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!
This week, Bitcoin (BTC) traded within a wide range of $8,000. It started off at around $60,500 and ended with a new all-time high of $68,500. Currently, the moves have eased, and BTC is trading within a narrower range - at roughly $65,000.
The long-awaited "taproot" upgrade should take place this Saturday. It will improve privacy, efficiency, and the programmability of the protocol. Ethereum (ETH) and other altcoins continue to outperform bitcoin slightly.
The Ethereum/Bitcoin (ETHBTC) spread has been trading in favour of ETH and is expected to trade higher towards the end of the year - to clearly outperform bitcoin.
Alternative smart contract platforms
Other alternative chains, e.g. Polkadot (DOT), Solana (SOL), and Cosmos (ATOM) are trading below their all-time highs, helping them gain attractiveness and acceptance. DOT remains volatile (with a bullish touch) as DOT's parachain auctions actually reduce the circulating supply.
Acala, a DeFi protocol, has already gathered over $600m and is most likely to win the first Polkadot parachain slot in the auction process. Another important and meaningful parachain is Moonbeam.
Derivatives markets
Overall, derivatives are not stretched, and the leverage factor is staying within the lower limits. Despite the higher market valuation, funding rates and future premiums are trading in a healthy zone. Open interest, mainly in ETH, has risen towards an all-time high, whereas the implied at the money volatility has been trading neutrally over the course of the week: around 100% (for 1-month options); 112% (for 3-month options), and 120% (for 6-month options). BTC‘s implied volatility is being traded between 82% and 91% - depending upon the maturity.
At our desk, the flow over the week has mainly involved the "big names". In addition to the great interest in BTC and ETH, we have also been trading Litecoin (LTC). Note: Litecoin had an impressive bull run, going from roughly $200 to $290 this week.
Happy Trading!
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