An overview of the trading activities on the cryptomarkets. Studies on traded volumes, supply and demand situations, as well as periodic technical analysis of the most important crypto-currencies and indices, including the perspective of professional Traders.
Technical Analysis
Good Morning!
At the time of writing, Bitcoin (BTC) is trading at $51,057, which is a reflection of a rise of 4% in early trading in Asia. The rise is also in line with traditional markets.
During the last week, realised volatility finally spiked as a consequence of the sharp sell-off we saw on the weekend, justifying last week's option skews. The correlation between volatility and spot prices is still negative, and this fact was underlined by Friday's crash, causing volatility to quickly move higher and skews to drop by 10%.
Derivatives markets
By the way, skews are staying positive for the different maturities as a side effect of the portfolio rebalancing. The spot price fell as much as 22% on Friday night to around $42,000. This was due to a combination of profit-taking, macro-economic concerns, illiquidity, and fresh futures positions.
My eyes are on the funding rates on the different exchanges. Bitcoin's average funding rates - representing the cost of capital of holding long positions in the perpetual futures - listed on exchanges popular among Chinese traders, e.g. Huobi, OkeX, and Bybit are recovering from backwardation much more slowly than the funding rates on other major exchanges, incl. Binance and FTX. This is an indication of selling pressure from Chinese traders.
I am not expecting this kind of bearish sentiment to last long, but I am expecting the Futures Basis to start increasing back up to mid-October levels. BTC is stabilising above its 200-day moving average, which is currently at $46,461. I, unfortunately, believe that any upside movement will not come as fast as Friday's drop did. Resistance levels are now $55k and $60k.
Ethereum and Altcoins
Ethereum (ETH) is currently trading at $4,357, having extended its outperformance over BTC by 4.84% over the last week. Ethereum vs. Bitcoin (ETHBTC) is currently 0.085, which marks the first high since February 2018. What a ride!
ETH fees continue being elevated... And we have all seen what Polygon (MATIC) and other L2-tokens have been doing over the last few days. Despite ETH fees being an unfortunate occurrence, it is a great opportunity for other L1-tokens to demonstrate their potential.
I am certain we will soon discover the future winners of 2022.
Happy Trading!
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