Recurring market commentary on what’s happening in the crypto markets, summarized by the Crypto Broker team at Crypto Finance AG.
Market commentary
Good Morning!
The news item of the week was the FOMC meeting on Wednesday, which can be best described as having been hawkish - with a reduction in bond purchases of USD 30 billion per month, and now three expected rate hikes in 2022. But despite the hawkish outlook, equity markets and crypto subsequently rose.
In general, however, it was an unusually quiet week for December. Since last Friday, Bitcoin (BTC) has been trading within a tight range between USD 46,500 and USD 49,500, while Ethereum (ETH) trading has changed little at around USD 3,950 this week.
We are also seeing an interesting market environment. The three-month rolling basis in BTC has flattened since mid-October: from 15% to currently around 8%.
Other market dynamics
In my opinion, the long basis trade (short perpetual futures vs. long March futures) currently has an interesting risk-reward profile. The current underperformance of BTC against equity markets and the upcoming holidays and year-end, which are a time often characterised by a dollar shortage in the system, could either widen the basis, or funding could skyrocket.
In my opinion, IOTA is also very interesting. The current price weakness could be an opportunity for purchasing the coin. The upcoming staking in the next few weeks might be the market driver. People will be staking IOTA through the Firefly wallet only, which will result in the increased withdrawal of IOTA from exchanges to wallets, thus thinning out the supply side on the exchanges.
On the demand side, we already saw in August how Reddit groups catapulted the price of IOTA 100% within a day. It is not unlikely that the emerging staking will trigger this dynamic yet again. This time, however, the supply side is thin. One can only imagine what might happen...
Happy Friday!
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