Market Wrap: Cryptos Waver as Speculators Lose Interest
Open interest in the BTC futures market is starting to decline.
Cryptocurrencies were mixed Friday, although selling pressure from earlier in the week appeared to be gaining steam.
The dispersion in crypto returns suggests uncertainty among traders after a near 7% dip in BTC over the past week. Further, alternative cryptos (altcoins) have fallen in and out of favor as investor sentiment shifts between bullish and bearish.
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Elsewhere, the S&P 500 was roughly flat on Friday, while traditional safe havens such as gold and the U.S. dollar traded higher. The 10-year Treasury yield reached a new three-year high at 2.7% as investors reduced their exposure to bonds amid rising inflation and higher interest rates.
●Bitcoin (BTC): $42775, −1.63%
●Ether (ETH): $3243, +0.49%
●S&P 500 daily close: $4489, −0.26%
●Gold: $1948 per troy ounce, +0.73%
●Ten-year Treasury yield daily close: 2.71%
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.
The bitcoin futures market has been relatively quiet, which suggests that BTC's 30% rise from its Jan. 24 low around $33,000 was driven by spot traders.
The chart below shows bitcoin's total open interest, or number of outstanding derivative contracts on the Chicago Mercantile Exchange (CME), which has ticked lower over the past week. Participation in the bitcoin futures market has waned since peak levels in November of last year, which preceded a 50% drop in BTC's price.
Still, the current level of open interest is higher than its previous range between May and September of 2021.
Analysts also pointed to a reduction in leverage among bitcoin futures traders, which indicates lower conviction behind the latest price recovery.
Further, BTC's annualized rolling three-month basis, or the relative difference between the price of the future contract and the spot price, has declined across major exchanges over the past two weeks. That indicates uncertainty among traders about the future price of bitcoin.
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Most digital assets in the CoinDesk 20 ended the day lower.
|Cosmos||ATOM||+0.9%||Smart Contract Platform|
|Ethereum||ETH||+0.5%||Smart Contract Platform|
|EOS||EOS||−3.7%||Smart Contract Platform|
|Solana||SOL||−3.7%||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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