Market Wrap: Cryptos Mixed as Volatility Fades; Analysts See Risk of Selling Pressure
Traditional safe-haven assets declined on Tuesday as Russia-Ukraine tensions eased, but some indicators point to a pause in the risk-on rally.
Bitcoin (BTC) traded sideways on Tuesday, pausing an 11% price jump over the past week.
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Stocks traded higher on Tuesday after Russian and Ukrainian officials said they made progress in cease-fire talks. Traditional safe havens such as gold and the U.S. dollar declined during the New York trading day, while the Chicago Board Options Exchange's CBOE Volatility Index (VIX), a popular measure of the stock market's expectation of volatility based on S&P 500 index options, reached the lowest level in a month.
Fading volatility indicates less fear among market participants, which could support the current relief rally across speculative assets.
Still, some analysts are monitoring signs of a short-term pullback, especially in cryptocurrencies.
"Bitcoin is going along with the rise of stock indices and often even acts as a leading indicator of investor sentiment," Alex Kuptsikevich, a trader at FxPro, wrote in an email to CoinDesk. That means a temporary pullback in bitcoin could precede a drop in equity prices.
●Bitcoin (BTC): $47,704, −0.46%
●Ether (ETH): $3,424, +0.52%
●S&P 500 daily close: $4,632, +2.00%
●Gold: $1,919 per troy ounce, −1.04%
●Ten-year Treasury yield daily close: 2.40%
Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.
Bitcoin miners realize gains
The chart below shows the Bitcoin Miners' Position Index (MPI), which measures total miner outflows relative to its one-year moving average. The index spiked on Tuesday, which could mean that miners are selling more coins than usual.
Further, while miner outflows surged, miner flows to exchanges have been relatively stable. That suggests miners are choosing to sell BTC over the counter, directly between two parties, without the supervision of an exchange, according to CryptoQuant.
Typically, large MPI spikes occur around BTC price peaks as miners sell to realized revenue gains.
The latest price jump coupled with an all-time high in Bitcoin's hashrate, or the total combined computational power that is being used to mine and process transactions on the blockchain, has been a boon for miners.
While miners' revenue gains have been plentiful, a pullback in BTC's price could weigh on future returns.
For example, Bitcoin's hashrate growth has slowed in recent weeks despite BTC's recent breakout above $46,000, according to data compiled by CoinMetrics. Ethereum’s hashrate has also moved higher this year, although growth has slowed recently.
- Terra’s LUNA Set New Highs of $107: Terra’s LUNA tokens rose 10% in the past 24 hours to set new all-time highs of over $107.89. Sentiment for LUNA has grown in the past month largely due to the Luna Foundation Guard (LFG), a Singapore-based nonprofit that is purchasing over $3 billion worth of bitcoin (BTC) as an additional layer of security for UST, Terra's decentralized dollar-pegged stablecoin, according to CoinDesk’s Shaurya Malwa. Read more here.
- WisdomTree launches crypto ETPs for Solana, Cardano, Polkadot in Europe: Investment firm WisdomTree launched another tranche of crypto exchange-traded products (ETP) in the European market. New ETPs covering Solana's SOL, Cardano's ADA and Polkadot's DOT listed on Swiss stock exchange SIX and Börse Xetra on Tuesday, according to a press release. Read more here.
- Axie Infinity’s Ronin network suffers $625M exploit: The gaming-focused Ronin Network announced Tuesday a loss of over $625 million in USDC and ether (ETH). According to a blog post published by the Ronin Network’s official Substack, the exploit affected Ronin Network validator nodes for Sky Mavis, the publishers of the popular Axie Infinity game, and the Axie DAO, according to Andrew Thurman. Read more here.
- Fintechs See Strongest Payments Challenge From Stablecoins and CBDCs, Not Bitcoin: Cowen: The team at Cowen recently held fireside chats with executives from PayPal and Visa, among others.
- FTX Europe in Talks With British Regulators to Expand Into the UK: The country has set a March 31 deadline for crypto firms to register with the Financial Conduct Authority.
- Prime Trust, Swan Bitcoin Link Up on Crypto IRA Product: Prime Trust, a firm connecting bank accounts to the crypto economy, is beta testing retirement accounts.
- Bitcoiners Scoff at Chris Larsen's $5M Campaign to Force a BTC Code Change: The Ripple executive and allies at Greenpeace seem to assume all it takes for a fundamental change to bitcoin's code is getting 50 firms and developers on board.
- Dapper Labs, Ether Capital Headline Newly Formed Canadian Web3 Council: The 11-member nonprofit trade association includes issuers of financial products, exchange platforms, open-source blockchain projects, investors and more.
Digital assets in the CoinDesk 20 ended the day lower.
|Ethereum Classic||ETC||+3.6%||Smart Contract Platform|
|Solana||SOL||+2.3%||Smart Contract Platform|
Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.
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