Market Pulse (17/10/2022)

BTC becoming less volatile. Tether replaces commercial paper with U.S. Treasury bills. Polygon launches zkEVM public testnet.

Oct 17, 2022
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Chart of the Week: BTC Becoming Less Volatile

  • BTC’s implied volatility, a widely used measure of risk gleaned from the derivatives market, has recently been falling. This is in stark contrast to the rising VIX, which measures implied volatility for the S&P 500 index (comprised of the largest U.S. equities). This could be implying less cautious sentiment for BTC compared to equities and is also potentially indicative of a typical consolidation phase given the low trading volumes as well.

Crypto Fund Flow Tracker

  • The aggregated exchange balance for BTC continues to hover around YTD lows. No significant movements were seen in OTC (over-the-counter) desks’ balance for BTC. OTC desks are typically used by larger investors.

Crypto Derivatives Pulse

  • BTC and ETH put-call ratios are at yearly lows. Implied volatilities (vols) dropped again over the past week and are at subdued levels. 1-month implied vol currently stands at 55.3% (vs. 59.3% a week ago) and 69.8% (vs. 73.0% a week ago) for BTC and ETH, respectively.

  • BTC perpetual futures funding rates remain positive (longs pay shorts). ETH funding rates are still mainly negative (shorts pay longs).

  • No notable movements in leveraged traders’ and asset managers’ net positions in CME Bitcoin futures over the past week. 

  • Leveraged traders are typically hedge funds and various types of money managers, including commodity trading advisors and commodity pool operators. The traders may be engaged in managing and conducting proprietary futures trading, and trading on behalf of speculative clients.
  • The asset manager category consists of institutional investors, including pension funds, endowments, insurance companies, mutual funds, and those portfolio/investment managers whose clients are predominantly institutional.

Crypto Price Movements

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Crypto News Highlights

  • BNY Mellon, the world’s largest custodian bank and the oldest lender in the U.S., announced it has added crypto to its custody services. The bank will now be able to provide fund manager clients with keys storage for BTC and ETH, as well as other traditional bookkeeping services.
  • Policymakers with the European Parliament Committee on Economic and Monetary Affairs approved the Markets in Crypto-Assets (MiCA) framework. MiCA aims to create a consistent regulatory framework for crypto among the European Union member states.
  • Polygon (MATIC) launched its zero knowledge-EVM (zkEVM) public testnet. Polygon’s zero knowledge roll-up with EVM (Ethereum Virtual Machine) technology is a type of Layer-2 scaling solution for the Ethereum (ETH) blockchain. EVM is the software that runs smart contracts on Ethereum. With zkEVM, developers won’t have to learn new programming languages and can transfer their smart contracts over from Ethereum easily.
  • Tether, issuer of the stablecoin USDT, has reduced its commercial paper to zero, replacing them with U.S. Treasury bills, in an attempt to back its stablecoin with more secure reserves.
  • An exploiter who says he is part of the group that drained US$114M from Solana (SOL) based decentralised crypto exchange Mango Markets, returned US$67M to the exchange.

Catalyst Calendar

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