Market consolidation — how long will the party last
The past week has given a number of reasons to believe that the market has found the bottom and is now in consolidation before a new upward phase. After reaching the low point on June 18, a number of relatively positive news followed and some macro indicators improved.
Between June 21 and June 28, the market was actually in a sideways movement. The market capitalization index started from $909.2 billion and till the end of the period did not go out of the $864.5-$951.9 billion range, reaching $926.8 billion by the end of the period. The final weekly change in the index amounted to +1.93%.
Bitcoin, although slightly different, followed a broadly similar paradigm. Starting at 21 185, the “digital gold” price essentially stayed within the 20 000–22 000 range (only at one point falling slightly below 20 000). By the end of the period in review, bitcoin had settled at 21 020. The final price change for the period amounted to 0.77%.
In contrast to bitcoin, the Ethereum price chart had a slightly more upward movement (with more volatility) during the period under review. Starting at 1156, it first hit a local low of 1056 and then a local high of 1269. By the end of the period, it had settled at 1222. Final change amounted to +5.7%. Remarkably, both Ethereum and other altcoins demonstrated much better dynamics than bitcoin.
Solana plans to release a mobile phone, which is one of the industry’s first attempts to take Web3 technology beyond the computer. The SAGA phone will include a decentralised app shop, the Solana SDK and a hardware security system with a private key. The Saga phone will feature a 6.6-inch display, 512GB of storage and 12GB of RAM. While Solana Labs doesn’t expect it to ship until the first fiscal quarter of 2023, users can already pre-order it online for 100 USDC.
Dynamic, a startup creating web3 authentication and authorisation tools for developers, has raised $7.5m in a seed funding round led by Andreessen Horowitz (a16z). Investors in the round included Castle Island Ventures, Solana Ventures, Circle Ventures, Breyer Capital, Hypersphere and Chapter One. Dynamic was founded in January by Itay Turban and Yoni Goldberg, who have known each other for more than 15 years. They first met at the Massachusetts Institute of Technology (MIT) and have worked together in the past for several organisations, including the Israel Defense Forces and Juul Labs.
Cristiano Ronaldo, one of football’s biggest stars, has partnered with cryptocurrency exchange Binance, becoming the latest global celebrity to enter into a lucrative partnership with the digital asset company despite the crisis engulfing the sector. The legendary Portuguese footballer, who has for many years shown wonders of footballing excellence at global grands such as Manchester United, Juventus and Real Madrid, will partner with Binance to create a collection of NFTs that will be traded exclusively on the Binance exchange.
Robinhood’s share price jumped 12% on Monday afternoon on news that crypto company FTX is considering a possible acquisition of the company. According to Bloomberg, such discussions are ongoing within FTX. The report highlights that Robinhood has not received a formal offer and that FTX may ultimately reject such a deal. The $HOOD price, which opened at $8.12 on Monday, rose to $9.72 following the Bloomberg report. In statements to the media, company chief Sam Bankman-Fried said there were “no active talks with Robinhood about a possible deal”.
According to Glassnode’s analytical service, the realized loss reached $4.23 billion, making it the largest loss taking in the observation history. Such extreme values underscore the uniqueness of the current market environment, and may indirectly confirm the formation of strong support levels for Bitcoin prices in the 18 000–20 000 range. The recent active movement of BTC and ETH leads to new calculated entry points and future gains and losses. This cohort of new owners will have different time and price benchmarks for positions taken, and are able to support the market in the short term by reducing supply pressure in the spot order book.
Lower volatility had a positive effect on traders’ sentiment towards Bitcoin. While last week in block trades review we noted the significant prevalence of put options and hedge ideas from possible continuation of market collapse, in the last seven days the situation has changed diametrically. Lack of negative news and generally very accurate comments from US Federal Reserve officials on the pace of rate cuts led to a short-term recovery in traditional equity markets, which was reflected in crypto market expectations as well. Most trading activity was concentrated around call options in the 27 000–34 000 price range and expiration dates at the end of July and September.
The trading dynamics of Ethereum options underscore the scattered valuations of crypto assets amongst themselves. While bitcoin has become a proxy for the crypto industry’s overall wellbeing, ETH, with its own news agenda, continues to trade in a different strategic direction. Judging by the fact that the main expiration dates of the options involved in block trades were either short-term (within a week) or long-term (September or December), traders in this particular market are not trading the macro agenda and are not using the instrument as a way to hedge against global risks.
Options with July execution are advantageous as they include the release of important statistics on the US, EU and Japanese economies, as well as the Federal Reserve’s meeting, which will be the last one this summer. Potentially, good economic data could mitigate or even postpone regulatory action to harshly raise the refinancing rate, which would mean a period of relative stability in the crypto markets.
Thus, at the moment traders are waiting for the economic statistics release to get the final information in order to form a medium-term portfolio and have an opportunity to take a short holiday after an extremely volatile period in the global markets.
Money markets — an add-on for experienced crypto users
This information allows us to compare earnings in stablecoins between different ways of generating “organic” returns — providing liquidity to decentralised exchanges, to decentralised deposits or through liquidity placement by selling options (one week term, central strike, put options for stablecoins, call options for ETH/BTC).