1. Market Wrap: Ether Climbs, Pushing Past ‘Musk Dip’ as Crypto Volatility Increases
Investors are buying and no longer panicking.
Crypto assets are mostly flashing green Tuesday but volatility is also making gains across major cryptocurrencies.
Bitcoin (BTC) trading around $43,324 as of 21:00 UTC (4 p.m. ET). Losing 2.1% over the previous 24 hours.
Bitcoin’s 24-hour range: $42,658-$45,736
Ether (ETH) trading around $3,402 as of 21:00 UTC (4 p.m. ET). Gaining 0.22% over the previous 24 hours.
Ether’s 24-hour range: $3,209-$3,551
Bitcoin, the world’s largest cryptocurrency by market capitalization was down Tuesday by 2.1% as of press time and going as low as as $42,658 around 23:15 UTC (7:15 p.m. ET). BTC was below the 10-hour moving average and the 50-day, a bearish signal for market technicians.
Crypto investors seem to be back to hitting the buy button on some cryptocurrencies, however, after the mercurial Elon Musk seems to have slowed his crypto Twitter activity — at least for now.
2. ‘Extreme Fear’ Grips Bitcoin Market After Price Plunge, Sentiment Gauge Shows
The drop in market sentiment follows the past week’s bitcoin price plunge, according to Arcane Research.
The Crypto Fear and Greed Index, a metric that measures the current sentiment in the bitcoin market, has fallen to “extreme fear” levels not seen since April 2020, a report Tuesday showed.
The drop in market sentiment follows the past week’s plunge in the bitcoin (BTC) price to about $43,200, down from last month’s record near $65,000.
The Crypto Fear and Greed Index is now at 21, down from a “greedy” level of 73 just last week, according to the report from hosting site Alternative and quoted by Arcane Research, a Norwegian analysis firm.
“The past week has been filled with fear, uncertainty and doubt, and the bitcoin price has crashed down,” the Arcane analysts wrote. “In the past, an extremely fearful market like this has historically presented solid buying opportunities during bull cycles.”
Other market indicators are reflecting that fear, according to Arcane:
The so-called “Grayscale discount” has widened to a record 25%. This is the difference between the price of bitcoin, as implied by the trading level of Grayscale Bitcoin Trust shares, and the spot-market price. “If the discount becomes of sufficient size, this could post a short-term risk for bitcoin,” according to Arcane.
Funding rates in the market for bitcoin derivatives turned negative. The funding rates fell below 0% on two separate occasions over the past week — during the May 12 sell-off, and again on Monday as the market reacted to Tesla CEO Elon Musk’s latest comments on the cryptocurrency. “As the market headed downwards yesterday, $1 billion worth of longs got liquidated as the market turned sour.” By Tuesday, according to the report, the funding rate had returned to neutral territory, according to the report.
Short-term price volatility has climbed to the highest level since February. The 30-day volatility is now at 4.5%, indicating that the bitcoin price has been moving 4.5% every day over the past month, on average.
3. New OCC Chief Signals Greater Caution on Crypto
“We created an Office of Innovation, updated the framework for chartering national banks and trust companies, and interpreted crypto custody services as part of the business of banking. I have asked staff to review these actions,” Acting Comptroller Michael Hsu said.
The U.S. Office of the Comptroller of the Currency (OCC) will review its crypto-related guidance issued over the past year, its new chief said.
Michael Hsu, the new acting comptroller, said in prepared remarks that he requested a review of all of the federal bank regulator’s pending matters, interpretative letters and guidance, including issues around digital assets and cryptocurrencies.
Much of the OCC’s crypto guidance was issued under the administration of former Acting Comptroller Brian Brooks, and marked what seemed like a watershed moment for the crypto industry’s acceptance from the broader banking sector. Brooks now leads Binance.US.
4. Saxo Bank Arm Launches Trading of BTC, ETH, LTC Against Major Currencies
The offering from Saxo Markets will be available initially to clients in Singapore and Australia.
Saxo Markets, the digital investing subsidiary of Danish bank Saxo, has launched a service enabling trading of three top cryptocurrencies in FX pairs.
The offering matches bitcoin (BTC, -8.48%), ether (ETH, -5.37%) and litecoin (LTC, -7.25%) against the euro, U.S. dollar and Japanese yen, initially for Saxo Markets’ clients in Singapore and Australia.
Rollout to other key markets will follow in the coming weeks, a Saxo Markets spokesperson told us.
The news marks Saxo Markets’ first new crypto offering since 2017 when it launched exchange-traded notes (ETNs) tracking bitcoin and ethereum.
The new offering is designed to complement the company’s existing range of crypto trackers and ETNs, according to Saxo’s emailed announcement Tuesday.
The cryptocurrency traded will be in the form of derivatives rather than the actual coins.
Retail clients will be able to trade on 60% margin with accredited investors trading on 40% or 50%.
5. Why You Shouldn’t Look at Bitcoin Backwardation Like an Oil Trader
Backwardation refers to a downward sloping futures curve where front-month contracts trade at a higher price than far-maturity contracts.
Bitcoin (BTC) futures on the Chicago-based CME exchange slipped for a few days into “backwardation,” a condition sometimes observed in commodities markets where prices on near-month contracts exceed those for further-out delivery dates.
The backwardation appears to have started late last week and continued through early Tuesday. The unusual condition might have been an indication that immediate demand for the cryptocurrency was outstripping supply. Crypto analysts, however, aren’t sure if the interpretation holds for bitcoin.
“BTC’s backwardation does not necessarily imply tighter supply conditions,” Nathan Cox, CIO at Two Prime Digital Assets, said.
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