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 $47'033: it has gone down 4.45% in the past 24 hours. We also saw a 6.56% drop in Ethereum (ETH), which is currently trading at $3'774, and a drop of 8.38% in Solana (SOL), which is currently at $153.67.
Rising inflation
Cryptocurrencies are dropping as investors continue to worry about a worsening macroclimate, tighter monetary policies, and an economic slowdown linked to the Omicron variant. In my mind, what is influencing the price from a macro perspective the most is the meeting of the US Federal Reserve's Open Market Committee (FOMC), which will take place on December 14-15.
The central bank may decide to reduce the pace of asset purchases, which could lead some investors to reduce their exposure to speculative assets, including stocks and cryptocurrencies. Tighter monetary policy, coupled with low liquidity and portfolio rebalancing remains a cyclical headwind that may continue to dominate performance over the coming weeks.
Derivatives dynamics
The derivatives market does not say much in terms of BTC or ETH. The expectation is that the market will continue at these low levels. Open interest is down (-4.1% in the last 24h for BTC and -4.8% for ETH), at the money implied vol. continues to hold up well, and skews are trading around par.
More interesting: the short-term BTC and ETH futures on CME are trading in backwardation, and the futures premia at the different crypto derivatives exchanges continue to decline towards one-year lows. Trading the term structure to build up some spot positions and expecting prices to pick up in early 2022 seems like a decent move.
Other developments
SUSHI jumped up 10% in early European hours to over $6.37 from a low of $5.3 on Sunday night. The move comes shortly after Daniele Sestagalli, one of the leading application developers on Avalanche, shared a post proposing to join the platform.
For people like me who love motorsports, the last chapter of one of the most beautiful seasons in F1 took place over the weekend in Abu Dhabi. What really amazed me, other than the duel between Hamilton and Verstappen, was realising that instead of seeing some old school brands there, the cars, the drivers, and the circuit were dominated by crypto sponsors (Crypto.com, FTX, Tezos, Fantom, etc.). Going back two years, this would not even have been conceivable. As has already been stated numerous times in our market commentaries, I too believe that gaming and e-sports will be the hot spots for crypto.
Happy trading!
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