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:
- Price Movements: Ethereum's spectacular YTD returns and promising fundamental developments have attracted increased institutional interest over the past few months.
- Trading Volume: The most Bitcoin-Dollar trading occurs during the overlap between U.K. and U.S. trading hours.
- Volatility and Correlations: Bitcoin and Gold's correlation turned negative for the first time since early July.
- Order Book Liquidity: Bid-ask spreads appear to have stabilized on most exchanges after a volatile November.
Ethereum for institutional investors?
Historically, Bitcoin has been the on-ramp to cryptocurrency markets for traditional investors, but Ethereum is increasingly seen as a viable alternative asset. “There’s a growing conviction around Ethereum as an asset class", according to the managing director at Grayscale Investments, whose Ethereum Trust for institutional investors has grown considerably over the past year. Ethereum's YTD returns crush nearly every other crypto-asset, including Bitcoin's, buoyed in part by several fundamental news events such as the launch of ETH 2.0 and the growth of decentralized finance.
Highest trading volumes during New York and U.K. hours
In a new series of charts, we will be taking a look at trends in trading volume aggregated over time. This week's charts are constructed using 6 months of hourly volume data for BTC-USD trading pairs, averaged per hour of day. We found that the most trading occurs during the overlap between U.K. and New York trading hours, between 13:00 and 16:00 UTC (8am and 11am EST).
Bitcoin-Gold correlation turns negative
For the first time since early July, Bitcoin's correlation with Gold has entered into negative territory, indicating that daily returns for the two assets have had almost no correlation over the past 30 days. This event comes amidst increasing buzz around Bitcoin's "Digital Gold" narrative, which has attracted extensive media coverage and new institutional investors over the past month. Bitcoin's correlation with the S&P 500 and Nasdaq also took a nosedive, as traditional markets and cryptocurrency markets increasingly diverge in price behavior.
Spreads stabilize after a volatile November
Although there have been plenty of price swings this month, the bid-ask spreads on most exchanges has stabilized since the start of December. The stabilization comes as Bitcoin's momentum slows down and the asset trades steadily between a range of $18k and $19k.
