26 Sep 2022

A green end to September

After an uplifting Tuesday morning, BTC sees a positive seven day-return of 3% in what’s been a volatile week in global financial markets. We’ve witnessed a plunge in the British Pound and yet another hawkish FOMC, but crypto market stands strong.
Market update (20).svg
BNB (5%) again outperformed BTC and ETH (1%) this week. This has been a theme throughout the year. BNB has seen strong relative YTD performance, with yearly returns of -46% compared to ETH’s -63% and BTC’s -56%. BNB seems to benefit from growing Binance dominance and less downward pressuring backlash following the crypto credit crisis in June, as neither Celsius nor 3AC held significant exposure to the asset.BTC’s 90-day correlation to the S&P 500 is declining. However, as illustrated in this article, we see that short-term correlations are on an uptrend caused by important market-moving macro events in September.
Source: Tradingview (Coinbase, Binance US)
Source: CoinGecko,
XRP is this week’s top performer after experiencing a volatile week peaking at $0.55 before falling to $0.47. From December 2020, Ripple Labs have been charged by the SEC with violating the securities law. The SEC and Ripple filed for a summary judgment on Sep 18, which might eliminate uncertainty in XRP.
A flat September
September is coming towards an end. This month has historically been the weakest for the crypto market. However, September 2022 is shaping up to become a flat month for the market. The Mid Cap index has seen 4% gains in September and is this month's best performer. Bitcoin is the second-best performer seeing a slight 1% gain. In September, BTC outperformed other major asset classes. Small Caps (-1%) follows in third while the Large Caps Index is the worst performer after falling 2% MTD.
Source: Bletchley Indexes, Tradingview (Coinbase)
Source: CoinMarketCap
The main reason behind the Large Caps Index's weak performance is ETH's underperformance in September. ETH's market share peaked at 20.7% in late August, fueled by optimism in advance of the merge. The merge proved to be a sell-the-news-event, and ETH has kept underperforming relative to the rest of the crypto market, particularly BTC. This underperformance has led its market dominance to decline to 17.4%.During the past weeks, stablecoins have seen considerable growth in their market shares due to crypto traders reducing their risk exposure. This trend has reversed over the past seven days, as USDT, USDC, and BUSD all see declines in their market shares.
The fearfulness among crypto market participants continues
The crypto market’s longest streak of fearfulness in history continues. Today marks the 178th day in the fearful territory, as shown by the Fear and Greed Index. In addition, social media sentiment indicates that market participants rarely have been this bearish, even during this bear market. Historically in financial markets, being greedy when others are fearful has been a good strategy, but it’s important to be aware that the fearful market sentiment can last much longer.
The bitcoin spot volume stays elevated
The elevated activity in the bitcoin spot markets continues, with the 7-day average spot volume sitting at $10.9 billion. This volume corresponds to a slight decline from the yearly high of $12.7 billion, which took place earlier this month. Such high activity in the spot markets while the price increases is usually a bullish sign for bitcoin, as it indicates significant buying pressure in the market, which could contribute to lifting the price even higher.
Source: Skew, Tradingview (Binance, Binance US, Bitfinex)
Bitcoin’s volatility stays just below its historical average
After the initial volatility burst at the beginning of September, the bitcoin price has hovered between $18.5k and $20k. This price stability has led the 7-day volatility to fall to 3.2%, slightly below its historical average of 3.7%. Last week we warned that last Wednesday’s FOMC meeting could catalyze a volatility surge. This happened as we saw the highest hourly volatility during a FOMC meeting ever. Still, in this chart, we track daily price fluctuations, which were not impacted by the FOMC meeting, as the price quickly stabilized following the meeting.
Source: Tradingview (Coinbase)
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