A summarizing review of what has been happening at the crypto markets of the past week. A look at trending sectors, liquidity, volatility, spreads and more. The weekly report in cooperation with market data provider Kaiko.
This week in the cryptomarkets:
- Bitcoin (BTC) has gained more than $5,000 over the past 30 days, breaking $18k for the first time in nearly three years.
- Ethereum's (ETH) YTD returns are now +350% — nearly double that of Bitcoin's — as it closed the week above $500 for the first time since July of 2018.
- November trading volumes are already higher than volumes for any of the previous six months.
- The quantity of ask orders on Bitcoin-Dollar order books nearly doubled this week as traders prepare to take profits.
- Spreads for Ethereum-Dollar pairs widened on all exchanges in response to rising volatility.
Bitcoin nears new ATH
Bitcoin tore through five key price levels over the past 30 days in one of its fastest climbs ever, rivaled only by the 2017 bull run and brief 2019 climb above $10k. Bitcoin closed the week above $18k for the first time since December of 2017, ending the week up a whopping 15% in its largest week-on-week growth YTD. Other Bitcoin metrics are also on the rise including market capitalization, active addresses, and open interest for CME futures, which topped $1 billion for the first time. On the other hand, the balance of Bitcoin on exchanges has dropped 18% YTD, indicating that there may be a supply crunch contributing to the current rally.
November trading volume soars
Bitcoin-dollar monthly volumes are now higher than they were in the previous 5 months, and November isn't even over yet. The 6-month high for daily volume peaked on November 18th, topping $1.5 billion on 8 top exchanges as Bitcoin tore through $18k. Volumes are now nearly double what they were over the summer as traders flock to take advantage of the bullish sentiment. Week-on-week, volumes are up 70%.
Ask depth rises with price of BTC
The chart above depicts the quantity of orders on both the bid and ask side of order books for BTC/USD trading pairs. We can observe that as the price of Bitcoin rose over the past week, the depth of orders on the ask side of the book nearly doubled. The rise in ask depth could be in response to increased buying pressure, which market makers are accommodating by increasing the quantity of asks on the book. Another explanation could be that traders are placing limit orders on the ask side in preparation for a pullback, where they would take profit should Bitcoin breach key price levels.
Ethereum volatility widens spreads
This week, Ethereum's +25% price run caused spreads to widen for ETH-Dollar trading pairs on all exchanges analyzed. Market makers don't want to be caught in a volatility swing so they will often widen spreads to account for the increased risk. Spreads typically narrow once prices stabilize, but they make the cost to trade more expensive in the meantime.