Market Wrap: Cryptos Waver as Speculators Lose Interest
Open interest in the BTC futures market is starting to decline.
Apr 8, 2022 at 8:23 p.m. UTC:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/GCKUPC2F2FGH5DCNCTVX5K2VWY.png)
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Cryptocurrencies were mixed Friday, although selling pressure from earlier in the week appeared to be gaining steam.
The dispersion in crypto returns suggests uncertainty among traders after a near 7% dip in BTC over the past week. Further, alternative cryptos (altcoins) have fallen in and out of favor as investor sentiment shifts between bullish and bearish.
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Elsewhere, the S&P 500 was roughly flat on Friday, while traditional safe havens such as gold and the U.S. dollar traded higher. The 10-year Treasury yield reached a new three-year high at 2.7% as investors reduced their exposure to bonds amid rising inflation and higher interest rates.
Latest prices
●Bitcoin (BTC): $42775, −1.63%
●Ether (ETH): $3243, +0.49%
●S&P 500 daily close: $4489, −0.26%
●Gold: $1948 per troy ounce, +0.73%
●Ten-year Treasury yield daily close: 2.71%
Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.
Shallow speculation
The bitcoin futures market has been relatively quiet, which suggests that BTC's 30% rise from its Jan. 24 low around $33,000 was driven by spot traders.
The chart below shows bitcoin's total open interest, or number of outstanding derivative contracts on the Chicago Mercantile Exchange (CME), which has ticked lower over the past week. Participation in the bitcoin futures market has waned since peak levels in November of last year, which preceded a 50% drop in BTC's price.
Still, the current level of open interest is higher than its previous range between May and September of 2021.
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Analysts also pointed to a reduction in leverage among bitcoin futures traders, which indicates lower conviction behind the latest price recovery.
Further, BTC's annualized rolling three-month basis, or the relative difference between the price of the future contract and the spot price, has declined across major exchanges over the past two weeks. That indicates uncertainty among traders about the future price of bitcoin.
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Altcoin roundup
- Axie Infinity builder takes ‘full responsibility’ for $625M Ronin hack: “These are the players who trusted us, and we failed to live up to that trust,” Sky Mavis co-founder Aleksander Larsen said on CoinDesk TV Friday. To prevent further exploits, Sky Mavis is adding more validators to Ronin. Axie Infinity's token AXS is down 20% over the past week. Read more here.
- DeFi giant Yearn leads the way on ERC-4626 token standard adoption: Yearn Finance, a vault-based, decentralized yield aggregation platform, has become the first major protocol to publicly support the adoption of ERC-4626, providing a level of legitimacy and encouragement for others in the space to start exploring the usage of ERC-4626. Yearn's token YFI is down 76% from its all-time high in May of last year, compared with a 30% peak-to-trough decline in ETH. Read more here.
- Top U.S. bank watchdog issues warning on stablecoins: The wildly different approaches the crypto industry has taken to designing and hosting stablecoins may be good for innovation but bad for practical and safe usage, argued Michael Hsu, the acting chief of the Office of the Comptroller of the Currency. Read more here.
Relevant reads
- Listen: What did Netflix's QuadrigaCX documentary get right and wrong? – CoinDesk's Markets Daily podcast team unpacks the latest crypto scandal to hit the big screen.
- Goldman Downgrades Robinhood to Sell Amid Tough Environment for Crypto Brokerages: The investment bank also sees headwinds for Coinbase and Silvergate Capital to show up in first-quarter results.
- Canaan Unveils Bitcoin Mining Machine, Sees Speedier ASIC Market Growth: The new model’s mining power and efficiency positions it between rival Bitmain’s S19 and S19 Pro machines.
- Tesla, Blockstream, and Block to Mine Bitcoin Using Solar Power in Texas: The project aims to show that bitcoin mining using 100% renewable energy can be done at scale, says Blockstream CEO Adam Back.
- Applied Blockchain Files for $60M Nasdaq IPO: The enterprise blockchain firm is offering 3.2 million shares at an estimated $18.54 per share.
Other markets
Most digital assets in the CoinDesk 20 ended the day lower.
Largest winners:
| Asset | Ticker | Returns | Sector |
|---|---|---|---|
| Cosmos | ATOM | +0.9% | Smart Contract Platform |
| Dogecoin | DOGE | +0.5% | Currency |
| Ethereum | ETH | +0.5% | Smart Contract Platform |
Largest losers:
| Asset | Ticker | Returns | Sector |
|---|---|---|---|
| Internet Computer | ICP | −4.4% | Computing |
| EOS | EOS | −3.7% | Smart Contract Platform |
| Solana | SOL | −3.7% | Smart Contract Platform |
Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.
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Damanick was a crypto market analyst at CoinDesk where he wrote the daily Market Wrap and provided technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio strategist and does not invest in digital assets.