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  -  Weekly Wrap   -  Weekly Crypto Market Wrap, 28th June 2021
weekly crypto market wrap

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Week in Review

Winners & Losers

  • Bitcoin experienced a volatile week, dipping to its lowest since January this year as Chinese regulation continues to spook investors. Selling pressure across Asia was accentuated by leveraged liquidations which eventually drove the price to US$28,600 on Tuesday. After recovering some of its losses, Bitcoin ended the week down -2.53% at US$34,700. 
  • Ethereum endured similar weakness this week, capitulating to US$1,700 on Tuesday and revisiting the level on Saturday. The asset’s correlation to Bitcoin continues to be the predominant driver of short-term price movement. Overall, ETH recorded a -11.64% loss WoW.
  • A rise in the personal consumption expenditure index of 3.4% YoY marked the largest jump in almost 30 years, fueling inflation concerns and the US10Y’s recovery from last week’s sell-off. Overall, the US10Y recorded a 6.59% gain.
  • The US dollar retreated over the course of the week, providing gold with some support after its drop from the Fed’s hawkish comments last week. With investor confidence still subdued, eyes are focused on Biden’s new US$1 trillion infrastructure plan and the positive impacts it may have on gold should the bill pass through Congress and the Senate. Overall, gold returned a 0.22% return WoW.
  • Ahead of the quarterly earnings season in the coming weeks, equities rallied on raised earnings expectations. The S&P 500 recorded a new ATH and gains of 2.57% WoW.

Macro, Technicals & Order Flow

Bitcoin

  • Once again we saw BTC close below 34,000, before being rejected on another false break. This is the line in the sand. There is significant support here from unleveraged buyers.
  • Derivatives markets saw the quarterly futures and options pass on Friday without too much fanfare. BTC had around $4B in Open Interest across Futures and Options expiries. Most Option positions were way out of the money. Around 3,000 BTC sat at the 36,000 strike, which could explain some of the defense around this level.
  • The perpetual and futures funding rate markets continue to trade negatively – with perps increasingly funding shorts WoW, and near-term calendar futures weighted below zero for near term expires out to the end of July 2021.

BTC Perpetual Swaps Funding

BTC Futures Annualised Rolling 1 Mth Basis

BTC Futures Annualised Basis – Current

  • On-chain data showing further bearish drops in active addresses, whilst still conversely showing moderate outflows from exchanges. 

Number of Active Bitcoin Addresses


Bitcoin Net Transfer Volume from/to Exchanges

  • The Chinese miner shutdown is drastically affecting BTC’s hash rate. We don’t necessarily view the hash-rate as being inherently bullish or bearish – but rather in flux, as more often it is the price that creates demand drivers for more miners to enter the space. There is a possibility however that the China shutdown creates short-term selling pressure as miners liquidate treasury to pay for logistics, or to exit altogether.


  • In summary, we are still in an uncertain period for Bitcoin, despite clear buying at the 30,000 levels. We have diverging datasets technically, on-chain, and from derivative markets. Fundamentally, despite some inflation metrics firing, we are still not seeing concerted buying as a hedge. We still expect this theme to play out in the medium to long term.

Probability of BTC being above x$ per maturity

BTC Futures – Aggregated Open Interest

Total BTC Options Open Interest

Grayscale Bitcoin Trust (GBTC) Premium

Ethereum

  • As the funding rates last week suggested, ETH prices have been suppressed alongside BTC. The break below 2,000 is currently bid and looking to be a false break on the daily chart.
  • Funding rates on the perpetuals are, on balance, negative, and calendar futures have been oscillating between negative and positive throughout the week.
  • Options and Futures Open Interest is in decline, with notable liquidations just prior to the Friday calendar expiries.
  • On-chain net transfer data had a spike in net inflow exchange activity (bearish) in the prior weeks, but has now mean-reverted to slight outflows (bullish).

BTC Perpetual Swaps Funding

ETH Futures Annualised Rolling 1 Mth Basis

Ethereum Net Transfer Volume from/to Exchanges

ETH Futures Aggregated Open Interest

Probability of ETH being above x$ per maturity

  • The amount of ETH in the ETH 2.0 staking contract currently sits at 5,681,919. This represents 4.82% of the total supply estimated to remain locked for ~ one year, continuing to slowly constrict supply.
  • Similar to Bitcoin, we are in a wait and see mode for Ethereum. There is no lack of newsflow and activity in the general crypto arena at the moment, including notable strides in Citigroup, Goldman Sachs and VanEck. We just need some confluence in on-chain and derivative data to give us some insights into the next moves.

DeFi & Innovation

What to Watch 

  • Inflation metrics continue, with the largest YoY pump since 1992 and Fed talks on potential hawkish measures. As we’ve pondered last week on important statements coming from the Fed, Chair Jerome Powell stated that no policy changes will be made based on inflation fears, maintaining the stance that current highs are transient. Despite the YoY record, the monthly inflation gains have tempered over May, with June’s upcoming results essential to determining near-term expectations. 
  • China’s crackdown holds ground as more mining facilities leave the nation for other countries. However, institutional-backed projects and investments continue to surface, with the first Latin American ETF being listed, more CBDC trials and governments seeking paths towards better crypto regulations. We’ve conjectured that new institutional offerings may lead to a trend reversal but, with China’s restrictive measures as one of the primary agents for the present uncertainty, a ranging or bearish market during the current crackdown may be necessary for a new investment cycle to begin.
Disclaimer

This document has been prepared by Zerocap Pty Ltd, its directors, employees and agents for information purposes only and by no means constitutes a solicitation to investment or disinvestment.  The views expressed in this update reflect the analysts’ personal opinions about the cryptocurrencies. These views may change without notice and are subject to market conditions. All data used in the update are between 21 Jun. 2021 0:00 UTC to 27 Jun. 2021 23:59 UTC from TradingView. Contents presented may be subject to errors. The updates are for personal use only and should not be republished or redistributed. Zerocap Pty Ltd reserves the right of final interpretation for the content herein above. 

* Index used:

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

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