Market Wrap: Metaverse Tokens Rise; Crypto Analysts Expect More Volatility

BTC was roughly flat over the past 24 hours while SAND rose by as much as 7%.

AccessTimeIconMay 25, 2022 at 8:27 p.m. UTC
Updated Apr 14, 2024 at 9:53 p.m. UTC

Bitcoin (BTC) continued to trade sideways on Wednesday, indicating a pause in bearish sentiment among traders.

However, most alternative cryptos traded higher on Wednesday, paring losses from last week. For example, Decentraland's MANA token was up by 3% over the past 24 hours and is roughly flat over the past week. Meanwhile, The Sandbox's SAND token rose by 7% on Wednesday. MANA and SAND are metaverse tokens, used to exchange value in a virtual game setting.

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Also, on Wednesday, the U.S. Federal Reserve published minutes from its committee meeting of earlier this month, which indicated that multiple 50 basis point interest rate increases could occur over the next several meetings.

Stocks traded slightly higher, while gold and the 10-year Treasury bond yield ticked lower over the past 24 hours.

Latest prices

Bitcoin (BTC): $29,578, +0.68%

Ether (ETH): $1,950, −0.59%

S&P 500 daily close: 3,979, +0.95%

Gold: $1,853 per troy ounce, −0.64%

Ten-year Treasury yield daily close: 2.75%

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

More volatility ahead

Range-bound price action typically results in a volatile breakout or breakdown.

The chart below shows the recent rise in open interest, or the number of outstanding contracts, in the bitcoin perpetual futures market. "Rapid surges in open interest tend to foreshadow large moves in the market," Arcane Research wrote in a report this week.

For example, a similar rise in open interest occurred shortly before a short squeeze in July of last year when BTC was trading around $30,000. But a rise in open interest also coincided with BTC's price peak of around $48,000 in March, and remained elevated during subsequent sell-offs in price, according to Arcane.

Bitcoin perpetual open interest (Arcane Research)
Bitcoin perpetual open interest (Arcane Research)

Speculative unwind

With so much uncertainty, traders have been unwilling to express a strong bullish or bearish bias. For example, funding rates, or the cost to fund long and short positions in the perpetual futures market, have been moved between neutral and negative over the past few months. That means traders holding short positions have been dominant in the market, willing to pay long traders to express a bearish view.

Still, funding rates have not been deeply negative in a while, which typically occurs around price bottoms. Likewise, extreme rises in funding rates have typically occurred around price peaks. That suggests the excess speculative activity that defined the 2020-2021 bull market has receded.

Bitcoin average funding rate (CryptoQuant)
Bitcoin average funding rate (CryptoQuant)

Altcoin roundup

  • Terra 2.0 and LUNA airdrop incoming: Revival plans for the Terra blockchain are taking shape two weeks after the network’s stablecoin (UST) and its native token (LUNA) fell to nearly zero. There has been a heated debate about what's next for Terra, with the community being divided. The conclusion is a launch of a parallel “Terra 2.0” later this week, with a plan to compensate LUNA holders gradually over time to mitigate selling pressure. Validators, which run the blockchain and stake LUNA by managing staking pools, approved the revival plans, much to the dismay of the Terra community’s majority, including one of the largest decentralized finance platforms, Lido, voting against supporting the new Terra blockchain. Read more here.
  • ETH merge in a bear market: The second-largest blockchain’s long-anticipated (and delayed) transition to proof-of-stake may finally be ready in August. For a while, the upcoming Merge was hyped to send ether’s price to the moon – even speculating about surpassing bitcoin in an event called the “flippening.” But market conditions have drastically changed since then (Fed tightening, risk-asset sell-off, war, decades-high inflation and so on), and the Merge’s desired impact on the price may well turn out to be lukewarm. Read more here.
  • Whales ditched Tether to USDC: Terra’s UST failure prompted a shake-up on the stablecoin market, and large investors have a new favorite. Data by CoinMetrics shows that crypto whales – addresses that hold more than $1 million – on the Ethereum blockchain left Tether’s USDT for the perceived safety of its biggest competitor, USDC. Since Terra’s collapse, USDT saw $10 billion in redemptions. It’s still the most popular stablecoin – cryptocurrencies with a price pegged to another asset, usually to the U.S. dollar – but USDC gained about $5 billion, eating into USDT’s market share. Read more here.

Relevant insight

Other markets

Most digital assets in the CoinDesk 20 ended the day higher.

Biggest Gainers

Asset Ticker Returns DACS Sector
Ethereum Classic ETC +2.0% Smart Contract Platform
Stellar XLM +0.8% Smart Contract Platform
Polygon MATIC +0.8% Smart Contract Platform

Biggest Losers

Asset Ticker Returns DACS Sector
Litecoin LTC −2.5% Currency
Bitcoin Cash BCH −1.9% Currency
Solana SOL −1.6% 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 Dantes

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.

Krisztian  Sandor

Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.