The situation in the cryptocurrency market is not expected to be rosy -weekly April 19 review

The fall of the crypto market continued during the week of 11–18 April. Thus, the total cryptocurrency market capitalisation index fell from $1.922 trillion to $1.818 trillion (by 5.4%) during the past week. Within this period levels of April lows — 1.81T and 1.787T were also formed, “breakdown” of which we could see immediately after its completion (in the morning of April 18, the index dropped to $1.771 trillion). This paves the way for further market declines.

A fairly obvious and absolutely correct assumption is that within the last week the bitcoin price had an almost similar trajectory to the general market. The decline started at 42 350 and ended at 38 900 (8.1% decline overall). In this case, we can see a “breakout” of 40 000 psychological level and price fixation below it.

Ethereum has declined from 3185 to 2890 (down 9.3%) over the past week. The asset has also consolidated below the psychological mark of 3000, which in the context of high market uncertainty and additional pressure from macroeconomic factors could lead to further declines. In the case of Ethereum, the network’s reduced activity in the DeFi and NFT segments should be highlighted separately.

News

Cryptocurrency trading platform Fasset has raised $22 million in an investment round A. The company will use the funds to develop new products and expand its digital asset-based money transfer services in Asia. The round was led by New York-based Liberty City Ventures and Pakistan-based Fatima Gobi Ventures. Soma Capital and MyAsiaVC also participated in the round.

US President Joe Biden has said he plans to nominate Michael Barr as the next Federal Reserve vice-chairman for oversight. Barr previously worked at the Treasury Department under President Barack Obama, where he helped develop the regulatory framework for financial institutions. Barr later worked as an advisor to the distributed computing technology company Ripple. He is currently a faculty member at the University of Michigan.

Beanstalk, the Ethereum-based stablecoin credit protocol, was hacked on Sunday morning. The protocol lost about $182 million in various crypto-assets, according to the findings of blockchain security firm PeckShield. The hacker withdrew $80 million, which was then “laundered” through Tornado Cash.

Uniswap Labs, the main developer of the largest decentralised cryptocurrency exchange, is looking to grow by introducing code that allows its interface to be embedded into any website. The widget, which can be added by inserting a line of code, will allow OpenSea users, for example, to exchange various tokens without leaving the website on which it is running, and will also be available initially on some other platforms. Earlier, the company launched a venture capital arm to invest in web3 start-ups.

Market situation

During the past week, put option trading remained the main source of activity and premiums. Relative to the time of market growth, when there were three call options per put contract, the ratio has now leveled off and recently put options have even been traded more frequently. Such a change could be an indirect signal of further market declines. Particularly significant volume came from short-term (up to 30 days) options — traders expect the capital market to reassess in the near future in line with a tougher US Federal Reserve position. With most regional reserve bank presidents in favour of an immediate 0.5% rate hike and further monetary policy tightening, and with the cryptocurrency market remaining highly correlated with the NASDAQ tech index — the market situation will not be the brightest. These concerns are reflected in trading strategies and option types.

In block options trades on Bitcoin, a major strike trading was at the 40 000 level. The trade was also mostly short-term, ahead of the next Fed meeting in May. The second-largest level of put options trading was 35 000, which could potentially be a target in case the market continues to decline.

At the moment, the market is actively hedging against the possibility of aggressive rate hikes and monetary policy changes by central banks. In the short term, cryptocurrencies remain slack relative to traditional capital markets, which in turn have a growing shortage of trading ideas and a lack of strong drivers for growth and downtrend reversals.

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