volatility

Bitcoin sentiment index drops to ‘fear’ — its lowest score in 18 months

June 25, 2024 Coin Telegraph

This Week’s Biggest Crypto Gainers and Losers: Cheelee Rises as Pendle Falls

May 13, 2024 Bitcoin.com

Fidelity Digital Assets Study: Bitcoin’s Volatility Declines as It Grows, Echoing Historical Asset Trends

May 2, 2024 Bitcoin.com

Uncovering the halving’s impact on Bitcoin’s inflation rate and store of value proposition

April 16, 2024 Coin Telegraph

3 metrics DeFi traders can watch in order to spot the next crypto bull market

November 17, 2023 Coin Telegraph

Altcoin

TVL, fee revenue and wallet activity are just three metrics investors can use to assess the health of the DeFi sector.

The decentralized finance (DeFi) market has been one of the most exciting and volatile sectors in the crypto outside of Bitcoin (BTC). In 2020, the DeFi sector experienced a bull market that saw the total value locked (TVL) in decentralized finance protocols surge from $1 billion to over $100 billion. However, the DeFi market has also been prone to significant corrections. In 2021, the DeFi market experienced a correction that saw the TVL fall from $100 billion to $40 billion.

Despite the volatility of the DeFi market, there are ways for traders to catch onto when the niche crypto sector begins to show sustained bullish momentum. Three of the most important metrics to watch are TVL, a platform’s fee revenue and the number of non-zero wallets holding tokens.

Let’s dig in a bit deeper to explore how these metrics can be used to guage the health of the DeFi sector.

Increases in the total value locked

TVL is one of the most widely used metrics to measure the overall health of the DeFi ecosystem. TVL represents the total amount of cryptocurrency assets locked in DeFi protocols. When TVL rises, it suggests increasing demand and use of DeFi services, which can signify a bull market.

While current TVL is slightly below the 2023 peak set on April 15 of $52.9 billion, it has risen since the start of the year. Since Jan. 1, TVL across the crypto market is up $7 billion, eclipsing $45 billion.

Increased fee reveunue points to increased usage and interest

Protocol fees measure the amount of fee revenue received by blockchains for completing transactions. Layer-1 blockchains are a key part of the DeFi ecosystem, as they allow for the building of decentralized applications (DApps) in which users can interact without a centralized intermediary.

When layer-1 fees are rising, it suggests that there is increasing interest in DeFi and that traders are utilizing DApps to interact with blockchains. In the past 30-days, the top 16 layer-1 blockchains by market cap all have shown a positive increase in fees. The 30-day fee total collected by Ether (ETH) is over $2.2 billion when annualized.

*Layer-1 blockchain fees. Source: TokenTerminal*

Non-zero DeFi wallet addresses rise

The number of non-zero addresses is a good indicator of the number of people who are actively participating in crypto. When the number of non-zero addresses increases, it suggests that there is increasing demand, which can be a sign of a bull market.

Non-zero addresses are a typically reliable indicator of demand as users are only likely to hold a crypto token if they believe that it will appreciate in value or actively utilize a protocol. Isolating statistics from the entire crypto market to focus on DeFi tokens, the number of non-zero addresses hit an all-time high on Nov. 8 of 1.1 million addresses. When looking at Nov. 8, 2020, there were only 267,180 non-zero wallet addresses.

*DeFi Blue-Chip tokens. Source: Glassnode*

The DeFi market has recovered and evolved since the Terra Luna implosion, but it is also volatile, so it is important to carefully consider on-chain metrics and other macro factors that can help identify bull markets.

By watching these metrics, traders can better understand the DeFi market’s overall health and possibly get early signals on the emergence of a new bull market.

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.

Will Bitcoin price hold $26K ahead of monthly $3B BTC options expiry?

September 27, 2023 Coin Telegraph

Bitcoin

Bitcoin trading volumes at a five-year low and the S&P 500 reaching its lowest levels in over three months could spell trouble for BTC bulls.

The upcoming $3 billion in Bitcoin (BTC) monthly options expiration on Sept. 29 could prove pivotal for the $26,000 support level.

BTC price faces serious headwinds

On one side, Bitcoin’s recognition in China appears to be strengthening, following a judicial report from a Shanghai Court that acknowledged digital currencies as unique and non-replicable.

Conversely, Bitcoin’s spot exchange trading volumes have dwindled to a five-year low, according to on-chain analytics firm CryptoQuant. Analyst Cauê Oliveira pointed out that a significant factor behind this decline in trading activity is the growing fear surrounding the macroeconomic outlook.

Despite the increase in long-term holders, the reduced trading volume poses a risk in terms of unexpected volatility. This means that price swings resulting from liquidations in derivative contracts could potentially cause structural market damage if there aren’t enough active participants.

Furthermore, there is growing unease among traditional financial institutions when it comes to handling crypto-related payments.

JPMorgan Chase, the largest bank in North America, is reportedly prohibiting transfers “related to crypto assets” within its retail division, Chase. The stated rationale is to protect against potential involvement in fraudulent or scam activities.

Lastly, Bitcoin holders are feeling apprehensive as the Dollar Strength Index (DXY), a measure of the dollar’s strength against other currencies, reached 106 on Sept. 26, its highest level in 10 months.

Historically, this index exhibits an inverse correlation with risk-on assets, tending to rise when investors seek safety in cash positions.

Bitcoin bulls too optimistic?

The open interest for the Sep. 29 options expiration currently stands at $3 billion. However, it is expected that the final amount will be lower due to bullish expectations of Bitcoin’s price reaching $27,000 or higher.

The unsuccessful attempt to break above $27,200 on Sept. 19 may have contributed to overconfidence among Bitcoin investors.

The 0.58 put-to-call ratio reflects the imbalance between the $1.9 billion in call (buy) open interest and the $1.1 billion in put (sell) options.

However, if Bitcoin’s price remains near $26,300 at 8:00 am UTC on Aug. 25, only $120 million worth of the call (buy) options will be available. This difference happens because the right to buy Bitcoin at $27,000 or $28,000 is useless if BTC’s price is below this level on expiry.

Bitcoin bears eye sub-$26,000 for max profit potential

Below are the four likeliest scenarios based on the current price action. The number of options contracts available on Sept. 29 for call (buy) and put (sell) instruments varies depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit.

This crude estimate disregards more complex investment strategies. For instance, a trader could have sold a call option, effectively gaining negative exposure to Bitcoin above a specific price. Unfortunately, there’s no easy way to estimate this effect.

Between $25,000 and $26,000: 1,400 calls vs. 19,300 puts. The net result favors the put instruments by $430 million.
Between $26,000 and $27,000: 6,200 calls vs. 12,600 puts. The net result favors the put instruments by $170 million.
Between $27,000 and $27,500: 9,900 calls vs. 10,100 puts. The net result is balanced between call and put options.
Between $27,500 and $28,000: 12,000 calls vs. 8,900 puts. The net result favors the call instruments by $85 million.

It’s worth noting that for the bulls to level the playing field ahead of the monthly expiration, they need to achieve a 3.2% price increase from $26,200. In contrast, the bears only need a modest 1% correction below $26,000 to gain a $430-million advantage on Sept. 29.

Given that Bitcoin traded below the $26,000 support level between Sept. 1 and Sept. 11, it wouldn’t be surprising if this level were breached again as the options expiration approaches. Moreover, investor sentiment is becoming increasingly risk-averse, as evidenced by the S&P 500 dropping to its lowest level since June.

Consequently, unless there is significant news or an event that strongly favors Bitcoin bulls, the likelihood of BTC’s price breaking below $26,000 by Sept. 29 remains high.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

No, Bitcoin is not in its ‘longest ever bear market’ — Here’s why

August 31, 2023 Coin Telegraph

Bitcoin Price

Based on some definitions of a bear market, the current cycle is not the longest crypto winter ever seen and may not even be a bear market.

Cryptocurrencies like Bitcoin (BTC) are not in their “longest ever bear market” and probably are not even in a bear market at all, according to some industry observers.

MN Trading founder Michaël van de Poppe took to X (formerly Twitter) on Aug. 27 to claim that Bitcoin is currently in its “longest bear market” in history.

“Right now, the price of Bitcoin is nowhere near the valuation of the peak in November '21. It's down more than 50% and in a bear market of 490 days,” the trader wrote.

Van de Poppe’s statement has brought much attention from X users, amassing 1.3 million views and nearly a thousand reposts at the time of writing. Some crypto enthusiasts, however, are confident that Van de Poppe’s information is not the case.

To determine the length of the current “bear market” in crypto, it’s necessary to understand that there are different interpretations of the term.

“Thing is, the terms ‘bull’ and ‘bear market’ are entirely subjective,” Quantum Economics founder Mati Greenspan told Cointelegraph. “It can mean either the price has moved in the past or that the price is expected to move in a certain direction in the future,” Greenspan said, adding:

“The ambiguity creates endless opportunities for analysts to make pointless arguments in perpetuity.”

According to Cointelegraph’s market editor Allen Scott, one may view the current market situation as a “multi-year bear market now until a new all-time high is broken.” Such a perspective suggests that Bitcoin has been in a bear market since reaching its historic peak near $69,000 on Nov. 10, 2021, or for 659 days. The period is even longer than the one mentioned by Van de Poppe, but it’s still not the longest “bear market” based on such an approach.

As previously mentioned by Cointelegraph, Bitcoin once saw its price below its previous highs for a period of 37 months — or about 1,125 days — between November 2013 and January 2017. For over three years, Bitcoin's price failed to reclaim $1,000 after hitting the price mark in 2013.

After reaching $20,000 for the first time in December 2017, Bitcoin again lagged behind the price level until December 2020, or for 1,095 days. But does that mean that Bitcoin was in a “bear market” during this period at all? Looking at the charts, one could say that Bitcoin was actually on the trajectory of hitting its all-time peak of $68,000.

*Bitcoin price chart between late 2017 August 2023. Source: CoinGecko*

According to another bear market term interpretation, Bitcoin may not currently be in a bear market at all.

Some classic definitions suggest that a bear market happens when a market index or asset declines by 20% or more from its recent high.

According to data from CoinGecko, Bitcoin’s most recent high occurred in mid-July 2023 at around $31,400. At current prices, Bitcoin is around 13% shy of that level. Moreover, the cryptocurrency has climbed 34% over the past year.

“If you zoom out enough, Bitcoin is just one big green candle and has been in a continuous bull market since 2019. I guess those that focus on short timeframes might be experiencing a bear market,” Jan3 CEO Samson Mow told Cointelegraph.

The Bitcoin advocate also hinted that he sees the current market situation as “very bullish” amid contributing factors like high inflation, loss of purchasing power, spiraling debt and adoption by nation-states like El Salvador. Mow also has his own definition of a bear market:

“A bear market is what high time preference crypto investors experience periodically.”

Quantum Economics’ Greenspan supported Mow's remarks, arguing that Bitcoin has never even been in a bear market. “Taking the longest time frame for both past occurrence and future expectations, we can however determine that Bitcoin always has and always will be in a bull market,” he stated.

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

Magazine: How to protect your crypto in a volatile market — Bitcoin OGs and experts weigh in

Bitcoin and Ether now less volatile than oil: Report

August 17, 2023 Coin Telegraph

Bitcoin Price

Technical analysts suggest that months of low volatility is often followed by a big price move.

The Bitcoin (BTC) and Ether (ETH) 90-day price volatility hit a new multi-year low in August as the top two cryptocurrencies continue to trade under their key resistance of $30,000 and $2,000 respectively.

According to data shared by crypto analytic firm Kaiko, the 90-day volatility of BTC and ETH hit 35% and 37% respectively making it less volatile than oil with volatility of 41%. Such a decline in the price momentum of the top two crypto assets was last seen in 2016.

*90-day price volatility of Bitcoin, Ether and Oil. Source: Kaiko*

The chart above indicates that BTC and ETH price volatility is more than half at the same time last year. While August is considered a bullish month for the crypto ecosystem, the declining price fluctuation is considered bullish by many.

Apart from the 90-day volatility at its lowest in 7 years, the daily Bitcoin volatility is also at 5-year low.

*Bitcoin daily volatility reaches 5-year low. Source: TradingView*

Bitcoin technical analyst who goes by the social media name of Cryptocon took to X platform to share observations about Bitcoin price volatility decline and what actually follows the period of low volatility.

The technical analyst noted that Bitcoin price went through a similar cycle of low price volatility in 2020 before the bull market picked up, however, he warned against the sideways movement of the top cryptocurrency.

#Bitcoin volatility continues to decrease, which I've shown is bullish

But the burning question is, when does the sideways grind end?

Upon thinking about I was reminded of a time very similar to now… pic.twitter.com/psO50vxUWD
— CryptoCon (@CryptoCon_) August 16, 2023

The analyst noted that despite the Black Swan event of 2020 when the BTC price fell over 50% in a day below $5000, Bitcoin made a recovery the very next month. However, when BTC price neared the $10,000 mark, the momentum vanished, again recording very low volatility. After three months of low volatility, the price of BTC broke out and created new highs before running into resistance again and seeing a sideways movement.

*Historical BTC price momentum after low volatility. Source: X*

The analyst concluded that Bitcoin price leaps out of the lows after a period of low volatility to form a first high, followed by another second high, while a third one is made against the key resistance. Cryptocon concluded that every major low volatility period for BTC is followed by a big move.

Magazine: Deposit risk: What do crypto exchanges really do with your money?

Top Trader Says One Ethereum Altcoin Has Now Reached ‘Blue Chip Status’ and Is Primed for Next Bull Run

August 1, 2023 The Daily Hodl

Deribit’s Bitcoin volatility index hits lifetime lows, hinting sideways action

July 25, 2023 Coin Telegraph

Bitcoin

The Bitcoin Implied Volatility Index has fallen to its lowest levels since the crypto options exchange launched the tracker in early 2021.

Crypto options exchange Deribit's future-looking Bitcoin (BTC) volatility index — used as a crypto fear gauge of sorts — has reportedly reached its lowest level in two years, indicating a possible lack of price turbulence for Bitcoin in the near future.

On July 24, crypto derivatives analytics platform Greeks Live noted that the volatility index for both Bitcoin and Ether (ETH) has fallen to a multi-year low of 37%.

Furthermore, the current implied volatility level has fallen to the lowest level in crypto's history according to the DVOL algorithm, it added.

The Dvol (Volatility Index) for BTC and ETH fell to 37%, the lowest level in history since two years ago, and the current Implied Volatility level, as projected by Dvol's algorithm, has fallen to the lowest level in crypto's history.
Continued low liquidity has severely depressed… pic.twitter.com/GdWE4GHXZw
— Greeks.live (@GreeksLive) July 24, 2023

DVOL is the Deribit Implied Volatility Index. It gives an indication of the expected volatility for a crypto asset over the next 30 days by analyzing option activity. In simple terms, the index can indicate investors' expectations for a crypto's price turbulence.

Greeks Live noted that continued low liquidity has severely depressed implied volatility (IV) levels for Bitcoin.

This suggests that derivatives traders are not confident that there will be any major moves in crypto markets in the short term and the lack of volatility is likely to continue, it said.

“It is an indisputable fact that the overall volatility of cryptocurrencies is declining, which will inevitably force the implied volatility of cryptocurrencies to keep going to new lows.”

Other analysts using different metrics have echoed the sentiment. On July 24, crypto analyst Josh Olszewicz observed that Bitcoin’s weekly Bollinger Bands had contracted to record levels. “This is officially the tightest bbands [Bollinger Bands] have ever been on the weekly timeframe,” he said.

Bollinger Bands are a type of statistical chart characterizing asset prices and volatility over time which consist of a middle trend line with two outer bands that are two standard deviations away.

*BTC weekly Bollinger Bands, all time. Source: Twitter/CarpeNoctom*

Crypto markets have been rangebound since mid-March with total capitalization hovering around $1.2 trillion. There has been very little deviation from this level aside from a brief peak in mid-April and an equally brief trough in mid-June.