Market Wrap: Bitcoin Rebounds Amid Lower Volatility, Altcoins Outperform
AAVE rallied by 20%, compared with a 4% gain in ETH and 9% rise in SOL on Friday.
Apr 1, 2022 at 8:24 p.m. UTC:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/2ZYE7TBVUJGAVIFDRNDSTHVBZM.png)
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Bitcoin (BTC) returned to above $45,000 on Friday as volatility faded.
Alternative cryptocurrencies (altcoins) were also higher, especially AAVE, which posted a 20% gain over the past 24 hours (up 60% over the past week) because of the platform's version 3 (v3) upgrade earlier this month. Ether (ETH) was up 4% over the past 24 hours, compared with a 9% rise in Solana's SOL token and a 1% rise in BTC over the same period.
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Meanwhile, stocks traded lower for most of the New York trading day as investors positioned themselves for aggressive monetary policy tightening because of strong U.S. employment data. Low interest rates and central bank stimulus contributed to rising asset prices. When inflation rises and the economy overheats, however, central banks reverse accommodative policies, which typically leads to higher market volatility.
In the bitcoin futures market, an uptick in short liquidations occurred over the past 24 hours because of the cryptocurrency's price jump. Liquidations happen when an exchange forcefully closes a trader’s leveraged position as a safety mechanism due to a partial or total loss of the trader’s initial margin.
Still, the ratio of buy/sell volume was slightly negative on Friday, indicating low conviction among crypto traders despite BTC's price rise.
Latest prices
●Bitcoin (BTC): $46327, +1.52%
●Ether (ETH): $3463, +5.31%
●S&P 500 daily close: $4546, +0.34%
●Gold: $1927 per troy ounce, −1.14%
●Ten-year Treasury yield daily close: 2.38%
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.
Volume spike coming?
Bitcoin's trading volume across major exchanges remains relatively low, according to CoinDesk data, despite trading activity tending to increase around the first and last weeks of the month.
The chart below shows large volume spikes, which typically occur during price drops. Some analysts noticed that BTC tends to decline around the beginning of the month before a recovery unfolds, similar to what occurred in February and March.
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Neutral sentiment
The chart below shows a decline in the bitcoin put/call ratio, which suggests less bearish sentiment among option traders. The ratio has stabilized over the past two weeks, which could precede higher volatility, especially if BTC breaks above or below its short-term trading range.
The options market is placing a 55% probability that BTC will trade above $44,000 in May, according to data provided by Skew. And calls outweigh puts at strike prices above $45,000.
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Altcoin roundup
- GMT price surge: The three-week-old GMT rose by as much as 52% on Friday to highs of $3.11. GMT is the governance token of Stepn, a fitness app that allows users to access in-game features, such as being able to mint virtual sneakers, upgrade “gems” and participate in governance voting. Read more here.
- Axie Infinity delays launch of 'Origin' game: Axie Infinity developer Sky Mavis delayed the launch of its highly anticipated “Origin” upgrade from March 30 to April 7 after hackers stole $625 million from the underlying Ronin blockchain earlier in the week. Read more here.
- Metaverse economy could grow to $13 trillion by 2030: Getting to that market level is going to require sizable infrastructure investment, Citi said in a report on Thursday. It is possible that the “metaverse is moving towards becoming the next generation of the internet or Web 3," Citi said. Read more here.
Relevant reads
- Elizabeth Warren Calls for US to Create a CBDC: "I think it's time for us to move in that direction," the Democratic senator told NBC's Chuck Todd, in an interview that was aired Thursday night.
- SEC Rejects Spot Bitcoin ETF Application From Ark 21Shares: The move continues a recent string of denials by the SEC of applications for spot bitcoin ETFs.
- Does the Metaverse Need a Free Trade Agreement?: It’s seeking to be the centerpiece of Web 3, but a successful metaverse could run headfirst into some old-style protectionist barriers, Sam Lowe, a trade policy consultant at Flint Global, said in an interview with CoinDesk.
- Bitcoin Miner PrimeBlock Plans to Go Public With $1.25B SPAC Merger: The merger is expected to be closed in the second half of 2022 and the merged company will trade on the Nasdaq.
- US Adds 431K Jobs in March, as Unemployment Rate Nears Pre-Pandemic Level: Job growth continued in March as the U.S. unemployment rate dropped toward pre-pandemic levels, further tightening the labor market at a time when inflation is rising.
Other markets
Digital assets in the CoinDesk 20 ended the day higher.
Largest winners:
| Asset | Ticker | Returns | Sector |
|---|---|---|---|
| Solana | SOL | +11.5% | Smart Contract Platform |
| Ethereum | ETH | +5.5% | Smart Contract Platform |
| Internet Computer | ICP | +5.2% | Computing |
Largest losers:
| Asset | Ticker | Returns | Sector |
|---|---|---|---|
| Stellar | XLM | −1.2% | 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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Damanick was a crypto market analyst at CoinDesk where he wrote the daily Market Wrap and provided technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio strategist and does not invest in digital assets.