25 Oct 2022

Dwindling activity and dead flat crypto markets

Bitcoin reigns in an unusually flat environment, seeing no notable price swings over the last week.
Market update (5).svg
Bitcoin reigns in an unusually flat environment, seeing no notable price swings over the last week. This has pushed the 30-day volatility to multi-year lows at levels below those of U.S. equities. Further lowering options IVs are creating an attractive entry for straddle strategies.
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Source: Tradingview (Coinbase, Binance US)
The Nov 2nd FOMC press conference represents the most likely near-term catalysts to reignite volatility in the market. The market is currently pricing in a 95% chance of a 75bps interest rate hike. Previous FOMCs have tended to be volatile and should be on everyone’s radar next week.
Source: CoinMetrics
The political turmoil in the U.K. continued last week, culminating in Rishi Sunak being installed as the new British Prime Minister. Interestingly, Sunak has been positive towards crypto, seeking to position the U.K. as a global crypto hub.
Source: CoinGecko,
Among this week’s losers, we find LEO. LEO has seen a strong year following the seizure of funds related to the 2016 Bitfinex hack. Currently, LEO trades at a 160% premium to the value of its seized BTC, down from 256% on Sep 1st. Thus, the recent decline may be viewed as a normalization from overvalued levels.
Source: Coingecko, Tradingview, Bitfinex, The Block
Uneventful October continues
The crypto market has not moved much since last week, and the uneventful October has continued.
Source: Bletchley Indexes, Tradingview (Coinbase)
Bitcoin is down 0.5% so far this month after another exceptional flat week in the crypto market. Bitcoin keeps its leading position in October, with the rest of the indexes following closely.The Large Cap Index is the second-best performer so far in October, currently down 2.5%. The Mid Caps Index has declined slightly and is now down 4.0% this month.The Small Caps Index is still lagging behind the rest, but we note that the gap is narrowing, with the index being down 6.6% so far this month.
Source: CoinMarketCap * Weekly change in percentage points
We note that most stablecoins gain market share again, further highlighting another week with little risk appetite from market participants.
Another week of extreme fear
Unsurprisingly, the state of the market is still fearful, and we record another week in the “Extreme Fear” area. The Fear and Greed Index has been more or less unchanged for more than a month, fluctuating between 20 and 25. Another two weeks in this area, and we can confirm one full year of fear in the crypto market.
Spot volume continues its decline on most exchanges
With little price action, the activity on most spot exchanges has naturally been low over the past seven days. The spot volume on Binance also declined this week after a little deviation from the rest last week. Excluding Binance, the bitcoin volume on the leading spot exchanges is at a 2-year low.
Source: Tradingview *Includes Bitwise 10 exchanges and FTX
30-day volatility at historic lows
The 30-day volatility is declining even more this week and is now at 1.4%. We’ve observed this level on very few occasions historically. The 7-day volatility has increased slightly but holds around the 1% level. To put this in perspective, bitcoin is less volatile than equities right now.
Source: Tradingview (Coinbase)
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