Autor Cointelegraph By Marcel Pechman

2 metrics signal traders do not expect $2T crypto market cap anytime soon

2 metrics signal traders do not expect $2T crypto market cap anytime soon

Uverejnil používateľ | mar 21, 2022 |

Cryptocurrencies failed to break the 42-day long downtrend after the $1.95-trillion capitalization resistance was rejected on March 20. Even though Bitcoin (BTC) gained a modest 3.7% over the past seven days, altcoins presented a robust rally.Crypto markets’ aggregate capitalization showed a 6.2% increase to $1.92 trillion between March 14 and 21. Such performance was positively impacted by Ether’s (ETH) 14% gains, Cardano (ADA) increasing 13%, and Solana (SOL) gaining 10%.Total crypto market cap, USD billion. Source: TradingViewWhile those assets were not the biggest weekly gains among the top 80 coins, Ether may have fueled investors’ expectations after Glassnode’s on-chain data showed that ETH balances on crypto exchanges reached their lowest levels since 2018.Comparing the winners and losers provides skewed results, as only two names presented negative performances over the past seven days:Weekly winners and losers among the top 80 coins. Source: NomicsEthereum Classic (ETC) rallied 51% after the HebeSwap decentralized exchange application surpassed $290 million in total value locked. With liquidity pools growing on the protocol, Ethereum Classic appears to have a decentralized finance hub of its own.Aave gained 35% following its v3 liquidity pool upgrade on March 16, adding cross-chain asset functionality, a community contribution tool, and a gas optimization model. Several wallet-based decentralized applications will be integrated, including Instadapp, DeBank, 1inch, ParaSwap, Zapper, DeFi Saver, Zerion and more.Kusama (KSM) gained 31% after Parity Technology confirmed that it would enable parachain (sidechain) swaps on the upcoming 0.9.18 release. Moreover, Manta Network’s on-chain privacy Dolphin Testnet reached 30,000 transactions on March 14.Tether premium shows slight discomfortThe OKX Tether (USDT) premium is a good gauge of China-based retail trader crypto demand. It measures the difference between China-based peer-to-peer trades and the United States dollar.Excessive buying demand tends to pressure the indicator above fair value at 100%, and during bearish markets, Tether’s market offer is flooded, causing a 4% or higher discount.Tether (USDT) peer-to-peer vs. USD/CNY. Source: OKXCurrently, the Tether premium stands at 99.9%, its lowest level since March 3. While distant from retail panic selling, the indicator showed a modest deterioration over the past week.Still, weaker retail demand is not worrisome, as it partially reflects the total cryptocurrency capitalization, which is down 46% year-to-date.Related: ‘No more 4-year cycles’ — 5 things to know in Bitcoin this weekFutures markets show mixed sentimentPerpetual contracts, also known as inverse swaps, have an embedded rate usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.Accumulated perpetual futures funding rate on March 21. Source: CoinglassAs depicted above, the accumulated seven-day funding rate is slightly positive for Bitcoin and Ether. This data indicates slightly higher demand from longs (buyers), but it is insignificant. For example, Solana’s positive 0.20% weekly rate equals 0.8% per month, which should not be a concern for most futures traders.On the other hand, both Terra (LUNA) and Polkadot (DOT) futures showed slightly more demand from shorts (sellers). Thus, the absence of Tether demand in Asia and mixed perpetual contract premiums signal a lack of confidence from traders despite the recent price gains.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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Bitcoin rally hopes diminish as pro traders flip bearish, retail interest at 12-month lows

Bitcoin rally hopes diminish as pro traders flip bearish, retail interest at 12-month lows

Uverejnil používateľ | mar 18, 2022 |

Bitcoin (BTC) has been trapped in a symmetrical triangle for 56 days and the trend change could last until early May, according to price technicals. Currently, the support level stands at $38,000, while the triangle resistance for daily close stands at $43,600.Bitcoin mining up, retail interest downBitcoin/USD price at FTX. Source: TradingViewThe week started with a positive achievement for the Bitcoin network as the Lightning Network capacity reached a record-high 3,500 BTC. This solution allows extremely cheap and instant transactions on a secondary layer, known as off-chain processing.After cryptocurrency mining activities were banned in China in 2021, publicly-listed companies in the United States and Canada attracted most of this processing power. As a result, Bitcoin’s hash has recovered dramatically since the summer. It’s currently at all-time highs at over 200 EH/s. According to the Cambridge Bitcoin electricity consumption index, 45% of the global hash rate derives from North America. Furthermore, Whit Gibbs, the founder and CEO of Compass Mining, stated that “public mining companies definitely have an advantage when it comes to holding Bitcoin because they have access to the capital markets.” In addition, there is less selling pressure as miners’ reserves have been steadily increasing.Global search for the “Bitcoin” term. Source: Google TrendsMeanwhile, searches for “Bitcoin” on Google are nearing their lowest levels in 12 months. This indicator could partially explain why Bitcoin is 41% below its $69,000 all-time high, i.e., public interest is low. Still, one needs to analyze how professional traders are positioning themselves, and there’s no better gauge than derivatives markets.Related: Crypto miner Hut 8 posts record revenue as BTC holdings surge 100%Long-to-short data confirms lack of excitementThe top traders’ long-to-short net ratio excludes externalities that might have impacted specific derivatives instruments. By analyzing these top clients’ positions on the spot, perpetual and futures contracts, one can better understand whether professional traders are leaning bullish or bearish.There are occasional methodological discrepancies between different exchanges, so viewers should monitor changes instead of absolute figures.Exhanges’ top traders Bitcoin long-to-short ratio. Source: CoinglassBitcoin might have jumped 8% since March 13, but professional traders did not increase their bullish bets according to the long-to-short indicator. For instance, Huobi’s top traders’ ratio slightly decreased from 1.10 to the current 1.06 level. Moreover, OKX data shows those traders reducing their longs from 1.26 to 1.03 significantly reducing their longs. Binance was the only exception, as top traders increased their longs from 1.05 to 1.13. Still, there has been a slight 0.06 decrease across the three major exchanges on average.Can the triangle break to the upside?From the perspective of the metrics discussed above, there is hardly any sense that Bitcoin price will flip bullish in the short-term. Data suggests that pro traders have reduced their long positions, as expressed by the basis rate and long-to-short ratio.Moreover, the broader Google search trend signals retail interest is not picking up despite high inflation data and global socio-political uncertainties. For now, the odds of the symmetrical triangle breaking for the upside seem dim.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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ETH derivatives show pro traders are worried about Ethereum’s $2.5K support

ETH derivatives show pro traders are worried about Ethereum’s $2.5K support

Uverejnil používateľ | mar 17, 2022 |

Ether (ETH) investors are having a rough time in 2022, with ETH accumulating 25% losses year-to-date as of March 17. Still, the cryptocurrency has bounced multiple times near $2,500 over the past couple of months, signaling a solid support level.Ether/USD price at FTX. Source: TradingViewOn March 15, Ethereum developer Tim Beiko announced that the Kiln testnet — formerly Ethereum 2.0 — successfully passed the Ethereum “Merge.” The process involves taking Ethereum’s Execution Layer from the existing proof-of-work layer and merging it with the Consensus Layer from the Beacon Chain. The end goal is to turn the blockchain into a proof-of-stake network.The United States Federal Open Market Committee (FOMC) increased interest rates to 0.50% on March 16 — the first such move since 2018. The monetary authority warned of persisting “upward pressure on inflation,” precisely the problem that cryptocurrencies’ digital scarcity aims to solve.Investors fear that further rate hikes by the FOMC could have negative consequences on risk markets. For example, a higher cost of borrowing reduces economic stimulus, creating a hurdle for businesses’ expansion and consumer spending. Regardless of its potential, Ether’s 80% historical volatility shifts most investors’ perception to see it as a risky asset that will inevitably succumb to an eventual broader market correction.Ether futures show modest sentiment improvementTo understand how professional traders are positioned, one should look at Ether’s futures and options market data. Firstly, the basis indicator measures the difference between longer-term futures contracts and the current spot market levels.The annualized premium of Ether futures should run between 5% and 12% to compensate traders for “locking in” the money for two to three months until the contract expires. Levels below 5% are extremely bearish, while numbers above 12% indicate bullishness.Ether 3-month futures’ annualized premium. Source: LaevitasThe above chart shows that Ether’s basis indicator recovered from 2% on March 13 to the current 3.5%. However, such a level falls below the 5% threshold expected on neutral markets, signaling that pro traders are far from comfortable holding ETH futures longs.Thus, one can assess that an eventual break of the $3,200 resistance will catch those investors off guard, creating  strong buying activity to cover short positions.Options traders fear ETH could drop lowerEther’s daily closing price has been ranging from $2,500 to $3,000 for the past 27 days, making it difficult to discern a direction in the market. In that sense, the 25% delta skew is extremely useful, as it shows whether arbitrage desks and market makers are overcharging for upside or downside protection.If those traders fear an Ether price crash, the skew indicator will move above 10%. On the other hand, generalized excitement reflects a negative 10% skew. That is precisely why the metric is known as the pro traders’ “fear and greed” metric.Related: How professional Ethereum traders place bullish ETH price bets while limiting lossesEther 30-day options 25% delta skew: Source: LaevitasAs shown above, the skew indicator has been over 10% since March 11, indicating fear, as these options traders are overcharging for downside protection.Even though there was a modest improvement on Ether’s futures premium, the indicator remains on a bearish level. Considering the ETH options markets pricing a higher risk of downside, it is safe to conclude that professional traders are not confident that the current $2,500 support will hold.However, not everything is lost for Ether bulls, as the cheap futures premium offers the opportunity to leverage long at a low cost. As long as the Ethereum network continues to advance on solving its scalability problem, it is still possible that the $3,200 resistance gets revisited considering the global macroeconomic uncertainty and inflation.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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Klaytn token down 15% in a month, but network's TVL shows resilience

Klaytn token down 15% in a month, but network's TVL shows resilience

Uverejnil používateľ | mar 16, 2022 |

Klaytn (KLAY) had a promising start in March 2021, reaching an impressive $11 billion market capitalization following its debut. However, investors have exaggerated their expectations as the token’s current total value stands at $3 billion, down roughly 70%.KLAY/USD on Binance. Source: TradingViewAlthough not as well known as the leading smart contract blockchains, Klaytn remains a top-35 token by capitalization rank. Moreover, the network holds $1.2 billion worth of deposits locked on smart contracts. Capital locked on smart contracts is known in the industry as total value locked, or TVL.Real use cases and strong backingKlaytn is a flexible modular network architecture created by Kakao, a publicly-traded South Korean internet giant. The Asian tech group’s shares are valued at $36 billion, backed by diverse applications in traditional markets, including games, chat, taxi and rides, financial services, and a venture arm.Businesses can customize and operate their own service-oriented blockchains built atop Klaytn architecture. These autonomously operated subnetworks are called Service Chains and are fully customizable. The network is fully functional, offering decentralized applications (dApp) ranging from DEX exchanges, nonfungible token (NFT) marketplaces, social networks, collateralized loans, and games. For instance, KlaySwap, Klaytn’s leading dApp, holds $746 million in TVL and 19,840 active addresses over the past week.According to Klaytn’s blog, the network is gearing up its infrastructure to provide services for the gaming and metaverse sectors. Initiatives include launching an open-source tools developer package that incorporates layer-2 solutions and adding direct support to Ethereum Virtual Machine (EVM) applications. Additional services include providing management and financial support for projects with high potential.Klaytn’s roadmap includes higher scalability by leveraging layer-2 service chains, additional interoperability bridges with other blockchains, and integrating an Interplanetary File System (IPFS) gateway for decentralized storage.Klaytn smart contracts deposits jumped 24%Despite KLAY’s negative 15% performance over the last 30 days, the network’s TVL increased by 24% in the same period. As a comparison, Arbitrum scaling solution stalled at $1.7 billion, and Polygon decreased to $3.35 billion from $4.65 billion on Feb. 15.Klaytn Total Value Locked, USD. Source: DefiLlamaIn dollar terms, Klaytn’s current TVL of $1.2 billion is 13% below its $1.35 billion peak in January 2022. Yet, these figures represent less than 2% of the aggregate TVL (excluding Ethereum), according to DeFi Llama data.In terms of recent developments, on Feb. 17, Klaytn joined the Blockchain Game Alliance, which encourages the development of standards and sharing of best practices in the decentralizing gaming sector. The initiative also aims to increase the public understanding and awareness of blockchain games.Related: Cointelegraph Research report analyzes GameFi’s bumper 2021 and trends for 2022To confirm whether Klaytn’s TVL growth is backed by increased adoption, one should analyze DApp usage metrics. Some DApps, such as games and collectibles, do not require large deposits, so the TVL metric is irrelevant in those cases.Klaytn DApps 30-day usage metrics. Source: DappRadarAs shown by DappRadar, on March 15 the number of Klaytn network addresses interacting with decentralized applications decreased by 5% versus the previous month.Even though Klaytn’s TVL has increased by 24%, the network lacks a more substantial user base growth to support further KLAY token price momentum. Still, KLAYswap, the leading Dapp, presented a decent 39,090 active addresses over the past 30 days.The above data suggests that Klaytn has found a niche within the decentralized application segment. If the project’s proposed features come to fruition, KLAY’s token price will likely hold $1.05 as medium-term support and present a decent upside.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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Bitcoin bulls to defend $40K leading into Friday's $760M options expiry

Bitcoin bulls to defend $40K leading into Friday's $760M options expiry

Uverejnil používateľ | mar 16, 2022 |

Over the past two months, Bitcoin (BTC) has respected a slightly ascending trend, bouncing multiple times from its support. Even though that might sound positive, Bitcoin’s performance year-to-date remains a lackluster negative 14%. On the other hand, the Bloomberg Commodity Index (BCOM) gained 2% in the same period.Bitcoin/USD 1-day candle chart. Source: TradingViewThe broader commodity index benefited from price increases in crude oil, natural gas, gold, corn, and lean hogs. Worsening macroeconomic conditions pressured the supply curve, which, in turn, shifted the equilibrium price toward a higher level.Moreover, the United States approved a $1.5 trillion spending bill on March 15 that funds the government through September. President Joe Biden’s signing of the legislation averts a government shutdown but further pressures the U.S. national debt, now at over $30.3 trillion.Still, cryptocurrency traders are increasingly concerned about the U.S. Federal Reserve rate hikes expected throughout 2022 to contain inflationary pressure.Investors took profits on riskier assets, causing the U.S. Dollar Index (DXY) to reach its highest level in 21 months at 99.2 on March 11. The index measures the dollar’s strength against a basket of top foreign currencies.Bearish bets are mostly below $40,000Bitcoin’s recovery above $40,000 on March 26 took bears by surprise as only 7% of the bearish option bets for March 18 have been placed above such a price level. Bulls might have been fooled by the recent $45,000 resistance test on March 1 as their bets for March 18’s $760 million options expiry go all the way to $65,000.Bitcoin options aggregate open interest for March 18. Source: CoinGlassA broader view using the 1.26 call-to-put ratio shows more sizable bets as the call (buy) open interest stands at $425 million against the $335 million put (sell) options. Nevertheless, as Bitcoin is now back above $40,000, most bearish bets will likely become worthless. For instance, if Bitcoin’s price remains above $40,000 at 8:00 am UTC on March 18, only $24 million worth of those put (sell) options will be available. This difference happens because there is no use in a right to sell Bitcoin at $40,000 if it trades above that level on expiry.Bulls might pocket a $320 million profitBelow are the three most likely scenarios based on the current price action. The number of options contracts available on March 18 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:Between $38,000 and $40,000: 1,700 calls vs. 1,300 puts. The net result is balanced between the call (bull) and put (bear) instruments.Between $40,000 and $41,000: 3,200 calls vs. 600 puts. The net result favors bulls by $105 million.Between $41,000 and $42,000: 4,200 calls vs. 300 puts. Bulls boost their gains to $160 million.This crude estimate considers the call options used in bullish bets, and the put options exclusively in neutral-to-bearish trades. Even so, this oversimplification disregards more complex investment strategies.For instance, a trader could have sold a call option, effectively gaining a negative exposure to Bitcoin above a specific price. But unfortunately, there’s no easy way to estimate this effect.Related: Bitcoin risks final ‘bear market capitulation’ as rich investors continue BTC selloff — analystBears have incentives to suppress Bitcoin priceBitcoin bears need to pressure the price below $40,000 on March 18 to avoid a $105 million loss. On the other hand, the bulls’ best case scenario requires a push above $41,000 to increase their gains to $160 million.Bitcoin bulls had $98 million leverage long positions liquidated on March 16, so there’s less incentive to push the price higher in the short term. With this said, bulls will likely try to defend $40,000 support until the March 18 options expiry.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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