The Weekly Update Week 17, 2021
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Market Update 1 ▪ Bitcoin registered another flat week, while many altcoins keep climbing higher. ▪ Bitcoin ended April with a decrease of 2%, the first red month since September last year. Bitcoin dominance falls below 50% for the first time since 2018 $100,000 ▪ Altcoins have been ripping over the last few months, leading 100% the bitcoin dominance to decline from 71% on Jan 1st to 47% yesterday. 90% ▪ Despite the strong ETH performance lately, the speculators $10,000 80% now seem to be more cautious than earlier. Flat developments in the open interest vs. ETH’s market cap suggest that the latest moves are largely driven by the spot 70% markets. BTC Price (log scale) Valuation Bitcoin dominance 60% 2 $1,000 ▪ Bitcoin looked strong going into the weekend, but struggled to climb above $59,000 and is now back below this 50% resistance level. 40% ▪ Premiums on BTC futures are mostly unchanged from last $100 week. Premium rates climbed throughout the week, but decreased again as the bitcoin price turned again this 30% weekend. 20% $10 10% Blockchain Activity 3 ▪ On Saturday, the bitcoin difficulty fell by 12.6% due to the 0% declining hashrate following the Xinjiang incidents, leading fees to decline back to previous levels. $1 2017 2018 2019 2020 2021 ▪ The process for implementing the Taproot upgrade in bitcoin has begun. Source: Tradingview, Bitstamp ▪ The combined total value locked on Ethereum and the Binance Smart Chain this week surpassed $100 billion and currently sits at $124.6 billion.
Bitcoin flat, while altcoins thrive Bitcoin Correlation: ETH XRP GOLD S&P500 90-day correlation Bitcoin registered another flat week, while many altcoins keep climbing (weekly change included) ▪ higher. Bitcoin’s market dominance is now at the lowest level since August BTC 0.650 -0.093 0.424 0.104 0.079 -0.010 0.154 -0.029 2018, dropping below 50% this week. Source: CoinMetrics ▪ Ether (ETH) blew through its all-time high last week and has climbed more Top 3 by Market Cap: Percentage Change in Price Over the Last Week than 30% over the last 7 days. The combination of the upcoming Ethereum upgrade this summer and the increasing activity on Ethereum has really gotten the attention of many investors this spring. ▪ Binance Coin (BNB) is also climbing to new highs this week, and the 34.5% $3,435 exchange token has comfortably secured the role as the third-largest cryptocurrency by market cap, rising more than 1600% this year. Best Performing Price Last week Last month YTD Waves 39.746 102.20% 236.20% 510% 13.3% $646.6 Ethereum Classic 53.714 61.93% 280.90% 841% Dogecoin 0.439 60.57% 674.50% 7589% Worst Performing Price Last week Last month YTD 1.9% $55,874 Klaytn 2.389 -13.25% -33.39% 388% LUNA 17.067 -10.12% 3.93% 2499% BitTorrent 0.007 -9.09% -9.57% 2173% Last week of top 50 by market capitalization Source: cryptowat.ch, messari.io Source: NYDIG May 4, 2021 3 Provided by
Bitcoin dominance drops below 50% Percentage of Total Market Capitalization BTC ETH BCH LTC XRP DASH NEM XMR IOTA NEO Market 48.15% 17.80% 0.82% 0.89% 3.12% 0.15% 0.14% 0.33% 0.25% 0.33% Share Weekly Change* -5.70% 5.02% -0.02% 0.02% 0.09% 0.00% -0.03% 0.01% -0.03% -0.05% * Weekly change in percentage points Source: Coinpaprika.com Bitcoin ended April with a decrease of 2%, the first red month since September last year. The current altseason has seen bitcoin’s market dominance drop below 50% and we are currently at the lowest level Monthly Performance of Market Capitalization Weighted Indexes since August 2018. 77% ▪ The Mid Caps Index ended April with a gain of 77%, crushing the other indexes. ▪ The Small Caps Index bounced strongly during the last week of April, and managed to close the month with a 30% gain. ▪ The Large Caps Index ended April at 7%, dragged down by bitcoin. 30% Several large caps like ETH and BNB had a great month, but BTC’s 2% decline held the Large Cap Index down throughout the month. 7% -2% Source: NYDIG, Bletchleyindexes.com May 4, 2021 4 Provided by
Market sentiment climbing higher again The market sentiment is climbing higher again and is once again approaching the “Extreme Greed” area. The Fear and Greed Index dropped to 27 last week, the lowest seen in a year. However, we are now back at 68 already, with a rapid climb over the past week. While a market sentiment in the “Extreme Greed” area hasn’t been a top signal in this current bull run, it is always important to be more cautious when approaching an extremely greedy market. Extreme Greed Fear & Greed Index 68 68 Now Last week Last month Extreme Fear Greed (68) Greed (50) Greed (74) Source: Alternative.me, NYDIG May 4, 2021 5 Provided by
Bitcoin volume dropping Sunday marked the third-lowest daily volume of 2021 The past week has been relatively quiet for bitcoin, and the trading activity has declined. The 7-day real bitcoin volume* dropped sharply, down more than 40% over the past week. Sunday marked the third-lowest daily volume of 2021, with only $4.5 billion changing hands on the leading spot exchanges. We are now close to the lows from April again, but we expect the activity to pick up again as soon when bitcoin makes its next move. 16 Real BTC Daily Volume (7-day average) 14 12 Trading Volume ($ bn) 10 8 6 4 2 0 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20 Oct 20 Nov 20 Dec 20 Jan 21 Feb 21 Mar 21 Apr 21 May 21 Source: Messari, Skew *as defined by Arcane Research. Read more here. May 4, 2021 6 Provided by
Volatility stays high The 7-day volatility spiked last week and has stayed above 4.5% since. The 30-day volatility is also slowly trending upwards again, a sign that bitcoin is currently seeing more significant movements again, with the latest being Friday’s 8% increase. 15% BTC-USD Volatility Daily Return 30-Day Volatility 7-Day Volatility 10% 5% 4.56% 3.55% 0% -5% -10% May 20 Jun 20 Jul 20 Aug 20 Sep 20 Oct 20 Nov 20 Dec 20 Jan 21 Feb 21 Mar 21 Apr 21 Source: cryptowat.ch, Coinbase May 4, 2021 7 Provided by
It’s definitely altseason The bitcoin dominance falls below 50% for the first time since 2018 Altcoins have been ripping over the last few months, leading the bitcoin dominance to decline from 71% on Jan 1st to 47% yesterday. Bitcoin Bitcoin dominance dominance falls falls below below 50% 50% forfirst for the the first time time sincesince 20182018 ▪ It’s been an incredibly strong year for the many altcoins. On January 1st, the $100,000 100% combined market cap of all altcoins sat at $222 billion. Now, the combined market cap of all altcoins sits at $1.16 trillion, a YTD growth of 420%. 90% ▪ The altcoins have, in other words, significantly outpaced bitcoin’s growth this year. $10,000 80% ▪ Many factors have been pulling in the direction of altcoins lately. Thriving 70% developments in DeFi have led Ethereum and the DeFi tokens to grow BTC Price (log scale) Bitcoin dominance significantly. Likewise have the so-called ETH-killers (most notably Solana and BNB). $1,000 60% ▪ In addition, the market has also definitely been frothy lately. Dogecoin has seen 50% YTD returns of more than 7500%, and TikTok influencers have jumped into the space promoting investments in highly questionable projects. $100 40% ▪ The driving forces seem to be a mix of the anti-establishment uproar seen from 30% the WallStreetBets community following the infamous GME squeeze, in addition to a very high risk tolerance with the hopes of financial independence looming. 20% $10 ▪ Bitcoin has been consolidating (albeit with substantial volatility) more or less 10% since the end of February, setting the perfect stage for altcoins to skyrocket. In the 2017 bull run, prolonged consolidation periods were very strong periods for altcoins with capital rotating into the sector. $1 0% 2017 2018 2019 2020 2021 ▪ While some altcoin projects are highly interesting, such as those within the disruptive DeFi sector, others are not. We urge investors to be cautious Source: Tradingview, Bitstamp onwards in the more questionable altcoins. May 4, 2021 8 Provided by
Ether (ETH) Futures: Open interest data suggest that this rally is driven by spot buyers, not leverage ETH Futures: Open Interest $10bn 3.8% Despite the strong ether (ETH) performance lately, the speculators now $9bn 3.6% seem to be more cautious than earlier. Flat developments in the open interest vs. ether’s market cap suggest that the latest moves are largely driven by the spot market. $8bn 3.4% ▪ The recent strength in ETH has been accompanied by remarkably soft growth $7bn Total Open Interest (OI) in open interest. 3.2% OI vs. Market Cap $6bn ▪ Previous rallies in ether have been accompanied by a spiking open interest, this 3.0% time it’s different. $5bn 2.8% ▪ Now, the open interest relative to the market cap has remained flat at around $4bn 2.6% since the liquidation flush of April 18th, meaning that the OI currently follows the price action in ETH tightly. 2.6% $3bn ▪ The OI to market cap ratio of ETH is still substantially higher than in Bitcoin, 2.4% though, where the OI sits at 1.8% of the BTC market cap at the time of writing. $2bn $1bn 2.2% ▪ This suggests that the ETH market is more leveraged than BTC’s, but the current ether rally seems more sustainable than previous rallies. However, this is purely based on data from the futures market and do not account for leverage $0bn 2.0% through lending. Oct 20 Nov 20 Dec 20 Jan 21 Feb 21 Mar 21 Apr 21 May 21 Total OI vs Market Cap Source: Skew, TradingView May 4, 2021 9 Provided by
Flat month for the bitcoin funds It’s been a relatively slow month in terms of growth in the bitcoin investment vehicles, with the aggregated fund size remaining flat for a month. Bitcoin Funds: BTC Under Management ₿ 820,000 ▪ The bitcoin investment vehicles have seen a year-to-date growth of 107,000 BTC, but flows and outflows netted each other out in April, with the ₿ 800,416 ₿ 801,844 combined bitcoin holdings of all investment vehicles growing by 1400 BTC. ₿ 800,000 ▪ The Grayscale bitcoin trust has not been closed for private placements in the last months, with the shares of the trust trading at large discounts in the ₿ 780,000 secondary market. ₿ 760,000 ₿ 756,724 ▪ Meanwhile, the Canadian ETFs have continued to prosper. In the last month, the Purpose ETF’s Bitcoins under management grew by 18%, while Evolve’s AUM grew by 33%. ₿ 740,000 ₿ 735,507 ▪ There seems to be a trend of capital rotating into ETFs, with most other ₿ 720,000 investment vehicles seeing declining AUM. ▪ The market awaits an answer from the SEC on the 10 US ETF applications. ₿ 700,000 ₿ 694,636 This could dramatically shake up the market and lead to further growth of bitcoins under management by bitcoin investment vehicles. ₿ 680,000 ▪ The SEC was due to make a first comment on VanEck’s Bitcoin ETF application last Thursday but postponed it to June. We’ll likely have to wait ₿ 660,000 until at least the end of June for the SEC to make any statements on the ongoing applications. ₿ 640,000 ▪ Currently, 801,444 BTC is managed by bitcoin investment vehicles, equaling Dec 30th Jan 29th Feb 28th Mar 26th Apr 30th 4.3% of the circulating bitcoin supply. Source: NYDIG, Purpose, CoinShares, Grayscale, 3iQ, Wisdomtree, Ninepoints, 21Shares May 4, 2021 10 Provided by
Valuation Provided by
Bitcoin struggling with resistance? Bitcoin / U. S. Dollar, 6H, Coinbase Bitcoin looked strong going into the weekend, but struggled to climb above $59,000 and is now back below this resistance level. Resistance Resistance ▪ With an impressive recovery last week, bitcoin managed to climb 26% from the lows at $47k. ▪ As noted in last week’s report, the $58k level would be an important area to surpass for further upside. This level got rejected over the weekend, and we still need a confident move above $59k to look for more upside. ▪ It looks like the $55k level is holding for now, and we could likely see a retest of the $58k level soon, ▪ A retrace to the lower $50k area would also not be surprising (or bearish), as bitcoin consolidation continues, and we haven’t seen any clear signs of a trend reversal. Source: Tradingview, Coinbase May 4, 2021 12 Provided by
Futures premiums mostly unchanged BTC Futures Annualized Rolling 3-Month Basis 60% 50% Premiums on BTC futures are mostly unchanged from last week. Premium rates climbed throughout the week, but 40% decreased again as the bitcoin price turned again this weekend. 30% ▪ The annualized 3-month basis is still around 20% on average among the retail-focused platforms. 20% ▪ The annualized 3-month basis on CME is also declining a bit this week, and touched the lower 5% area this morning. 10% ▪ With no clear direction for these futures premiums at the moment, the market seems more undecided on the 0% next move for bitcoin. -10% -20% 28 Feb 6 Mar 12 Mar 19 Mar 25 Mar 31 Mar 6 Apr 13 Apr 19 Apr 25 Apr 2 May FTX BitMEX Deribit Binance CME* Source: Skew.com *Closed Saturday - Sunday May 4, 2021 13 Provided by
Funding rates still neutral BTC Price vs Funding Rates A quiet week in the bitcoin perpetuals. The funding remains neutral. ▪ The funding rates have now been in the neutral territory for 16 days as short-term traders seem undecided on bitcoin’s direction. ▪ This is the longest period of neutral funding rates we’ve seen since bitcoin broke its 2017 ATH in December. ▪ One of the key explanations behind the declining funding rates could be the ongoing altseason, attracting the risk seekers to move onto other coins in the spot market. ▪ We believe the low funding rates and the low open interest in bitcoin as of now is a healthy sign. With less leverage, fewer positions will risk becoming liquidated, setting the stage for less dramatic price movements. Source: NYDIG Data May 4, 2021 14 Provided by
Blockchain Activity Provided by
Bitcoin on-chain summary: Difficulty adjustment normalizes fees On Saturday, the bitcoin difficulty fell by 12.6% due to the declining hashrate following the Xinjiang incidents, leading fees to decline again. ▪ The percentage contribution from fees to the miner revenue has quickly fallen back to its normal state as it declined to 11.82% over the last week, in contrast to last week’s 21.98%. ▪ This has made it cheaper to conduct transactions on the bitcoin blockchain. The average transaction fees now sit at around $25 dollars, after having spiked at $62 in the aftermath of the hashrate fall. ▪ Bitcoin’s difficulty adjustments elegantly absorb various shocks in the market and then normalize the state leading the block creation rate to reach the desired state of 6 blocks per hour. ▪ Now, blocks are created at a higher rate than 6 blocks per hour following the difficulty adjustment, meaning that miners are earning more from block subsidies at the current rate. This has helped to increase the miner revenue, despite a large decline in fees. Source: Bytetree May 4, 2021 16 Provided by
Taproot upgrade upcoming: Status on signaling from the miners The process for implementing the Taproot upgrade in Bitcoin has begun. ▪ Taproot is a soft fork to the Bitcoin network that will improve Bitcoin’s scripting capabilities and privacy. It may help with making smart contracts more efficient and private by only revealing the relevant parts of the contract when spending. ▪ It can also improve privacy of the Lightning Network by making channels look like regular bitcoin transactions. ▪ To activate the soft fork, BIP9 and Speedy Trial has been the chosen deployment method. Here, miners and mining pools help coordinate the deployment by signaling for deployment in their mined blocks. ▪ 90% of all blocks within a 2016 block period (the period between bitcoin’s difficulty readjustments) must signal for Taproot in order for the soft fork to take place, meaning that 1815 of the 2016 blocks within a period must signal for taproot. The Taproot soft fork signaling process lasts until August. ▪ Within the next 12 weeks, 90% of all mined blocks within a 2016 block period must be signaling for Taproot for the activation to take place. ▪ If 1815 (90%) of the blocks signal for readiness within a period, then full nodes that have upgraded to Bitcoin Core or any other compatible implementation will consider the signaling a success and activate the Taproot soft fork in November. ▪ We will not see the Taproot activation take place within this first period, given that there are already 365 non-signaling blocks. But, according to taprootactivation.com most major miners seem to be open to signal for Taproot in the upcoming months. Source: Screenshot from taproot.watch May 4, 2021 17 Provided by
The combined total value locked in DeFi and BSC surpasses $100 billion The combined total value locked on Ethereum and the Binance Smart Chain this week surpassed $100 billion and currently sits at $124.6 billion. May 4th Total value locked: Ethereum DeFi + Binance Smart Chain ▪ With the blistering ETH rally, the DeFi sector has seen massive developments in its TVL over Combined TVL $124.6bn the last weeks. The last week has seen the TVL on Ethereum grow by $16.5 billion, a 1-week growth of 27%. $120bn ▪ At the current growth rate, the total value locked on Ethereum’s DeFi alone will surpass $100 billion within the next week. BSC $100bn $47.3bn ▪ The total value locked in Ethereum DeFi has seen a one-year growth of 8318% - highlighting the enormous growth of the sector. $80bn ETH DeFi $77.3bn ▪ The growth of Ethereum’s DeFi sector has not been without hurdles and problems. The major hurdle to overcome being the scalability issues, leading to very high fees in periods. $60bn ▪ This has led to more centralized chains entering the space (The root behind the contradictory term “CeDeFi” – centralized decentralized finance), most notably with the $40bn Binance Smart Chain. Throughout 2021 the Binance Smart Chain ecosystem has experienced enormous growth. The total value locked in Binance Smart Chain projects currently sits at $47.3 billion. $20bn ▪ Combined, the total value locked on Ethereum and BSC sits at $124.6 billion as of May 4th. $0bn 31 Jan 14 Feb 28 Feb 14 Mar 28 Mar 11 Apr 25 Apr ▪ Other chains have also attracted new DeFi-like projects with growing success. Solana has attracted the attention of many. Sam Bankman Fried of FTX has been a huge proponent of DeFi Ethereum TVL Binance Smart Chain TVL Solana utilizing the network to create Project Serum, a decentralized exchange with on- chain orderbooks. Source: Defipulse, Defistation May 4, 2021 18 Provided by
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