Bitcoin (BTC) traded in a tight range between $35,000 and $38,000 on Thursday after a few days of sharp price swings.
Traders are starting to position themselves ahead of the bitcoin options expiry on Friday. So far, volume on open interest, or the total number of outstanding option contracts, indicates bearish sentiment, although some analysts expect BTC’s price to trade closer to the max pain price of $42,000, or the strike price with the most open options contracts.
“More volatility is expected as $2 billion worth of options are set to expire this Friday. We are seeing mixed sentiments among traders,” Lennard Neo, head of research at StackFunds, a Singapore-based crypto investment firm, wrote in a Thursday briefing.
CoinDesk’s Omkar Godbole pointed to the recent jump in bitcoin’s six-month put-call skew (the cost of bearish puts relative to bullish calls). The jump in skew suggests market participants are seeking protection from downside volatility.
Historically, a positive six-month skew has signaled peak bearish sentiment, similar to what occurred in April 2020 and late May 2021, according to Godbole.
Uncertainty in the options market could lead to more price swings, creating difficulties for some traders who rely on stable price trends.
“It is possible that we could see short-term rallies over the next several weeks, but overall maintain that monetary tightening will continue to present choppy waters for crypto through Q1 and into Q2,” Sean Farrell, head of digital asset strategy at FundStrat wrote in a newsletter.
Latest prices
?Bitcoin (BTC): $35668, -4.00%
?Ether (ETH): $2321, -7.95%
?S&P 500 daily close: $4327, -0.54%
?Gold: $1795 per troy ounce, -1.91%
?Ten-year Treasury yield daily close: 1.81%
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.
Large holders remain
Bitcoin transfer volumes have been dominated by large institutional size flows, according to blockchain data compiled by Glassnode. The chart below shows more than 65% of all BTC transactions have been larger than $1 million in value over the past year.
The uptrend in large bitcoin transaction volumes started around October 2020 when the BTC price was between $10,000 and $11,000, according to Glassnode. Still, the uptrend in transfer volumes has slowed over the past few months as BTC established a higher price range between $28,000 and $69,000.
Some analysts point to large holders and long-term investors as a stable source of BTC demand. But will these deep-pocket investors stick around if crypto prices continue to fall?
“The crypto market is currently going through another test amidst broader macroeconomic uncertainty relating to global interest rate policy and repricing of risk-on assets,” Thomas Perfumo, head of business operations and strategy at Kraken Intelligence, wrote in an email to CoinDesk.
“Investor sentiment in crypto markets is greater than when markets briefly turned over eight months ago. Long-term confidence in the prospects of both assets has not disappeared, as some might argue,” Perfumo wrote.
Altcoin roundup
Wonderland rattled after co-founder tied to failed QuadrigaCX exchange: Wonderland’s TIME tokens fell 32% in European trading hours after blockchain sleuths revealed “Sifu,” a core member of the founding team, is allegedly a long-time serial scammer, with a conviction and deportation on his record. He was also the co-founder of QuadrigaCX, a failed Canadian cryptocurrency exchange, according to Shaurya Malwa. In an effort to understand how Sifu, outed by popular on-chain analyst zachxbtas as Michael Patryn, came to be so deeply embedded in the organization, CoinDesk reached out to Daniele Sestagalli, leader of the loose conglomerate of projects including Popsicle Finance, Wonderland and Abracadabra for more information. Read the article by Andrew Thurman here.Avalanche Q4: Avalanche recorded all-time highs in active addresses, transactions, total value locked and market capitalization during Q4, fueled by incentive campaigns and network partnerships. The arrival of Aave and Curve sparked a network-wide decentralized finance (DeFi) boom; the number of contracts deployed and unique contract deployers to the network both reached an all-time high in December. Read more here.Warner Music Group to launch ‘Concert Theme Park’ in Sandbox Metaverse: Warner Music Group (WMG) is entering the metaverse with a music-focused theme park in The Sandbox, the company announced Thursday. The virtual theme park will feature “concerts and musical experiences” from the music company’s star-studded roster of artists, which includes the likes of Ed Sheeran, Bruno Mars, Dua Lipa and Cardi B, according to the company. Read Eli Tan’s article here.
Relevant news
Genesis Posts Another Record Derivatives Trading Quarter With Over $20B in VolumeAxie Infinity Founder Sky Mavis Launches RON Governance TokenRio Official Explains Why City Is Putting 1% of Its Treasury Reserves Into CryptoAmazon Marketplace Owners Can Now Be Bought Out in CryptoSEC Rejects Fidelity’s Wise Origin Bitcoin ETF Proposal
Other markets
Digital assets in the CoinDesk 20 ended the day lower.
Largest gainers:
There were no gainers in the CoinDesk 20 on Thursday.
Largest losers:
Asset
Ticker
Returns
Sector
Cosmos
ATOM
-12.0%
Smart Contract Platform
Solana
SOL
-8.5%
Smart Contract Platform
Ethereum
ETH
-7.9%
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.
Feedzy
Bitcoin (BTC) traded in a tight range between $35,000 and $38,000 on Thursday after a few days of sharp price swings.
Traders are starting to position themselves ahead of the bitcoin options expiry on Friday. So far, volume on open interest, or the total number of outstanding option contracts, indicates bearish sentiment, although some analysts expect BTC’s price to trade closer to the max pain price of $42,000, or the strike price with the most open options contracts.
“More volatility is expected as $2 billion worth of options are set to expire this Friday. We are seeing mixed sentiments among traders,” Lennard Neo, head of research at StackFunds, a Singapore-based crypto investment firm, wrote in a Thursday briefing.
CoinDesk’s Omkar Godbole pointed to the recent jump in bitcoin’s six-month put-call skew (the cost of bearish puts relative to bullish calls). The jump in skew suggests market participants are seeking protection from downside volatility.
Historically, a positive six-month skew has signaled peak bearish sentiment, similar to what occurred in April 2020 and late May 2021, according to Godbole.
Uncertainty in the options market could lead to more price swings, creating difficulties for some traders who rely on stable price trends.
“It is possible that we could see short-term rallies over the next several weeks, but overall maintain that monetary tightening will continue to present choppy waters for crypto through Q1 and into Q2,” Sean Farrell, head of digital asset strategy at FundStrat wrote in a newsletter.
Latest prices
?Bitcoin (BTC): $35668, -4.00%
?Ether (ETH): $2321, -7.95%
?S&P 500 daily close: $4327, -0.54%
?Gold: $1795 per troy ounce, -1.91%
?Ten-year Treasury yield daily close: 1.81%
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.
Large holders remain
Bitcoin transfer volumes have been dominated by large institutional size flows, according to blockchain data compiled by Glassnode. The chart below shows more than 65% of all BTC transactions have been larger than $1 million in value over the past year.
The uptrend in large bitcoin transaction volumes started around October 2020 when the BTC price was between $10,000 and $11,000, according to Glassnode. Still, the uptrend in transfer volumes has slowed over the past few months as BTC established a higher price range between $28,000 and $69,000.
Bitcoin relative transfer volume by size (Glassnode)
Some analysts point to large holders and long-term investors as a stable source of BTC demand. But will these deep-pocket investors stick around if crypto prices continue to fall?
“The crypto market is currently going through another test amidst broader macroeconomic uncertainty relating to global interest rate policy and repricing of risk-on assets,” Thomas Perfumo, head of business operations and strategy at Kraken Intelligence, wrote in an email to CoinDesk.
“Investor sentiment in crypto markets is greater than when markets briefly turned over eight months ago. Long-term confidence in the prospects of both assets has not disappeared, as some might argue,” Perfumo wrote.
Altcoin roundup
Wonderland rattled after co-founder tied to failed QuadrigaCX exchange: Wonderland’s TIME tokens fell 32% in European trading hours after blockchain sleuths revealed “Sifu,” a core member of the founding team, is allegedly a long-time serial scammer, with a conviction and deportation on his record. He was also the co-founder of QuadrigaCX, a failed Canadian cryptocurrency exchange, according to Shaurya Malwa. In an effort to understand how Sifu, outed by popular on-chain analyst zachxbtas as Michael Patryn, came to be so deeply embedded in the organization, CoinDesk reached out to Daniele Sestagalli, leader of the loose conglomerate of projects including Popsicle Finance, Wonderland and Abracadabra for more information. Read the article by Andrew Thurman here.
Avalanche Q4: Avalanche recorded all-time highs in active addresses, transactions, total value locked and market capitalization during Q4, fueled by incentive campaigns and network partnerships. The arrival of Aave and Curve sparked a network-wide decentralized finance (DeFi) boom; the number of contracts deployed and unique contract deployers to the network both reached an all-time high in December. Read more here.
Warner Music Group to launch ‘Concert Theme Park’ in Sandbox Metaverse: Warner Music Group (WMG) is entering the metaverse with a music-focused theme park in The Sandbox, the company announced Thursday. The virtual theme park will feature “concerts and musical experiences” from the music company’s star-studded roster of artists, which includes the likes of Ed Sheeran, Bruno Mars, Dua Lipa and Cardi B, according to the company. Read Eli Tan’s article here.
Relevant news
Other markets
Digital assets in the CoinDesk 20 ended the day lower.
Largest gainers:
There were no gainers in the CoinDesk 20 on Thursday.
Largest losers:
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.
DISCLOSURE
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Subscribe to Crypto for Advisors, our weekly newsletter defining crypto, digital assets and the future of finance.