Friday, 20 May 2022

Market Summary

Market Summary 20 May 2022

Bitcoin Price: US$ 30,319.23 (+5.59%)
Ethereum Price: US$ 2,019.55 (+5.45%) 

 

Bitcoin Put/Call Ratio

  • The put/call ratio for Bitcoin open interest hit a 12-month high of 0.72 yesterday, indicating bearish sentiment among investors.
  • Last April, the put/call ratio traded as high as 0.96 before Bitcoin’s price dropped over 50% in May 2021.
  • The put/call ratio measures the amount of put buying relative to calls. A high put/call ratio indicates that investors are speculating whether bitcoin will continue to sell off, or it could mean investors are hedging their portfolios against a downward move.
  1. Monthly Chartbook – The Sellers Strike Back [April 2022]
  • In just a few short days, Bitcoin’s price took another big leg lower and is now trading at its lowest level in almost 12 months. Bitcoin finds itself holding onto the weekly support structure found from $28.5K-$30K.
  • Two common concepts within market structure analysis (and one that we have spoken about ad nauseum) is ranging price action versus trending price action. In short, ranging price action occurs when price is more or less directionless, meandering sideways, and failing to breakout from either price range extremes. This behavior can be observed on various timeframes. Two notable examples of this are seen during the first five months of 2022, and more broadly speaking during the 18 month time period from the start of 2021 to the present day. Trending price action is the opposite of ranging price action. Trends are periods in which price moves from one price range (also known as a balanced area) towards another. A common adage within FX trading is that markets typically range 70%-80% of the time, and trend for only about 20% of the time. While not a direct 1:1 comparison to crypto, this heuristic can be helpful for market observers when developing a market view.
  • As mentioned in last week’s Market Insights post, there is a low volume void lurking below the weekly support structure that Bitcoin finds itself holding onto. “Should Bitcoin fail to attract enough buyers to stage a relief rally, price will likely be prone to ‘slip’ through these low volume areas before finding footing at the next structural support levels. In this case, we are likely looking at the 2017 ATH retest level.”
  • Continue on Delphi

 

SWIFT, Capgemini team up to test using the international network for CBDC transfers

  • The Society for Worldwide Interbank Financial Telecommunication, or SWIFT, the Belgian financial messaging network used by banks in international money transfers, announced Thursday that it is teaming up with French IT company Capgemini to conduct experiments with cross-border central bank digital currency (CBDC) payments. This is SWIFT’s second research project on CBDC.
  • SWIFT and Capgemini are testing ways to link multiple CBDC networks, as well as CBDC and traditional currency networks, as a proof of concept. The majority of central banks worldwide are working on creating CBDCs, “with numerous central banks developing their own digital currencies based on different technologies, standards and protocols,” Thomas Zschach, SWIFT chief innovation officer, said in a statement.
  • According to the company’s statement, it is developing a gateway for domestic CBDC networks to intercept, translate and forward them to the SWIFT platform for onward transmission. The system will use existing SWIFT standards, authentication models and infrastructure. SWIFT connects over 11,000 financial institutions in over 200 countries.

 

Here’s why Terra’s snowball effect could send Avalanche (AVAX) price to $15

  • Avalanche (AVAX) has emerged as one of the worst-performing cryptocurrencies among the top-ranking tokens in the last 24 hours, partially due to fears connected to Terra (LUNA) and it’s a near-dead UST algorithmic stablecoin project.
  • AVAX’s price plunged by nearly 14% between May 18, where it traded near $35 to May 19 when the price dipped to $28.50. The dip coincided with a South Korean news agency report that claims Terraforms Labs, the developer of the Terra blockchain, owes 100 billion won (approximately $78.5 million) to the regional tax agency.

 

Hyperledger Foundation deploy new versions of three blockchain tools to enhance ecosystem

  • Enterprise blockchain firm Hyperledger Foundation has announced the development and release of three roadmap projects: Cactus 1.0, FireFly 1.0 and a preview version of Iroha 2.0’s long-term support (LTS).
  • Operating under the umbrella of the Linux Foundation, Hyperledger supports an ecosystem of fourteen distributed ledgers. The deployment of the three technological tools is expected to assist consumers and businesses across areas of blockchain, Web3 and decentralized applications (DApps).

 

Tether reports 17% decrease in commercial paper holdings over Q1 2022

  • USDT Stablecoin issuer Tether (USDT) has reported it cut its reserves allocation to commercial paper investments and increased that of United States Treasury bills over the first quarter of 2022.
  • In a Thursday blog post, Tether reported its reserves were “fully backed,” seemingly in an effort to assuage many users’ fears around USDT briefly depegging from the dollar on May 12. According to the stablecoin issuer, its commercial paper holdings over Q1 2022 decreased 17% from roughly $24 billion to $20 billion, with an additional 20% reduction to be reflected in the firm’s next quarterly report. Tether also increased investments in money market funds and U.S. Treasury bills by 13% over the same quarter, from roughly $34.5 billion to $39 billion.
  • “Tether has maintained its stability through multiple black swan events and highly volatile market conditions and, even in its darkest days, Tether has never once failed to honor a redemption request from any of its verified customers,” said Tether chief technical officer Paolo Ardoino. “This latest attestation further highlights that Tether is fully backed and that the composition of its reserves is strong, conservative and liquid.“

 

Swiss asset manager Julius Baer eyes crypto and DeFi potential

  • The 132-year-old Swiss asset management firm, Julius Baer, intends to offer exposure to cryptocurrencies and decentralized finance (DeFi) for its high net-worth clients.
  • The firm’s CEO Philipp Rickenbacher confirmed the move into the cryptocurrency space during his delivery of the company’s strategy update for the next three years.
  • Rickenbacher noted that the recent slump in the cryptocurrency markets presented a watershed moment for its clients to gain exposure to the nascent asset class.
  • “It could well be at this very instant that we are witnessing a bubble-burst moment of the crypto-industry and we all know what happened after the dot-com bubble burst 30 years ago. It paved the way for the emergence of a new sector that indeed transformed our lives.”
  • Rickenbacher drew parallels with the two sectors, noting that cryptocurrencies and DeFi hold the same potential as the Dot Com bubble, which birthed the internet and various core services that we now know and use.
  • “They will transform the financial sector over the next ten years and it is important for us to gain a strong foothold in this area. That’s why it’s exactly the right moment to invest in the long-term potential of digital asset technology.”

 

FTX US to launch stock trading against stablecoins

  • Major cryptocurrency exchange FTX is moving into equity trading, with its United States-based subsidiary FTX US launching a stock trading platform.
  • West Realm Shires Services, the owner and operator of FTX US, announced on Thursday the upcoming launch of FTX Stocks, a stock trading service offered directly through the FTX US trading app.
  • The new stock trading platform will feature trading and investing in hundreds of U.S. exchange-listed shares, including common stocks and exchange-traded funds.
  • According to the announcement, FTX Stocks will be the first platform to ever allow retail investors to fund their accounts with fiat-backed stablecoins like USD Coin (USDC). The option is enabled via a partnership with the FTX US crypto exchange, providing an alternative option to default deposit methods in the U.S. dollar, including wire transfers, credit card deposits and others.
  • The FTX Stocks platform will be initially available in a private beta phase for select U.S. customers chosen from a waitlist. The service will also initially route all orders through Nasdaq to ensure transparent trade execution and fair pricing, the announcement notes.

 

Terra crash not a risk to the broader crypto ecosystem, says Huobi Global co-founder

  • As the fall of Terra (LUNA) and TerraUSD (UST) may have a noticeable short-term impact on the decision-making of both retail and institutional investors, it doesn’t pose a risk to the larger crypto ecosystem, according to Jun Du, co-founder of Huobi Global. 
  • In an interview with Cointelegraph, Du explained that the collapse of Terra will affect the ecosystem by slowing down investor interest in crypto as an asset class. However, Du noted that this will only be a short-term effect. In the long term, the exchange co-founder explained that crypto like Bitcoin’s (BTC) demand as a hedge against fiat inflation will grow along with the advent of new applications for blockchain:
  • “In the long term, demand for cryptocurrencies as a hedge against fiat inflation will continue to grow, as well as for applications of blockchain technology.”
  • When asked about critics who are using the Terra collapse as an opportunity to take a dig at the entire crypto market, Du highlighted that crashes like Terra also happen in many other industries.
  • “Market crashes and coordinated attacks are not unique to crypto,” said Du. Citing the Lehman Brothers collapse and the housing market crash, Du mentioned that “every industry will see its fair share of toppled players.” He further explained that the long-term endurance of an industry always depends on the demand for its services:
  • “Crypto as a technology and asset class introduces value and innovation that are unique and irreplaceable, and we believe that one bad apple in the short run will not affect long-term demand for crypto assets and the industry as a whole.”

 

‘Huge testing milestone’ for Ethereum: Ropsten testnet Merge set for June 8

  • The Ethereum ecosystem is set for a “huge testing milestone,” with the Ropsten testnet Merge set to be conducted on June 8.
  • According to the Merge testnets page on GitHub, Ethereum DevOps engineer Parathi Jayanathi submitted a pull request for the Ropsten testnet Merge configuration code on Monday, suggesting the implementation is ready to go.
  • Ropsten is one of several testnets created by the Ethereum Foundation in 2017 and is currently maintained by the Geth developer team.
  • This specific testnet is seen as the best replication of the Ethereum Mainnet as it follows a similar network structure. This enables developers to conduct realistic deployment testing before making updates to the actual mainnet.
  • The Ropsten testnet Merge will see the proof-of-work (PoW) network combined with a new proof-of-stake (PoS) consensus layer testnet, with its genesis set for May 30. It will simulate what will happen once the actual Merge between Ethereum and the Beacon Chain finally takes place and it becomes a PoS network.

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