Market Wrap: Cryptocurrencies Stabilize as Some Traders Buy the Dip

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Bitcoin was roughly flat over the previous 24 hours as consumers tried to proceed to reverse a few of final weekend’s losses. Some short-term merchants are shopping for on dips, whereas others stay cautious about what crypto costs will probably be over the subsequent month.

“In spite of the shock sell-off, volatility markets remain relatively calm. The knee-jerk spike in BTC and ETH implied volatility faded very quickly and the volatility term structure reverted to an upward sloping one, indicating no heightened fear or panic in the near-term,” crypto buying and selling agency QCP Capital wrote in a Telegram announcement.

Also, Three Arrows Capital, a Singapore-based hedge fund, bought greater than 90,000 ETH price about $400 million over the weekend, in keeping with pockets knowledge proven on Etherscan. The transfer comes mere weeks after co-founder Su Zhu “abandoned” Ethereum due to its prohibitively excessive charges for brand spanking new customers, CoinDesk’s Lyllah Ledesma reported.

Latest Prices

  • Bitcoin (BTC): $50,835, +0.81%
  • Ether (ETH): $4,422, +3.21%
  • S&P 500: $4,701, +0.32%
  • Gold: $1,785, +0.07%
  • 10-year Treasury yield closed at 1.52%

From a technical perspective, the latest sell-off displays a “loss of intermediate-term momentum that serves as an impetus to reduce exposure to bitcoin and cryptocurrencies broadly,” Katie Stockton, managing companion at Fairlead Strategies, a technical analysis agency, wrote in a report this week.

Still, ether’s outperformance of late is uncommon in a market the place merchants are cautious of riskier belongings, Stockton famous. “ETH’s long-term uptrend has not been impacted by its pullback – long-term momentum is still to the upside,” she wrote.

On the regulatory entrance, the U.S. House Financial Services Committee grilled six crypto executives about buying and selling and stablecoins in a listening to on Wednesday. Discussions centered on safety frameworks, the nameless nature of crypto transactions and the way Congress can incorporate digital belongings into present regulatory requirements. Read CoinDesk’s reside protection right here.

Bitcoin in concern mode

The Bitcoin Fear & Greed Index declined to its lowest degree since late July throughout the weekend sell-off. Some analysts view the index as a contrarian sign, suggesting that consumers may return to purchase BTC on value dips. Previous “extreme fear” readings preceded value rallies much like what occurred in August and October.

Returns slender

Bitcoin’s year-to-date return has narrowed relative to the S&P 500 over the previous month. Still, regardless of the latest sell-off, bitcoin is up about 75%, in contrast with a roughly 22% return in the S&P 500 and a 34% return in the Thomson Reuters Core Commodity CRB Index to date this yr.

On a associated word, bitcoin’s Sharpe ratio (risk-adjusted return) is akin to the S&P 500 and Nasdaq over the previous yr, in keeping with knowledge compiled by IntoTheBlock.

Bitcoin and S&P 500 year-to-date returns (CoinDesk)

Altcoin roundup

  • Polygon’s MATIC token surges amid crypto restoration: MATIC is up about 25% over the previous week, in contrast with an 11% decline in BTC over the similar interval. The improve occurred as extra customers have change into conscious of Polygon’s decrease prices and better effectivity and scalability. Speculation has additionally mounted over what the agency has known as an “exciting announcement” scheduled for Thursday at Polygon virtual “zk day.”
  • Not all various cryptocurrencies transfer in stride with ETH: While some decentralized finance (DeFi) tokens are correlated with ether, metaverse tokens such as The Sandbox’s SAND and Decentraland’s MANA have been much less correlated with ether, in keeping with a statistical research by Coin Metrics. “Some tokens on Ethereum today seem to be garnering narratives that are less tied to ETH itself, showing the potential benefits to diversification,” Coin Metrics wrote.
  • Inside EIP 4488: Last week, Ethereum co-founder Vitalik Buterin launched Ethereum Improvement Proposal (EIP) 4488, an improve that would drive down transaction prices for Ethereum rollups like Arbitrum, Optimism and zkSync. The proposal detailed the speedy steps for pushing gas fees down with out sacrificing safety, as nicely as the highway map for transferring ahead post-”Merge.” CoinDesk’s Edward Oosterbaan explored a few of the concepts contained in the proposal right here.

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Other markets

Most digital belongings in the CoinDesk 20 ended the day larger.

Notable winners as of 21:00 UTC (4:00 p.m. ET):

  • EOS (EOS), +13.93%
  • Chainlink (LINK), +11.91%
  • Internet Computer (ICP), +7.41%

Notable losers:

  • Polkadot (DOT), -1.16
  • Algorand (ALGO), -0.28%