5 Jun, 23

Weekly Crypto Market Wrap, 5th June 2023

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Week in Review

Winners & Losers

Data source: TradingView

Market Highlights

  • Bitcoin moved lower amidst a week that was marked by discussions and concerns regarding the U.S. debt ceiling, negotiations, and renewed inflation concerns. In line with its recent trend, we saw BTC remain relatively depressed on Friday by a robust jobs report that boosted equities. The strong jobs report indicated a tight employment market, signalling ongoing economic expansion and persistent inflation concerns. Expectations for rate hikes in June have been lowered on the back of positive debt ceiling negotiations, and we place emphasis on next week’s FOMC for further guidance. BTC found support at the 100-day moving average throughout the week, demonstrating its continued resilience and despite prevailing macroeconomic concerns, Ethereum has persistently exhibited relative strength.
  • Gauging sentiment specific to BTC within the context of macroeconomic ambiguity can be a difficult task. Often, spectators look to network activity as well as the holdings of firmer hands, such as whales, for an indication of sentiment. However, such metrics often lack insights into market dynamics which often impact volatility as well as overall market health. Since the collapse of FTX, the perpetual futures market has faced considerable diminishment in open interest and trading activity. Additionally, given the recent pullback of market makers out of the U.S. and the adverse impacts this has had on liquidity across the board, it is particularly promising to see BTC’s perpetual open interest volume, as a percentage of market capitalisation, increase despite BTC’s more recent price appreciation. This behaviour is indicative of increased trading activity, liquidity, and improved market confidence.

Data source: Tradingview

  • Front-end volatility increased at the start of the week as both BTC and ETH rallied towards the upper boundary of their current and exceedingly persistent range. Volatility is still very much correlated to bullish price action, and we saw that reverberated in how vol traded to begin the week as the price rallied higher. Somewhat unsurprisingly, given the year-long price behaviour, both ETH and BTC failed to break above the trading range and remained stagnant for the remainder of the week. This contributed to a reversion in vols, and we saw extremely low IVs priced across the whole strip.
  • As the week came to a close, 30d realised volatility was at 35%. IV trended lower in accordance with lower RV, and we now see the spread between the implied volatility (IV) of ETH and BTC narrowing further. In the near-term expirations, IV between the two was inverted, which is an indication of the static activity within alt-coins and their parallel movement with BTC. Historically, this spread has been considered attractive when closer to 0, due to the typically larger price swings of Ethereum relative to Bitcoin. Longer-dated volatility appears the most attractive here, as we anticipate the potential of interest rate pauses in the upcoming FOMC meets to spark some much-needed price action in the coming months, which could result in ETH IV being priced over BTC in those maturities. 

Data source: Amberdata

What to Watch 

  • Switzerland’s CPI and US ISM services PMI, on Monday.
  • Bank of Canada’s rate statement, on Wednesday.
  • US unemployment claims, on Thursday.

Research Lab

Innovation Analyst Beau Chaseling, provides a comprehensive overview of Data Availability in his latest Research Lab article. Learn the role of full nodes and light nodes, the costs associated with data availability, the importance of rollups and recent innovations such as data availability sampling and danksharding.

Innovation Analyst Beau Chaseling sheds light on how Injective is transforming traditional exchanges into decentralized public utilities, its vision for the future and more in this latest Zerocap Research Lab piece.

* Index used:

  Bitcoin    EthereumGoldEquities        High Yield Corporate Bonds      CommoditiesTreasuryYields
BTCETHPAXG        S&P 500, ASX 200, VT      HYG  SPGSCIU.S. 10Y

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What were the major events in the crypto market for the week of 5th June 2023?

Major events included China releasing a whitepaper promoting web3 innovation despite previous regulatory crackdowns on crypto, new Hong Kong licensing crypto regulations coming into effect, US lawmakers proposing crypto regulatory clarity in a new bill draft, and the hacking of OpenAI CTO’s Twitter to promote a scam crypto airdrop. Other notable events were the launch of the blockchain tool “AppChains” by Ankr and Microsoft, and the European Union adding MiCA legislation to its official journal.

What was the significance of China’s whitepaper promoting web3 innovation?

Despite regulatory crackdown on crypto since 2017, China’s release of a whitepaper promoting web3 innovation in the territory indicates a shift in its stance towards blockchain technology and its potential applications. This could potentially lead to increased innovation and development in the web3 space within China.

What was the impact of the new Hong Kong licensing crypto regulations?

The new Hong Kong licensing crypto regulations, which are now officially under effect, represent a significant regulatory development in the crypto market. These regulations could potentially impact the operations of crypto companies in Hong Kong and set a precedent for other jurisdictions.

What was the significance of the US lawmakers’ proposed crypto regulatory clarity bill draft?

The proposed crypto regulatory clarity bill draft by US lawmakers indicates ongoing legislative efforts to provide clear regulatory guidelines for the crypto market. If passed, this bill could potentially lead to increased regulatory clarity for crypto companies and impact the development of the crypto market in the US.

What was the impact of the hacking of OpenAI CTO’s Twitter to promote a scam crypto airdrop?

The hacking of OpenAI CTO’s Twitter to promote a scam crypto airdrop highlights the ongoing cybersecurity risks associated with the crypto market. This event underscores the importance of cybersecurity measures for individuals and companies involved in the crypto space.

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