’s close is at 102.9% on an annualized basis whereas gold is at 16%.
Yet, crypto advocates see bitcoin and ether (ETH) similar to different asset classes, according to Joel Edgerton, chief operating officer of cryptocurrency exchange BitFlyer USA. “My guess is that BTC is like gold and priced by the value it stores, a scarce commodity in price discovery,” Edgerton said. “ETH is more like a stock and priced by the value it delivers (ETH 2.0, network effects, basis for DeFi).” He said he thinks of ether as an exchange-traded fund (ETF) for decentralized finance.
While bitcoin has performed well so far in 2021 – it’s up 29% – ether’s returns have more than quadrupled, gaining 129%.
Bitcoin (orange) versus ether (blue) on Bitstamp.
Source: TradingView
“Ether is surging largely on the back of the growth in decentralized finance projects that rely on ERC-20 tokens to operate,” Guy Hirsch, managing director of U.S. for eToro. “Since ETH has not previously traded this high, it’s hard to tell what kind of support there is but, should DeFi projects continue to grow at the rate they are, it would be hard for ETH to not also continue setting new records.”
One thing to watch during a heated ether market is the ETH/BTC trading pair. A rise in this market signals traders are selling their bitcoin for ether; it has appreciated over 75% in 2021.
The ETH/BTC trading pair on Coinbase in 2021.
Source: TradingView
“While bitcoin consolidates and trends back towards all-time highs, much of the price action has focused on the ETH and DeFi space,” said Jason Lau, chief operating officer of San Francisco-based crypto exchange OKCoin. “ETH/BTC has almost doubled in the last month.”
Ether dominance up ahead of CME launch
Ether, the second-largest cryptocurrency by market capitalization, was up Friday, trading around $1,714 and climbing 3.3% in 24 hours as of 21:00 UTC (4:00 p.m. ET). It hit a brand-new price high Friday, at $1,761, according to CoinDesk 20 data.
Read More:Ether Tops $1.7K, Setting New Record as CME Futures Launch Nears
The dominance of ether, a measure of the asset to the larger $1.1 trillion market cap of cryptocurrencies overall, is now at over 17%. That’s a more than 50% increase since the beginning of 2021, according to metrics calculated by charting software TradingView.
Dominance of ether so far in 2021.
Source: TradingView
Chad Steinglass, head of trading at CrossTower Capital, told CoinDesk that crypto traders have been scooping up ETH ahead of institutional-friendly CME launching ether futures Feb. 8. “I think that many traders are building positions ahead of the launch,” he said.
“The availability of CME-listed ETH futures could be a significant positive catalyst,” said Steinglass. “The addition of CME futures will open the door to many potential investors who want to have exposure, but have yet to take any positions due to logistical hurdles.”
“With decentralized exchange trading surging yet again, and yield farming showing no sign of easing, growing interest in leveraged farming products is driving demand for ETH ever so higher and shows the market is only going to grow further,” noted Denis Vinokourov, head of research at crypto brokerage Bequant.
Other markets
Digital assets on the CoinDesk 20 are all in the green Friday. Notable winners as of 21:00 UTC (4:00 p.m. ET):
Read More:DeFi Season? LINK, AAVE, ZRX and COMP Hit Record Price Highs
Commodities:
Oil was up 0.86%. Price per barrel of West Texas Intermediate crude: $56.94.
Gold was in the green 0.92% and at $1,810 as of press time.
Silver is gaining, up 1.8% and changing hands at $26.82.
Treasurys:
The 10-year U.S. Treasury bond yield climbed Friday to 1.170 and in the green 3.2%.
The CoinDesk 20: The Assets That Matter Most to the Market
BTC above the 10-hour and the 50-hour moving average on the hourly chart, a bullish signal for market technicians.
Bitcoin trading on Bitstamp since Feb 1.
Source: TradingView
Bitcoin’s price had dropped Thursday, dipping to as low as $36,207, according to CoinDesk 20 data. Now, at press time, it has come back up, to $37,616.
“Still trading around the 50-day moving average, so all good,” said Chris Thomas, head of institutional sales for Swissquote Bank. “Moved a long way back up over the last week or so again, so there’s just a little lack of energy today. And no more Elon pumps!”
Read More:Elon Musk Is Back Tweeting About Dogecoin as Price Rises 50%
Elon Musk may not be tweeting about bitcoin – he seems to favor dogecoin (DOGE) at the moment – but Thomas is right about the technicals: On the TradingView chart, the 50-day BTC price moving average has been bullish since October.
Daily bitcoin spot price on Bitstamp since October.
Source: TradingView
“Is it more sellers than buyers? Honestly, if I said anything it would be a false narrative,” said Vishal Shah, founder of crypto derivatives venue Alpha5. “Nothing has happened to change the course of anything here, just taking a breather here it seems.”
Read More:Visa Signals Further Crypto Ambitions With API Pilot
It still seems there’s been some rotation out of bitcoin and into other cryptocurrencies, or “altcoins.” One metric to watch: The share of trading volume of cryptocurrencies other than bitcoin, particularly ether, is now larger than ever, according to CoinDesk 20 exchange volume data.
Coindesk 20 crypto volumes the past six months.(Shuai Hao/CoinDesk Research)
Source: CoinGecko
“Ether and the alts have been pushed quite aggressively over the last week or two so it’s a bit of profit taking,” said Swissquote’s Thomas, “Just looking at it all, not really much of a pullback. I think it’s just a pause for a breath.”
Some bullish analysts are undeterred. “These markets are going to surprise a lot of people to the upside,” said Rupert Douglas, head of institutional sales for crypto custody provider Koine. “Bitcoin is strong and is going to hit $100,000 this year, but ether is where you want to park your capital.”
“We’re going to look back in three months’ time and think ETH at $1,600 was cheap,” Douglas added.
Ether FOMO fuels DeFi but fees cause mixed feelings
Ether (ETH), the second-largest cryptocurrency by market capitalization, was up Thursday trading around $1,652 and climbing 1% in 24 hours as of 21:15 UTC (4:15 p.m. ET).
Read More:Ethereum Transaction Fees Hit Record Highs as Ether, DeFi Coins Soar
The amount of crypto in USD values locked in decentralized finance (DeFi) has crossed $32 billion, at $32.8 billion as of press time. That’s a gain of over 197% in the past three months, according to data aggregator DeFi Pulse.
Total value locked, or TVL, in DeFi the past three months.
Source: DeFi Pulse
Constantin Kogan, partner at crypto investment firm Wave Financial, points to ether’s all-time high as one of reasons for DeFi’s massive appreciation. Ether hit $1,697 Wednesday, according to CoinDesk 20 data. However, Kogan is concerned about fees, which often plague the ether market when ether gets hot.
“The all-time high is great. For the whales [large holders of the currency] the fees don’t matter,” Kogan told CoinDesk. “It’s simply not (good) for average people; expensive tech and just waiting for ETH 2.0 to launch. Hard for average people.”
Other markets
Digital assets on the CoinDesk 20 are mixed Thursday but mostly green. Notable winners as of 21:15 UTC (4:15 p.m. ET):
0x (ZRX) + 39.2%
orchid (OXT) + 19.6%
xrp (XRP) + 13.7%
Notable losers:
Commodities:
Oil was up 0.78%. Price per barrel of West Texas Intermediate crude: $56.35.
Gold was in the red 2.1% and at $1,739 as of press time.
Silver is falling, down 1.8% and changing hands at $26.34.
Treasurys:
The 10-year U.S. Treasury bond yield fell Thursday to 1.139 and in the red 0.33%.
The CoinDesk 20: The Assets That Matter Most to the Market
BTC above the 10-hour and 50-hour moving averages on the hourly chart, a bullish signal for market technicians.
Bitcoin trading on Bitstamp since Jan. 31.
Source: TradingView
The price of bitcoin was in its second day of a bull run, with the world’s oldest cryptocurrency going as high as $37,245, according to CoinDesk 20 data. It was changing hands at $37,092 as of press time.
“While BTC did break back below $30,000 very briefly during the period of consolidation over the last few weeks, the fact that it didn’t break down entirely is inherently bullish,” said Chad Steinglass, head of trading at CrossTower Capital.
Bitcoin has closed daily over $30,000 for over a month now. On CoinDesk’s candle charts, which shows a fuller picture of price orders in trading, every time bitcoin ducks under $30,000 it quickly picks back up.
Bitcoin’s historical candle price chart the past month.
Source: CoinDesk 20
Technical analysts often refer to this phenomenon as “support,” an area where traders have orders placed or will start buying in, usually because they feel a particular price point is enticing.
“There seems to be a solid institutional buying and technical bids just below $30,000 that gives some decent support which takes out the aspiring shorts,” noted Jean-Marc Bonnefous, managing partner for investment firm Tellurian Capital.
Looking at liquidations, which are automated crypto leverage margin calls on derivatives venue BitMEX, it’s clear there has been a larger proportion of short versus long positions eliminated in the past few weeks.
Bitcoin liquidations on BitMEX the past month.
Source: Skew
Of the $1.1 billion in BTC liquidations the past month, $699 million of that tally, or 63%, have been short-oriented wipeouts.
CrossTower’s Steinglass says large buyers are helping maintain price levels and are now pushing them higher. “After the brief pop from the buzz generated by Elon Musk’s tweet and support, we are starting to see another round of institutional support led largely by MicroStrategy’s Michael Saylor,” added Steinglass.
Read More:MicroStrategy Adds to Bitcoin Trove With Another $10M Purchase
However, not everyone is a permabull. Although bitcoin’s price Wednesday has not been seen since Jan. 28, Joel Kruger, currency strategist at LMAX Digital, is cautious. “While we wouldn’t rule out another poke back above $40,000, we think the balance of risk over the coming weeks actually leans more towards an expectation for a choppy consolidation phase than anything else,” Kruger told CoinDesk. “Medium- and longer-term technical studies confirm this outlook as they are still quite elevated following the parabolic run-up into January.”
One interesting development: Futures open interest on CME, a platform that caters to institutional investors, has dropped 29% to $1.7 billion since hitting an all-time high of $2.4 billion in open interest on Jan. 14.
Bitcoin futures open interest on CME the past three months.
Source: Skew
This is a sign there’s likely less interest in bitcoin hedging – and perhaps BTC overall – while investors test other waters such as ether.
“We believe that when it comes to consensus and adoption in the cryptocurrency space, everything runs through bitcoin,” Kruger said. “(But) where traders who perhaps felt like they had missed out on bitcoin, they looked to take advantage of the trend by way of ether.”
Ether price frenzy spills into options market
The second-largest cryptocurrency by market capitalization, ether (ETH), was up Wednesday, trading around $1,637 and climbing 6.6% in 24 hours as of 21:00 UTC (4:00 p.m. ET). It hit a fresh all-time high at around 19:00 UTC (2 p.m. ET) to $1,651 Wednesday, according to CoinDesk 20 data.
“Catching up on bitcoin’s recent surge, it seems that there is room for ETH to grow and to try new all-time highs in the coming days and weeks,” noted Elie Le Rest, partner at quantitative trading firm ExoAlpha. “With [decentralized finance] being a hot topic supported mainly by Ethereum technology and [with] ETH 2.0 moving forward, a significant ETH price surge throughout 2021 is highly anticipated.”
Read More:Sneaker App Switches From Ethereum to Hedera to Skip Blockchain Fees
The booming price of ether has stirred up options activity on bellwether venue Deribit, noted Greg Magadini, chief executive officer of data aggregator Genesis Volatility. “Traders are paying relatively more for the ‘speculative options’ in anticipation of bigger market moves,” he told CoinDesk.
Deribit’s launch of $10,000-strike ether contracts in January is an example of this; more than 8,000 ETH in calls at that strike price are open as of press time.
Open interest in $10,000 ETH calls since launch Jan. 5.
Source: Genesis Volatility
“These calls were recently released by Deribit and there is already a lot of activity,” Magadini told CoinDesk. “Quintuple-digit ETH prices are starting to enter the market’s psychology.”
Other markets
Digital assets on the CoinDesk 20 are all in the green Wednesday. Notable winners as of 21:00 UTC (4:00 p.m. ET):
Read More:Guggenheim CIO Says Bitcoin Could Eventually Climb to $600,000
Commodities:
Oil was up 1.3%. Price per barrel of West Texas Intermediate crude: $55.78.
Gold was in the red 0.19% and at $1,833 as of press time.
Silver is gaining, up 1% and changing hands at $26.85.
Treasurys:
The 10-year U.S. Treasury bond yield climbed Wednesday to 1.135 and in the green 4.7%.
The CoinDesk 20: The Assets That Matter Most to the Market
Bitcoin reversed several days of sideways trading to head higher, ether broke $1,500 for the first time and DeFi’s ecosystem has a record amount of value locked in dollar terms.
Bitcoin (BTC) trading around $35,824 as of 21:00 UTC (4 p.m. ET). Gaining 6% over the previous 24 hours.
BTC above the 10-hour but below the 50-hour moving average on the hourly chart, a sideways signal for market technicians.
Bitcoin trading on Bitstamp since Jan. 30.
Source: TradingView
Bitcoin’s price is gaining Tuesday, going as high as $35,645 around 10:00 UTC (5 a.m. ET) before dipping somewhat.
“I think we’ll see more interest in bitcoin again if we move solidly above $35,000,” said Chris Thomas, head of digital assets for Swissquote Bank. “On the support side for bitcoin is institutional buying in the low $30,000s.”
Read More:MicroStrategy Adds to Bitcoin Trove With Another $10M Purchase
Some exhaustion recently in the bitcoin market may have been caused by speculative activity in the stock market.
“So much attention has been on U.S. equities markets as of late, a lot of the mainstream and crypto outlets have been much less focused on driving the formation of opinions of traders and hodlers,” said John Willock, chief executive officer of crypto custody provider Tritum.
Equities on major indexes were all up Tuesday.
In addition to the bullish sentiment keeping stocks buoyant, it should be noted the price per 1 BTC has been able to stay above $30,000 for quite a while.
The last time bitcoin’s closing price was under $30,000, according to CoinDesk 20 data, was on New Year’s Day, when it closed at $29,333. It hasn’t looked back since.
Bitcoin’s historical price the past three months.
Source: CoinDesk 20
“More than anything else, we should all take the long-term sustained price levels above the 2017 high of $20,000 now over a month as the best possible endorsement of bitcoin being a long-term bullish asset,” added Tritum’s Willock.
Read More:Bullish Bitcoin Fundamentals Point to Renewed Price Rally Ahead
“Generally speaking, I think that the market is accepting higher prices while trying to digest the volatility,” noted Neil Van Huis, director of institutional trading at crypto liquidity provider Blockfills.
Bitcoin’s gyrations seem to have subsided somewhat, helped by a very flat weekend into Monday. As of Feb. 1, bitcoin’s 30-day volatility has trended downward; but it is still above 100%, which is quite high. The S&P 500, by comparison, has a 30-day volatility below 20%.
Bitcoin versus S&P 500 30-day volatility the past three months.(Shuai Hao/CoinDesk Research)
Source: CoinDesk Research, St. Louis Fed, Yahoo Finance
In the options market, traders are expecting a 62% chance of BTC over $32,000, based on their positions for February expirations. They seem to expect a 53% chance of trading over $34,000 and a 44% probability of bitcoin moving higher than $36,000, according to data collected by Skew.
Bitcoin price probabilities for February options expiration.
Source: Skew
“We have seen good signs in the option markets that participants are still valuing and pricing the market for higher in the near term,” added Blockfills’ Van Huis.
Ether hits new price zenith, crypto locked in DeFi at all-time high
Ether (ETH), the second-largest cryptocurrency by market capitalization, jumped Tuesday, trading around $1,526 and climbing 14.4% in 24 hours as of 21:00 UTC (4:00 p.m. ET) – a fresh all-time high, according to CoinDesk 20 data.
Read More:Ether Cryptocurrency Reaches Record High, Briefly Tops $1.5K
The total value locked, or TVL, of crypto in U.S. dollar terms within decentralized finance (DeFi) is also hitting a brand-new high, going over $28 billion locked and at $28.8 billion as of press time, according to data aggregator DeFi Pulse.
Total value locked in DeFi, in dollar terms, the past three months.
Source: DeFi Pulse
The amount of ether locked in DeFI is up, at over 7.3 million ETH as of press time. The rise in the price of ether locked in DeFi doesn’t hurt.
Total ETH locked in DeFi, in dollar terms, the past three months.
Source: DeFi Pulse
Meanwhile, the amount of bitcoin locked is heading upward, with the TVL at 45,632 BTC as of press time.
Total BTC locked in DeFi the past three months.
Source: DeFi Pulse
Jun Dam, a smart-contract developer who has written code on the Ethereum and Tron platforms, noted that many decentralized exchanges have numerous pairs with ETH, and speculates traders may be selling some of their stash for DeFi tokens. “It seems like total DEX volume has increased significantly in 2021,” Dam told CoinDesk.
“DeFi is definitely the flavor,” concurred Swissquote’s Thomas. “There’s still good value out there if you consider the possibility that more people will move to DEXs in the next 12 months [and that] arguably the DEXs are still undervalued.”
Other markets
Digital assets on the CoinDesk 20 are mostly green Tuesday. Notable winners as of 21:00 UTC (4:00 p.m. ET):
Notable losers:
Commodities:
Oil was up 2.5%. Price per barrel of West Texas Intermediate crude: $54.85.
Gold was in the red 1.3% and at $1,835 as of press time.
Silver is dropping, down 8.3% and changing hands at $26.48.
Treasurys:
The 10-year U.S. Treasury bond yield climbed Tuesday to 1.100 and in the green by 0.47%.
The CoinDesk 20: The Assets That Matter Most to the Market
Bitcoin is taking a break, staying in a tight trading range with lower than average volume compared to the past month. Meanwhile, alternative cryptocurrencies and decentralized finance are stealing the spotlight.
Bitcoin (BTC) trading around $33,782 as of 21:00 UTC (4 p.m. ET). Gaining 2.5% over the previous 24 hours.
BTC above the 10-hour and the 50-hour moving average just slightly on the hourly chart, a sideways-to-bullish signal for market technicians.
Bitcoin trading on Bitstamp since Jan. 29.
Source: TradingView
The price of bitcoin is extending its weekend respite Monday, trading in a fairly tight $32,500-$34,500 range, although its 24-hour performance is up 2.5% as of press time.
“XRP – and DOGE interestingly – both jumped over the weekend while most of the majors, including BTC and ETH, floundered,” noted Andrew Tu, an executive at quantitative trading firm Efficient Frontier. “While the timing is hard to say, it is usually the case after a period of low volatility that the market breaks out in one direction or the other.”
Bitcoin spot trading volumes on major exchanges were at $2.6 billion Monday as of press time on the eight major venues tracked on the CoinDesk 20. That’s much lower than frenzied $4.8 billion average the past month, but well within earshot of the three-month average of $2.7 billion.
Bitcoin volumes on major exchanges the past month.(Shuai Hao/CoinDesk Research)
Source: CryptoCompare
Lower volumes may explain some price sluggishness. Yet, given its 16% rise over the past month, Tu is skewing more bull than bear.
“The market seems to be leaning bullish, though a break to the downside again is always possible,” he said.
Bitcoin price performance on Bitstamp in 2021.
Source: TradingView
“January was a bumper month for bitcoin spot and futures volume, easily establishing new monthly all-time highs,” noted Jason Lau, chief operating officer of San Francisco-based exchange OKCoin. “For OKCoin, January spot volumes were more than two times December, which was already an all-time high,” Lau added “There’s clearly still a lot of interest in bitcoin as an asset, with the latest seeing Elon Musk expressing his support.”
Read More:‘A Good Thing’: Elon Musk Says He’s a Supporter of Bitcoin
Lau told CoinDesk he is seeing a consolidation of bitcoin prices at current levels after the run-up to $42,000. He noted bitcoin’s dominance, a measure of the world’s oldest cryptocurrency market share in the ecosystem, continues to drop. Less than a month ago, on Jan. 3, bitcoin dominance peaked at over 73% and it has dropped roughly 10% since then.
Bitcoin’s dominance in the market so far in 2021.
Source: TradingView
“Alt and DeFi tokens are having their moment with bitcoin dominance down,” said Lau.
SushiSwap eating up DEX market share
The second-largest cryptocurrency by market capitalization, ether (ETH), was up Monday, trading around $1,334 and climbing 2% in 24 hours as of 21:00 UTC (4:00 p.m. ET).
Read More:Decentralized Exchange Volumes Hit Record Above $50B in January
SushiSwap is making gains in trading volume market share for decentralized exchanges, or DEXs, hitting an all-time high of over 23% of the entire market as of press time, according to data aggregator Dune Analytics.
Market share of DEX trading volume for the past week.
Source: Dune Analytics
SushiSwap is a “fork” of reigning DEX by volume Uniswap, meaning that Uniswap’s smart contract code was used to create the rival exchange.Peter Chan, head of trading for OneBit Quant, says both SushiSwap and Uniswap are benefiting from cryptocurrency price gyrations to better position themselves in the market. “They both experienced huge growth in volume lately, most due to increased market volatility,” Chan told CoinDesk.
Market share of major DEXs in the past six months.
Source: Dune Analytics
In addition, Misha Alefirenko, co-founder of crypto market maker VelvetFormula, says the DEX exchanges’ token price gains recently enticed traders to switch from centralized exchanges (CEX) over to DEXs. “As we saw in the rally in altcoins, it is predictable that DEXs gain some market share from CEXs, especially in native DeFi tokens.”
Other markets
Digital assets on the CoinDesk 20 are mostly green Monday. Notable winners as of 21:00 UTC (4:00 p.m. ET):
Notable losers:
XRP, the native asset of San Francisco-based Ripple Labs, experienced a huge price run-up and subsequent precipitous fall Monday, making it the top loser on the CoinDesk 20 the past 24 hours.
“The XRP pump and dump may have been another situation where retail day traders brought the price upwards only to crash it,” noted Efficient Frontier’s Tu. “It seems like this sort of phenomenon is going to become more commonplace, especially in less-liquid markets like crypto, having been legitimized by the current zeitgeist.”
Read More:XRP Pump Fails to Materialize as Price Crashes 40% From Day’s High
Commodities:
Oil was up 2.8%. Price per barrel of West Texas Intermediate crude: $53.66.
Gold was in the green 0.75% and at $1,860 as of press time.
Silver made major gains, up 7.5% and changing hands at $28.93.
Treasurys:
The 10-year U.S. Treasury bond yield was flat Monday at 1.069.
The CoinDesk 20: The Assets That Matter Most to the Market
