Data shows the Bitcoin mining bear market has a ways to go

December 9, 2022 Coin Telegraph

Bitcoin

The 2022 bear market is impacting BTC miners in more extreme ways than previous downturns, especially with so many publicly listed miners struggling with their debt obligations.

Bitcoin (BTC) mining is the backbone of the BTC ecosystem and miners’ returns also provide insight into BTC’s price movements and the health of the wider crypto sector.

It is well-documented that Bitcoin miners are struggling in the current bear market. Blockstream, a leading Bitcoin miner recently raised funds at a 70% discount.

Current mining activity shares similarities to historic BTC bear markets with a few caveats.

Let’s explore what this means for the current Bitcoin cycle.

Analysis shows that based on previous cycles the bear market may continue

Bitcoin mining profitability can be measured by taking the miner’s revenue per kilowatt hour (kWh). According to Jaran Mellerud, a Bitcoin analyst for Hashrate Index, a BTC mining bear market has a sustained period of revenue per kWh of less than $0.25. Under his assumption, he calculates using the most efficient Bitcoin mining machine on the market.

The 2018 bear market lasted nearly a year, sending kWh to a bottom of $0.12. Following the downtrend, a short bull market commenced until the 2019 bear market began.

According to Mellerud, the 2019 bear market produced all-time low revenue per kWh of $0.083 and lasted 463 days, while Bitcoin price dropped to $5,000.

The most recent mining bear market started in April 2022 according to Mellerud’s analysis of revenue per kWh. As of Dec. 8, the current bear market has lasted for 225 days with a minimum revenue of $0.108 per kWh. The number is higher than in previous bear cycles due to high energy prices.

*Bitcoin mining historical revenue per kWh. Source: Hashrate Index*

Comparing the current bear mining cycles, a minimum of 138 bear market days may continue before the market turns. The difference between this period and past cycles is that previously, miners were mainly self-funded whereas now, there are many miners that funded their rapid growth with debt.

Public mining stocks feel the pain

At its peak, Bitcoin mining stocks reached a cumulative value of over $17 billion in the 2021 bull market. The bull market increased investor interest and spurred growth in BTC mining stocks skyrocketed from $2 billion in Nov. 2020.

After reaching the bull market peak in 2021, crypto mining stocks are under immense pressure, with many falling by 90%.

*Bitcoin mining stocks total market cap. Source: Hashrate Index*

The immense amount of debt taken on by public mining firms taken at Bitcoin’s all-time high is creating a massive debt-to-equity ratio.

Mirror, mirror on the wall, who are the strongest public #bitcoin miners of them all? pic.twitter.com/pnpypsxcAu
— Jaran Mellerud (@JMellerud) December 5, 2022

A great example of how the bear market is increasing miners’ reliance on debt, is to look at Core Scientific. Before the mining bear market in April, Core Scientific had a mere 0.6 debt-to-equity ratio. Since the start of the bear market, that number has grown to over 24.2 debt-to-equity.

*Core Scientific debt-to-equity. Source: Hashrate Index*

With the Bitcoin mining bear market expected to continue based on past historic BTC trends, more public miners will face equity squeezes. As miner debt continues to grow, investors may get spooked, creating even more depressed prices in the stock market.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

3 reasons why Ethereum price keeps rejecting at the $1,300 level

December 6, 2022 Coin Telegraph

3 reasons why Ethereum price keeps rejecting at the ,300 level

Coin Telegraph

Traders are not sure if ETH will be able to hold the $1,200 level while the S&P 500 rapidly approaches the crucial 3,900 support and ETH derivatives data hints at more downside.

Ether (ETH) rallied 11.3% between Nov. 28 and Dec. 5, peaking at $1,300 before facing a 4.6% rejection. The $1,300 resistance level has been holding ground for twenty-six days and is the most likely explanation for the correction to $1,240 on Dec. 6.

*Ether/USD price index, 12-hour. Source: TradingView*

So from one side, traders are relieved that Ether is trading 16% above the $1,070 low reached on Nov. 22, but it must be frustrating to fail at the same level the entire week. In addition to the price rejection, investors' mood worsened after three members of the United States Senate reportedly requested information from Silvergate Bank regarding its relationship with FTX.

The lawmakers raised questions after "reports suggesting that Silvergate facilitated the transfer of FTX customer funds to Alameda'' and gave the bank until Dec. 19 to issue a response.

On Dec. 5, NBC News reported that Silvergate claimed to be a "victim" of FTX's and Alameda Research's "apparent misuse of customer assets and other lapses of judgment."

Newsflow remained negative after the Financial Times reported that the United Kingdom Treasury is finalizing some guidelines to restrict cryptocurrency sales from abroad. The changes would enable the Financial Conduct Authority (FCA) to monitor the crypto companies' operations in the region. The guidelines are being prepared as a part of the financial services and markets bill.

Investors are afraid that Ether could lose the $1,200 support, but as highlighted by trader CashMontee, the S&P 500 stock market index will be the key — but for now, "market too bullish."

nah market too bullish I think. As long as spx stays up so does crypto. Monthly level at 1205 that i think will be tagged after but we didn't take enough liquidity on eth yet to fall back down but of course could be wrong
— CashMontee (@CashMontee) December 5, 2022

Let's look at Ether derivatives data to understand if the bearish newsflow has impacted crypto investors' sentiment.

Slight uptick in bearish demand for ETH futures' leverage

Retail traders usually avoid quarterly futures due to their price difference from spot markets. Meanwhile, professional traders prefer these instruments because they prevent the fluctuation of funding rates in a perpetual futures contract.

The two-month futures annualized premium should trade between +4% to +8% in healthy markets to cover costs and associated risks. Thus, when the futures trade at a discount versus regular spot markets, it shows a lack of confidence from leverage buyers — a bearish indicator.

*Ether 2-month futures annualized premium. Source: Laevitas.ch*

The above chart shows that derivatives traders remain bearish as the Ether futures premium is negative. So, bears can celebrate that the indicator is far from the neutral 0% to 4% premium, but that does not mean traders expect an immediate adverse price action.

For this reason, traders should analyze Ether's options markets to exclude externalities specific to the futures instrument.

Options traders are getting comfortable with the downside risks

The 25% delta skew is a telling sign when market makers and arbitrage desks are overcharging for upside or downside protection.

In bear markets, options investors give higher odds for a price dump, causing the skew indicator to rise above 10%. On the other hand, bullish markets tend to drive the skew indicator below -10%, meaning the bearish put options are discounted.

*Ether 60-day options 25% delta skew: Source: Laevitas.ch*

The delta skew has stabilized in the past week, signaling that options traders are more comfortable with downside risks.

As the 60-day delta skew stands at 12%, whales and market makers are getting closer to a neutral sentiment for Ether. Ultimately, both options and futures markets point to pro traders fearing that the $1,200 support retest is the natural course for ETH.

The answer might as well be hidden under the macroeconomic calendar ahead, which includes the EuroZone's and Canada's Gross Domestic Product (GDP) on Dec. 7 and the United States Consumer Price Index (CPI) on Dec. 13.

Currently, the odds favor Ether bears because the newsflow implies that the possibility of stricter regulation is weighing down the market.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

‘Imminent’ crash for stocks? 5 things to know in Bitcoin this week

December 5, 2022 Coin Telegraph

Analysis

Bitcoin gets a boost from a declining U.S. dollar, but BTC price action is anything but straight bullish, say analysts.

Bitcoin (BTC) starts its first full week of December at three-week highs as bulls and bears battle on.

After a weekly close just above $17,000, BTC/USD seems determined to make the most of relief on stocks and a weakening U.S. dollar.

As the United States gears up to release November inflation data, the dollar looks to be a key item to watch as BTC price action teases a recovery from the pits of the FTX meltdown.

All may not be as straightforward as it seems — miners are facing serious hardship, data shows, and opinions on stocks’ own ability to continue higher are far from unanimous.

As the end of the year approaches, will Bitcoin see a “Santa rally” or face a new year nursing fresh losses?

Cointelegraph presents five areas worth watching in the coming days when it comes to BTC/USD performance.

Bitcoin traders diverge over “Santa rally”

Light relief for Bitcoin bulls this week comes in the form of a solid weekly close followed by an uptick to multi-week highs.

BTC/USD hit $17,418 on Bitstamp in the hours after the close, taking the pair to its highest levels since Nov. 11, data from Cointelegraph Markets Pro and TradingView shows.

*BTC/USD 1-day candle chart (Bitstamp). Source: TradingView*

For traders, there is reason to believe that short-term strength may hold, allowing Bitcoin to head closer to $20,000.

“No change to my expectations. Still looking for 19k+,” Credible Crypto confirmed to Twitter followers on Dec. 4.

“$BTC has formed a nice tight consolidation here after a clean impulse on low time frame. May dip into 16k's first to take out these built up lows but still expecting continuation up after regardless.”

Fellow trader Dave the Wave meanwhile put faith in a Christmas rally coming next, while others, including popular commentator Moustache, said that the time was historically right for recovery.

Comparing the 2022 bear market to previous ones, he explained that BTC/USD should now be finding a bottom, 31 weeks after its last all-time high.

“The Bitcoin bottom should be very close,” he reiterated at the weekend.

*BTC/USD annotated chart. Source: Moustache/ Twitter*

Not everyone, however, is so optimistic. For Crypto Kingpin, there is room for a move to $18,000 before Bitcoin starts “heading lower.”

While not mentioning exact downside targets, he described the weekly close as “conflicting.”

“im still of the belief for now that this move up on btc is part of a corrective abc w4 before making a new low sub $15k into Q1 2023 where we find a longer term bottom,” another popular trader, Bluntz, tweeted after the weekly close.

Similarly conservative on lower timeframes is trader Korinek_Trades, who despite calling for a “huge relief bounce” on Bitcoin acknowledged that downside could take it as low as $12,000.

*BTC/USD annotated chart. Source: Korinek_Trades/ Twitter*

Crypto voices cautious on stocks amid “imminent" crash claim

The coming week in macro marks the precursor to the all-important U.S. Consumer Price Index (CPI) print for November, due Dec. 13.

In the meantime, U.S. Producer Price Index (PPI) and jobless data later in the week will be dates to watch for traders, these traditionally sparking at least short-term volatility.

Eyeing U.S. equities, meanwhile, the tone among crypto traders and beyond appears tense, despite recent strength in the face of a declining dollar.

The S&P 500 (SPX) finished the week prior up 1.66% at 4,071 points.

“Unless we take out 4,300 on volume and stay above, this to me is a propped-up rally. Could take a few weeks to climb mind,” Crypto Tony warned over the weekend.

An additional tweet revealed doubts about Bitcoin avoiding knock-on effects despite already significantly underperforming stocks in the wake of FTX.

“This is a very plausible scenario,” Crypto Tony commented alongside a chart.

“If we do indeed see a continuation crash in the stock market due to high interest, defaults etc, I expect Bitcoin to follow. Until then we will simply range in my opinion while there are minimal buyers.”

*BTC/USD annotated chart. Source: Crypto Tony/ Twitter*

That sentiment echoed a forecast from popular commentator, Nunya Bizniz, who earlier suggested that the SPX may put in a “Santa rally” before reversing.

The starkest outlook on equities came from Michael A. Gayed, the renowned portfolio manager and author of investment strategy circular, “The Lead-Lag Report.”

In an extensive Twitter digest on Dec. 3, Gayed went beyond caution, telling readers that an “imminent stock market crash” was next.

“My point is that there are lags and that markets have a funny way of surprising the crowd out of nowhere,” part of one post read.

“It is not impossible to see a scenario where the butterfly creates the hurricane.”

He added that FTX had itself created unusual market responses even beyond crypto.

Miners already in “giant capitulation”

The FTX saga is beginning to show itself in the struggles of Bitcoin miners to an increasing extent.

The latest data shows that the 30-day change in the BTC supply held in miner wallets is at its most negative since the start of 2021.

The numbers, from on-chain analytics firm Glassnode, come in the form of the Miner Net Position Change metric. As of Dec. 3, miners were overall down 17,721 BTC over 30 days.

*Bitcoin miner net position change chart. Source: Glassnode*

Additional data confirmed miners’ overall BTC balance putting in a further steep decline at the start of December, dropping from 1,828,630 BTC on Nov. 30 to 1,818,303 BTC on Dec. 3.

The last time that miners’ balances were that low was in September 2021.

*Bitcoin miner BTC balance chart. Source: Glassnode*

As BTC/USD fell 16% over the course of November, miners suddenly encountered already slim margins squeezed beyond the point of no return.

This means “capitulation” as they unplug, commentators argue, and a period of flux is now entering.

“November was a horrible time for BTC miners,” popular analyst Satoshi Stacker summarized.

“Bitcoin miners had gone bankrupt in previous cycles before things got better. We're in the middle of a giant Bitcoin mining capitulation now.”

An accompanying list of grim financial results from public miners underscored the theory.

As Cointelegraph reported, Bitcoin’s Hash Ribbons metric is already flagging a capitulation phase in the making, its two moving average crossing over just months after miners exited their last capitulation.

Difficulty set for biggest drop in 17 months

With Bitcoin miners under stress, network fundamentals are beginning to reflect changes in activity.

At its next automated readjustment on Dec. 6, mining difficulty will drop by an estimated 7.8%, according to data from BTC.com.

*Bitcoin network fundamentals overview (screenshot). Source: BTC.com*

The weeks following the FTX meltdown have produced curious changes in network participation, and analysts have suggested various reasons why fundamentals have diverged from price action.

As Cointelegraph reported, one theory even argued that Russia was cornering the market by adding significant hashing power despite miners en masse seeing significantly reduced profitability.

While hash rate was still increasing after FTX and the subsequent BTC price decline, toward the end of November, things began to change. Hash rate fell from near all-time highs, and difficulty with it.

The forthcoming decrease in difficulty will even constitute Bitcoin’s largest since July 2021, when a single readjustment saw it drop by over 27%.

Meanwhile, for Timothy Peterson, investment manager at Cane Island Alternative Advisors, there is even reason to believe that difficulty may preclude a macro BTC price bottom.

In a tweet on Nov. 29, he argued that when the 200-day moving average of BTC/USD and its “difficulty value” — a difficulty-derived BTC price value — converge, it has historically meant a bottoming formation.

“A bitcoin buy signal is within sight. Caveat: based on historical relationships which may no longer hold,” he commented.

“Still, I think difficulty is a good indicator of a minimum level of demand for bitcoin. The convergence is at 12k, which means price must be +/- 12k for 200 days.”

Such a formation, accompanying charts showed, may not enter until the middle of 2023.

*BTC/USD 200-day MA vs. difficulty price charts. Source: Timothy Peterson/ Twitter*

Sentiment avoids “extreme fear”

As Bitcoin price action staves off further macro lows, sentiment is also shunning volatility.

Related: How much is Bitcoin worth today?

Ever-popular sentiment gauge, the Crypto Fear & Greed Index, remains tied to an area just above its “extreme fear” zone.

*Crypto Fear & Greed Index (screenshot). Source: Alternative.me*

Having dropped in line with price following FTX, a modest recovery has been underway, despite the overall impression that new lows are due.

The curious divergence to many commentators’ prognoses is heightened by the state of affairs “on the ground” for investors themselves.

As Cointelegraph reported, realized and unrealized losses for the BTC supply are hitting levels never seen before, and as a whole, the supply is in net loss, as per the market value to realized value (MVRV) metric.

MVRV compares Bitcoin’s market cap to its realized cap — the aggregate price at which the supply last moved. When the latter crosses under the former, it has signaled price bottoming structures.

Describing those structures as an “accumulation zone,” meanwhile, popular commentator CryptoNoob said that current conditions could even constitute a “lifetime investment opportunity” for Bitcoin.

*Bitcoin market cap vs. realized cap annotated chart. Source: CryptoNoob/ Twitter*

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

DXY bounces at major support, reducing Bitcoin’s chance at breaking the $17.2K resistance

December 2, 2022 Coin Telegraph

DXY bounces at major support, reducing Bitcoin’s chance at breaking the .2K resistance

Coin Telegraph

The dollar index (DXY) found support at a key level, leading traders to question whether BTC will manage to flip $17,250 to support.

On Dec. 2, the United States dollar index (DXY), an index that measures the dollar's strength against a basket of top foreign currencies, reached 104.40 which was the lowest level seen in 5 months.

To recap, the U.S. dollar's weight against the basket of top foreign currencies grew by 19.6% in 2022 until late September as investors looked for protection against the impact of a hawkish Federal Reserve and, more recently, the rising energy costs and effect of high inflation.

The U.S. dollar's retreat may have been an interim correction to neutralize its "overbought" condition, as the 114.60 peak was the highest level in 20 years. Still, its inverse correlation with Bitcoin (BTC) remains strong, as pointed out by analyst Thecryer on Twitter:

$DXY $BTC pic.twitter.com/jG9HmYN8Mg
— Thecryer (@HumpBackCrypto) December 2, 2022

Notice how the intraday DXY retrace to 105.50 from the 104.40 low happened when Bitcoin faced a $230 flash crash to $16,790. Such movements reinforce how cryptocurrencies' performance remains codependent on traditional markets.

Bitcoin enthusiast Aldo the Apache noticed that the DXY "bullish divergence at support" occurred as the S&P 500 stock market index struggled with a vital resistance level.

$DXY with bullish divergence at support while $SPX is coming is at major resistence.

What does this mean for $BTC? Another leg down IMO. pic.twitter.com/PK3Ku0zZrl
— Aldo the Apache (@AldotheApache77) December 2, 2022

According to the analyst, the net impact for Bitcoin is negative if the expected trajectory confirms with the U.S. dollar gaining strength against major fiat currencies, and the stock market faces another leg down.

On-chain metrics are also painting a potentially bearish picture as Bitcoin miners, feared to be entering a new wave of capitulation, have upped sales of BTC reserves. For instance, the record hash rate and increased energy costs have drastically severed miners' profitability.

Glassnode's miner outflow multiple, which measures BTC outflows from miner wallets relative to their one-year moving average, is now at its highest in six months.

Let's look at derivatives metrics to understand better how professional traders are positioned in the current market conditions.

Bitcoin margin longs see a drastic reduction

Margin markets provide insight into how professional traders are positioned because it allows investors to borrow cryptocurrency to leverage their positions.

For instance, one can increase exposure by borrowing stablecoins to buy Bitcoin. On the other hand, Bitcoin borrowers can only short the cryptocurrency as they bet on its price declining. Unlike futures contracts, the balance between margin longs and shorts isn't always matched.

*OKX stablecoin/BTC margin lending ratio. Source: OKX*

The above chart shows that OKX traders' margin lending ratio firmly declined from Nov. 27 to Nov. 30, signaling that professional traders decreased their leverage longs during the dip toward $16,000.

More importantly, the subsequent $1,250 gain that led Bitcoin to $17,250 on Nov. 30 were not enough to instill confidence in Bitcoin buyers using stablecoin borrowing. Still, presently at 23, the metric favors stablecoin borrowing by a wide margin — indicating shorts are not confident about building bearish leveraged positions.

Option traders remain risk-averse

Traders should analyze options markets to understand whether Bitcoin will successfully break the $17,250 resistance. The 25% delta skew is a telling sign whenever arbitrage desks and market makers are overcharging for upside or downside protection.

The indicator compares similar call (buy) and put (sell) options and will turn positive when fear is prevalent because the protective put options premium is higher than risk call options.

In a nutshell, the skew metric will move above 10% if traders fear a Bitcoin price crash. On the other hand, generalized excitement reflects a negative 10% skew.

*Bitcoin 60-day options 25% delta skew: Source: Laevitas*

As displayed above, the 25% delta skew declined between Nov. 21 and Nov. 30, indicating options traders reduced their bets of unexpected price dumps. However, the trend inverted on Dec. 1 after the $17,250 resistance proved stronger than expected.

Currently at 18%, the delta skew signals that investors are still fearful and it reflects a lack of interest from whales and market makers in offering downside protection.

Consequently, pro traders are not confident that Bitcoin will recapture $18,000 anytime soon, which can be explained by the high correlation with traditional markets.

Until the DXY index sets a more precise direction and the S&P 500 shows strength at 4,000, the trend favors Bitcoin bears.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Bitcoin bulls lie in wait as US dollar strength hits 5-month lows

December 2, 2022 Coin Telegraph

Bitcoin

BTC price performance gains some positive tailwinds, but Bitcoin faces a potential top for U.S. stocks.

Bitcoin (BTC) continued to hold key support on Dec. 2 as United States stocks fell on the Wall Street open.

*BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView*

DXY weakness offers hope of "Santa rally"

Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as bulls bought time between $16,800 and $17,000.

Analysts had earmarked the former as a key level to retain, this nonetheless in question at the time of writing as stocks shed 1% to start the session.

Popular crypto analytics account Nunya Bizniz queried whether it was time for a “decision” on S&P 500 performance, eyeing a pattern which suggested a local top may soon appear.

Should that be the case, Bitcoin’s correlation to traditional risk assets would be tested, this having ebbed in the wake of the FTX meltdown.

For the meantime, however, the inversely-correlated U.S. dollar gave bulls little to worry about, the U.S. dollar index (DXY) hitting five-month lows.

DXY wicked down to just 104.37 on the day before rebounding above 105 at the Wall Street open.

*U.S. dollar index (DXY) 1-day candle chart. Source: TradingView*

Fellow analyst Pumpcat thus eyed the six-month close for the chart due at the end of December.

“I think the probablity for a longterm correction is high from here on,” he predicted.

Another popular Twitter analytics account, Cold Blooded Shiller, additionally entertained the idea of a “Santa rally” should macro data and comments from the Federal Reserve complement risk asset performance — to the dollar’s detriment.

“Markets are clearly at an important point - both the $DXY looking like freefall + markets like $SPX looking to try and break the major trendlines that have kept them capped,” a further tweet on the day added.

Analyst reinforces $19,500 significance

Eyeing potential for upside, trader and analyst Rekt Capital stuck with $19,500 as the ceiling for Bitcoin on monthly timeframes.

BTC/USD finished November down 16.2%, having broken through support to trade in a new range in the wake of FTX.

"BTC lost $19500 as support. But it hasn't turned it into a new resistance," he wrote.

"Technically, $BTC could relief rally to as high as $19500 to turn it to a new resistance. That would be a textbook confirmation of the breakdown. Doesn't have to happen but a possibility."

*BTC/USD annotated chart. Source: Rekt Capital/ Twitter*

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Markets Spike After Fed Chair Says It ‘Makes Sense to Moderate the Pace’ of Rate Hikes, Hints Easing Could Happen in December

November 30, 2022 Bitcoin.com

Amid Civil Unrest in China, Gold and Silver Prices Hold Steady — Equity, Crypto Markets Flounder

November 28, 2022 Bitcoin.com

Bitcoin is now less volatile than S&P 500 and Nasdaq

November 5, 2022 Coin Telegraph

Ark Invest

A rare 2% daily loss for the U.S. dollar index gives Bitcoin and stocks an opportunity for gains, but BTC still undercuts the rest on volatility.

Bitcoin (BTC) held gains above $21,000 into Nov. 5 as the U.S. dollar posted a rare major daily decline.

Dollar dives 2% as risk assets recover

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD building on prior strength to hit highs of $21,473 on Bitstamp — a new seven-week high.

The pair had benefited from the latest United States economic data, while the dollar conversely suffered. The U.S. dollar index (DXY) lost 2% in a day for the first time in years, helping fuel a risk asset rally.

“And, just like that, Bitcoin took out all the highs, volume is increasing and it's back above $21K,” Michaël van de Poppe, CEO and founder of trading firm Eight, commented.

“I'm assuming we'll continue towards $22.5K from here, but have a slight correction before continuing (as we took out all the liquidity). Buy the dip season.”

*BTC/USD annotated chart. Source: Michaël van de Poppe/ Twitter*

BTC had previously become notorious for its lack of volatility and narrow trading range, helping it beat even stocks for the first time ever.

“For the first time in history, bitcoin is less volatile than both the S&P 500 and Nasdaq,” Yassine Elmandjra, a crypto analyst at ARK Invest, noted, linking to the firm’s latest report, “The Bitcoin Monthly.”

“The last time volatility was this low, bitcoin rose from $9,000 to $60,000 in less than a year.”

*Bitcoin vs. S&P500 vs. Nasdaq Composite Index volatility chart. Source: Yassine Elmandjra/ Twitter*

Tyler Winklevoss, co-founder of trading platform Gemini, meanwhile revealed a belief that crypto markets would continue to act as a leading indicator of overall market trajectory, as in 2021.

“Crypto was the first asset class to crash; it will be the first to rise again,” he summarized.

Bitcoin more stable than major fiat currencies

Continuing on the theme of low volatility, ARK’s report, led by well-known analyst David Puell, showed that it was not just stocks being undercut by Bitcoin’s stability.

Related: Why is the crypto market up today?

“Bitcoin’s relative volatility has not only decreased relative to equities, but also to major currency pairs. As macro uncertainty and USD strength have increased, foreign currency pairs have been impacted negatively while bitcoin has been relatively stable,” The Bitcoin Monthly stated.

“Bitcoin’s 30-day realized volatility is nearly equivalent to that of the GBP and EUR for the first time since October 2016. Although Fed hawkishness could continue its volatility, bitcoin’s strength relative to foreign currencies is an encouraging sign.”

*BTC/USD volatility vs. EUR, GBP chart (screenshot). Source: ARK Invest*

As Cointelegraph reported, another popular analyst, LookIntoBitcoin creator Philip Swift, has forecast the end of the current bear market by the start of 2023.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Singapore bank DBS uses DeFi to trade FX and state securities

November 2, 2022 Coin Telegraph

Asia

Major Asian financial institution DBS Bank has applied DeFi technology for a project backed by the Monetary Authority of Singapore.

DBS Bank, a major financial services group in Asia, is applying decentralized finance (DeFi) for a project backed by Singapore’s central bank.

DBS has started a trading test of foreign exchange (FX) and government securities using permissioned, or private, DeFi liquidity pools, the firm announced on Nov. 2.

The development is part of Project Guardian, a collaborative cross-industry effort pioneered by the Monetary Authority of Singapore (MAS). Conducted on a public blockchain, the trade included the purchase and sale of tokenized Singapore government securities (SGS), the Singapore dollar (SGD), Japanese government bonds and the Japanese yen (JPY).

The project has shown that trading on a private DeFi protocol enables simultaneous operations of instant trading, settlement, clearing and custody. The initiative could potentially transform the existing trading processes by providing better liquidity across multiple financial assets and markets, DBS said.

According to DBS’ head of strategy Han Kwee Juan, the latest Project Guardian developments lay the foundations for building global institutional liquidity pools enabling faster trading, greater transparency, lower settlement risks and other benefits. Han noted that smart contracts show a lot of promise for trading execution and verification, stating:

“Smart contracts will reshape how execution can be achieved in a highly trusted manner, especially if it takes place in a permissioned market where all anonymous wallets are verified by trust anchors such as Know Your Customer processes.”

Han also pointed out that a highly liquid market attracts more investors and adds efficiency by bypassing intermediaries. “Currently, FX and government securities are primarily transacted in the over-the-counter markets involving multiple intermediaries resulting in friction in the settlement process,” he added.

DBS Bank made a massive move into the crypto industry in recent years, launching an institutional cryptocurrency exchange in December 2020. The company has also been working to expand its crypto trading platform to retail investors.

The latest milestone in Project Guardian is yet another example of the growing trend involving a combination of DeFi technology with centralized finance tools. According to Swiss central bank official Thomas Moser, DeFi can work well with central bank digital currencies, complementing each other in terms of stability and liquidity.

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