Market Pulse (Week 28, 11/07/2022 – 17/07/2022)

Chart(s) of the Week: ETH Gaining Momentum

• Not to be lost amid the current predominantly negative sentiment is that ETH has been quietly gaining momentum. It is up significantly at +24.1% in the past 1-month, outperforming BTC’s +3.5% by a wide margin. Ethereum developers very recently gave an update and proposed 19 September 2022 as the tentative target date for the Merge.

• Our recent Alpha Navigator report highlighted BTC vs. ETH as a potential market-neutral pair trade, as the BTC vs. ETH price ratio (BTC price divided by ETH price, in US$) was at a peak (2-standard deviation ceiling band), the ETH Merge catalyst remained in play for Q3 or Q4, and that any return to risk-on sentiment would likely favour ETH over BTC. ETH’s outperformance over BTC since then is driving the price ratio back down towards the average.

Fund Flow Tracker

• Aggregated exchange balance for BTC saw an uptick during the past week, after marking a 1-year low in early July 2022. The past week saw net-inflows of 13.3K for BTC and net-outflows of -74.6K for ETH. BTC balance held on OTC desks printed higher over the past week.

Derivatives Pulse

• All is quiet on the options front. 1-week implied vol currently stands at 64.8% (vs. 66.5% a week ago) and 83.3% (vs. 81.0% a week ago) for BTC and ETH, respectively. Skews remain subdued for both BTC and ETH.

• Perpetual futures funding rates continue to print positive for BTC, while ETH saw some negative prints over the past week.

• Leveraged traders’ (i.e. speculators) net-short position in CME Bitcoin futures has continued to reduce since mid-May 2022.

• 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.
• The dealer category consists of participants typically described as the “sell-side” of the market. These include large banks and dealers in securities, swaps, and other derivatives. The other reportable category consists of traders mostly using markets to hedge business risk, and includes amongst others corporate treasuries.

Technically Speaking

• ETH has broken out of the narrow sideways channel established since mid-June, crossing the 10-day moving average on its way up, and is now testing the 50-day moving average. 

Price Movements

News Highlights

• Grayscale expands its list of assets under consideration for potential future investment products, including Apecoin (APE), Kyber Network Crystal (KNC), and Cronos (CRO).
• German financial services company EQONEX Limited launched a physically-backed Bitcoin Exchange Traded Note (ETN) product on the Deutsche Borse XETRA Exchange.
• Circle released a breakdown (unaudited) of its reserve assets for the stablecoin USDC, consisting of U.S. Treasury bonds and cash.
• Mt. Gox trustee prepares to unlock 150K BTC to make repayments to account holders.
• U.S CPI came in at 9.1% YoY in June, above expectations and the highest in more than 40 years.

Catalyst Calendar

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Author

Research and Insights Team