First Mover Asia: Bitcoin Is Ready for a Consolidation Phase

ALSO: Sam Reynolds writes that decentralized derivatives platforms are having a liquidity problem. The shortage may stem from crypto traders' current caution, but at least one stakeholder is optimistic that the situation will change.

AccessTimeIconMar 27, 2023 at 1:21 a.m. UTC
Updated Apr 14, 2024 at 10:26 p.m. UTC

Good morning. Here’s what’s happening:

Prices: Bitcoin is beginning the week testing $28,000, but a consolidation at $25K is within the realm of possibility.

Insights: Decentralized derivatives platforms are short of liquidity. What's in store for them?


+23.4 1.9%
+470.9 1.7%
+32.2 1.8%
S&P 500 daily close
+22.3 0.6%
−3.7 0.2%
Treasury Yield 10 Years
BTC/ETH prices per CoinDesk Indices; gold is COMEX spot price. Prices as of about 4 p.m. ET

Happy Monday. Bitcoin is starting the Asia business day up 1.7%, just below $28K at $27,966. Ether is slightly outperforming bitcoin, beginning the day up 1.8% at $1,777.

Speaking with CoinDesk TV on Friday, Oanda Senior Market Analyst Edward Moya said the success of Coinbase is dictating much of the future price movement of crypto.

“Crypto traders are closely following everything with Coinbase. ​ Coinbase CEO [Brian] Armstrong noted that they weren't entirely surprised by the [Securities and Exchange Commission Wells] Notice. No one knows how regulators are going to rule if all tokens are securities,” he said. “Coinbase's success is vital for longer-term crypto growth. In the U.S., Coinbase is a critical option for how people are getting started with crypto.”

Moya pointed out that while bitcoin has so far been unable to test the $30,000 level, it seems like it’s ready for a consolidation phase.

Joe DiPasquale, CEO of crypto asset manager BitBull Capital, told CoinDesk in an email that the market has remained largely bullish after the Federal Open Market Committee (FOMC) pushed out a relatively tame interest rate hike.

“While we did expect a correction to $25K that didn't happen, we believe it is still in play. For now, the bulls will want to see bitcoin respecting $25K and consolidating above that level,” he told CoinDesk in a note. “Given some time with such price action, we may see altcoins starting to rally again. On the flipside, a breakdown of $25K could put the breaks on this rally.”

All the while, ether traders are breathing a side of relief – and pushing up the price – after the latest decentralized finance (DeFi) crisis, this time involving protocol Euler Finance, seems to be coming to a close.

CoinDesk reported over the weekend that the hacker behind Euler Finance’s $200 million exploit has returned the majority of the funds stolen from the protocol.

Tokens associated with layer 1 protocols such as Solana and Eos took the news favorably, beginning the Asia business day in the green.

Biggest Gainers

Asset Ticker Returns DACS Sector
Gala GALA +4.6% Entertainment
Loopring LRC +3.0% Smart Contract Platform
Polygon MATIC +2.5% Smart Contract Platform

Biggest Losers

Asset Ticker Returns DACS Sector
Terra LUNA −0.8% Smart Contract Platform


Decentralized Derivatives' Exchanges Liquidity Problem

Liquidity is a big concern in today’s crypto market. Without market depth, large orders create price slippage and extreme price fluctuations capsize traders.

The liquidity crisis has often been talked about in the context of bitcoin. Kaiko’s research team has flagged that a lack of fiat payment rails post-shutdown of Silvergate and Signature banks has dropped bitcoin’s liquidity to 10-month lows. But decentralized finance (DeFi) is also facing its own liquidity crunch.

One of the most interesting developments in DeFi has been decentralized derivatives exchanges (DEX). For centralized exchanges, derivatives are a much larger – and more lucrative – market than spot trading, but this comes with enhanced interest from regulators. At the same time, DEXs are far more efficient operations than their centralized counterparts, which makes them worth the regulatory risk for investors.

Perpetual futures DEX dYdX was first to the decentralized derivatives vertical, and by all accounts has done very well. But it’s not purely decentralized, combining a hybrid of a centralized order book with decentralized custody.

The collapse of FTX was a booster shot of interest; on-chain transparency is the best antidote for dishonesty and it's impossible to hide things like funds co-mingling on the open book of blockchain.

But dYdX’s competitors are running out of liquidity, leading to questions if the whole concept can scale.

On Friday, Kwenta only had $1.27 million in open interest available for long positions on bitcoin perpetuals, and $450,000 in open interest available on the short side. The situation wasn't much better for ether, with only $1.64 million in open interest available for longs.

Open interest on bitcoin perpetuals (Kwenta)
Open interest on bitcoin perpetuals (Kwenta)
Open interest on ether perpetuals
Open interest on ether perpetuals

GMX was in a better state, but has limited liquidity available for shorts, which can range from just over $1,000 up to around $700,000.


In a December report, TokenInsight flagged the issue of liquidity as being detrimental to the growth of the sector.

But this hasn’t affected everyone equally. Perpetual Protocol, another perpetual futures DEX, is still watching its open interest grow.

“I think the challenge is that there were not many new crypto traders coming to DEXs post-FTX fallout,” its co-founder, Yenwen, told CoinDesk in an email. “But I remain optimistic and believe that derivatives DEXs will become the key players for the next bull run.”

Important events

4:00 p.m. HKT/SGT(8:00 UTC) Germany IFO - Business Climate (March)

1:00 a.m. HKT/SGT(17:00 UTC) Bank of England's Governor Bailey Speech

5:00 a.m. HKT/SGT(21:00 UTC) Fed's Jefferson Speech

CoinDesk TV

In case you missed it, here is the most recent episode of "First Mover" on CoinDesk TV:

Federal prosecutors in New York are charging Terraform Labs founder Do Kwon with fraud after he was arrested by police in Montenegro. Former SEC Enforcement Branch chief and Bragança Law attorney Lisa Bragança shared her reaction. Plus, crypto exchange Binance suspended spot trading amid an issue on the world's most-used cryptocurrency trading platform. Innovating Capital general partner Anthony Georgiades weighed in.


$119M in Stolen Crypto So Far in 2023, NFT Rug Pulls on the Rise, Crystal Blockchain: DeFi protocols have been hackers’ favorite targets since 2021. Now hackers are preying on NFT projects, a blockchain intelligence firm says.

Matter Labs Opens zkSync Era to Users, Claiming First in ‘Zero Knowledge’ Tech on Ethereum: After zkSync Era was launched only for developers last month, the project took the additional step Friday of opening to general users. The latest push comes just days ahead of the rival Polygon system’s planned rollout Monday of its own “zero-knowledge Ethereum Virtual Machine.”

Do Kwon Charged, Due in Montenegro Court for Extradition Hearing, AFP: Terraform Labs founder Kwon was arrested in Montenegro on Thursday for document forgery.

Nasdaq Aiming to Debut Crypto Custody Service by Q2 End, Bloomberg: The stock exchange operator announced its intentions in September as it looked to respond to the demand from institutional crypto investors

Arbitrum Tokens Rack Up $2B in Trading Volume, Analysts Point to Growth Ahead: Integration into Arbitrum’s wider DeFi system could provide some new impetus for bullish sentiment for ARB tokens, one exchange executive said.

Edited by Greg Ahlstrand and James Rubin.


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