Market wrap: bitcoin rally stops as regulatory risks persist


Cryptocurrencies were slightly higher on Wednesday as traders grappled with the likelihood of greater regulation. Bitcoin has risen by around 1.9% in the past 24 hours, giving up about half of Tuesday’s relief rally, suggesting buyers are starting to take profits.

“It’s too early to tell if this is ‘the’ floor or just a temporary floor before other inconveniences. The absence of any upside catalyst (alongside some countercurrent oversold measures) remains the biggest obstacle to the crypto rebound, ”wrote Elie Le Rest, partner and co-founder of crypto hedge fund ExoAlpha, in an email to CoinDesk.

Latest prices

  • S&P 500: 4241, -0.11%
  • Gold: $ 1,773.9, -0.27%
  • The 10-year Treasury yielded 1.489% against 1.475% on Tuesday

“Overall, we could see an upscale market in July with lower brackets of $ 25,000 to $ 35,000,” Le Rest wrote.

Delta Exchange CEO Pankaj Balani doesn’t expect bitcoin to break above the $ 30,000 support. “Bare shorts have started to enter the market and the risk of big rises from squeeze shorts is higher,” he wrote in an email.

However, the risk of further regulatory pressures still looms.

“Unsupported private cryptocurrencies like bitcoin may attract attention, but the role of regulators and policymakers as key gatekeepers likely limits their potential to catalyze truly transformational change,” JPMorgan wrote in a research note. published Monday.

From a macro perspective, the sale of bitcoin has coincided with a wider move away from risky assets like stocks and cryptocurrencies over the past two months, as evidenced by the decline in the copper to gold ratio. Support at $ 30,000 is critical for bitcoin, although resistance is strong at $ 40,000.

The graph shows the copper to gold ratio and the price of bitcoin.
Source: TradingView

Achieve yield

Aside from the slight “no risk” tone over the past few months, the recent drop in negative-yielding debt could be a hindrance for cryptocurrencies.

The downtrend in global interest rates has encouraged a search for yield as central banks remain engaged in accommodative monetary policies. These easy money policies have benefited risky assets like corporate bonds, emerging market debt and more recently cryptocurrencies.

“Any evidence that easy money ends in a more hawkish stance on the part of central banks will likely be a drag on speculative assets,” Santiago Espinosa, strategist at MRB Partners, wrote in an email.

The chart shows bitcoin and the percentage of negative yielding global debt.
Source: MRB Partners

Bitcoin dominance stabilizes

Bitcoin’s dominance rate, or the leading cryptocurrency’s share of the total crypto market, fell to less than 40% in May, which preceded a price drop of nearly 30%. Since then, the dominance rate has stabilized, suggesting that bitcoin is regaining its luster.

“The wave of new altcoins has diverted some of the capital from BTC and spread it over small-cap assets, many of which subsequently died out,” Coin Metrics wrote in a newsletter on Tuesday.

The chart below shows an approximation of BTC dominance over around 100 of the largest altcoins, using the floating version of market cap, according to Coin Metrics.

The chart shows the dominance ratio of bitcoin to altcoins.
Source: Parts metrics

Ether options trading has gone awry

An ether put options seller lost $ 3 million taking a large bet against a sharp drop in the cryptocurrency and ended up posting a massive loss on Tuesday.

The trader likely sold the $ 2,560 put options during the bull run, expecting a continuous rally to last at least until the end of the year and therefore a steady decline in the price of the bull. ‘option. However, the ether peaked above $ 4,000 on May 12 and fell to $ 1,700 on Tuesday.

“The market moved just enough to force the trader to take a loss by repurchasing 5,000 contracts of the December-expiring $ 2,560 put option sold earlier this quarter,” Gregoire Magadini, CEO of the Genesis Volatility options analysis platform.

The loss emphasizes that selling options, whether put or call, is a strategy better suited to institutions with an abundant supply of capital and a high tolerance for risk.

Open interest on the $ 2,560 put expiring on December 31
Source: Volatility of Genesis

Altcoin balance sheet

  • According to a Financial Times article, monero has increasingly become a tool for criminals such as ransomware gangs to demand money from victims. The cryptocurrency, which was intended to veil the senders, recipients and amount of each transaction, saw its price jump 15% on Wednesday. The cryptocurrency has a market cap of $ 3.8 billion.
  • “The features that monero offers are probably aimed at criminals to protect their business, but ten years ago you read the same about bitcoin,” Vik Sharma, CEO of Cake Wallet, told First Mover. “It’s a double-edged sword. But again, cash too. Bitcoin too.
  • On Tuesday, Polkadot, the smart contract blockchain token of the same name, rose more than 70% in just four hours on the U.S. crypto exchange Coinbase. However, the price on other exchanges followed the market sell off. A Coinbase spokesperson told CoinDesk that the exchange is investigating what happened and said the DOT price differential (-1.56%) between Coinbase and other major exchanges is likely due the deactivation of the “send and receive” function in the context of “the incident.”

Relevant news

Other markets

All digital assets except one on CoinDesk 20 ended up in green on Wednesday.

Notable Winners at 9:00 p.m. UTC (4:00 p.m. ET):


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