n October, the highest trading activity for Bitcoin occurred during the overlap of London Trading Hours and New York Trading Hours, specifically from 13:00 UTC to 16:00 UTC. During this period, we observed that the London Range accounted for 45.22% of the total trading volume and 43.55% of the total trades. Similarly, the New York Range represented 36.19% of the total volume and 37.14% of the total trades. On the other hand, the Asian Range contributed to 23.47% of the total volume and 24.22% of the total trades for the month. Additionally, there was an observed increase in trading activity between 22:00 UTC and 23:00 UTC during the same month. It's essential to consider these timings when analyzing trading patterns, as they provide insights into the most active periods for Bitcoin trading on Binance. 2.11 Price Density - Selected Perpetual FUTURES Pairs on BinanceÂ
US Dollar's Unyielding Rise Thwarts Cryptocurrency Markets: Trading Activity Stagnates
Digital Assets Market Commentary - September LTP Research Table of Contents Summary of September 2023 Market Commentary News Highlights October Volatility Appendix Summary of September 2023 September experienced a broad-based market correction as the U.S. Dollar Index surged to its 2023 yearly high. The S&P500 depreciated by 5.3%, while the Nasdaq declined by 6.4%. Gold retraced 4.7%. However, Bitcoin stood out performing well, recording a 4% increase in September. The de-correlation between the performance of Bitcoin and these major financial instruments warrants continuous monitoring. Generally speaking, the strengthening of the U.S. Dollar results in a risk-off market environment, which often leads to underperformance of equities and risky assets, including cryptocurrencies. The market correction was accompanied by rising long-dated treasury yields, with 10-year, 20-year, and 30-year bonds reaching their highest levels since 2008. The Federal Reserve maintained interest rates at 5.25% to 5.5% in September FOMC, while the market has started pricing in potential rate cuts as early as the second half of 2024. The increase in the consumer price index (CPI) to 3.7% in August, coupled with rising energy prices, provoked concern regarding the efficacy of efforts to combat inflation. In this macroeconomic context, commercial traders on CME maintained aggressive net short positions with Bitcoin. The collective cryptocurrency markets experienced reduced trading volume and activity. The Aggregate Open Interest with Bitcoin Perpetual Futures did not recover since the last sell-off. Additionally, there was a shift in trading volume from BTCTUSD to BTCFDUSD on Binance, following the launch of FDUSD on their exchange, which could present new trading opportunities for market participants. Regarding the performance of cryptocurrencies, Layer 1 and Layer 2 tokens generally outperformed GameFi/Metaverse tokens in September. Among Layer 1 cryptocurrencies, LINK exhibited the highest performance, with an impressive 40% price appreciation throughout the month. In terms of regulatory developments, the U.S. Securities and Exchange Commission (SEC) has recently postponed its decision on Spot Bitcoin ETF applications, which includes prominent applicants such as BlackRock and Fidelity. Concurrently, the SEC warned that additional crypto exchanges, dealers, and brokers could face charges regarding inadequate disclosures or failure to register with the agency.Market Commentary 1. Macro Economic Outlook 1.1 Long-dated Bond Yields Continued Rising as Inflation Spiked in September
The August Consumer Price Index (CPI) year-over-year (YOY) inflation rate surprised to the upside, climbing to 3.7%, exceeding expectations and fueling concerns about the potential for sustained inflationary pressures. This development was reinforced by the continued ascent of long-dated Treasury securities yields, including the 10-year, 20-year, and 30-year, which broke all-time highs since 2008. The surge in Treasury yields suggests that investors are increasingly uneasy about the prospect of higher interest rates and inflation in the medium to long term. Meanwhile, the Federal Reserve maintained the interest rates at 5.25%-5.5% in September. 1.2 September Saw a Broad-based Market Correction
In September, the price of Bitcoin exhibited consolidation below both the 200-Week Moving Average and the short-term holder cost basis. The 200-Week Moving Average, a commonly utilized trend indicator, is considered significant, as a price below it may indicate a potential transition into a downtrend. Currently, the price is undergoing a retest of this level. Furthermore, there was convergence between the realized price and the long-term holder cost basis at $20,600. 2.3 Top 4 Stablecoins Aggregate Circulating Supply, No. of Total Staked ETH and Stablecoin Supply Ratio Oscillator
In September, XEMUSDT had the highest Price Density value, approaching nearly 6. On the other hand, AMBUSDT and ETHBTC had the lowest Price Density values, measuring at 4.3 and 4, respectively. These measurements indicate that XEMUSDT displayed more turbulent and erratic price behavior, while AMBUSDT and ETHBTC exhibited smoother trend characteristics. It is important to note that the measurements mentioned were conducted using a 20-hour rolling method. Different timeframes can indeed yield different results when analyzing Price Density. The choice of timeframe can influence the perceived choppiness or trend characteristics of a particular asset. 2.11 Annualised Volatility of Major Cryptos Declined in September
On September 11th, 2023, a specific stop hunt occurred, resulting in the elimination of $0.4B worth of Crypto Margined Open Interest. The chart indicates a cascade of taker sell orders that pushed the price below the range low of the entire August, where stop-loss orders were likely placed. The following day, after the taker sell orders were exhausted and the price dropped below the range low of August, aggressive taker buy orders entered the market and drove the price above $25, 800. This triggered a late short recovery.
In August, broader financial markets experienced corrections amid a strengthening U.S. dollar and weakening risk appetite.The S&P 500 Index registered a 5.1% decline while the NASDAQ Composite Index decreased 7.6%. Additionally, Gold pulled back 4.4% and Bitcoin retraced 11%.
Annual inflation data released in August showed the first notable uptick after a 12-month continual deceleration. Rising energy costs sparked concerns over near-term inflation projections. Investors remained cautious of an impending recession given elevated interest rates, despite the unemployment rate remaining stable at 3.5%.
Diminishing trading activity signaled bearish market sentiment. Records from the Commitment of Traders report indicated that commercial traders on The Chicago Mercantile Exchange (CME) held record high net short positions in Bitcoin, intimating bearishness.
A significant sell-off in Bitcoin occurred on August 16th, resulting in the elimination of $5 billion in Aggregate Open Interest and the cascade of liquidation of long positions worth over $150 million. The deleveraging event reduced approximately 25% of leverage on Bitcoin in aggregate.
On August 29th, a federal appeals court ruled that the U.S. Securities and Exchange Commission (SEC) must reevaluate its rejection of Grayscale Investments' application to convert its Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund (ETF). Bitcoin price reacted positively, appreciating approximately 6%. However, the SEC has yet to approve any applications for a Bitcoin spot ETF. It is reasonable to expect ongoing subdued trading conditions in cryptocurrency markets until the SEC grants approval of a spot Bitcoin ETF.
1.0 Macro Economic Outlook
1.1 Long-dated Bond Yields Surged as Inflation Fears Mounted
The United States Consumer Price Index for July 2023 has shown a notable uptick in its year-over-year inflation rate, rising to 3.29% from 3% in June 2023. This marks the first increase in the inflation rate (CPI YOY) after a consecutive 12-month decline from 8.93% in June 2022.
The uptick in inflation is concurrent with a surge in oil and gasoline prices (see Appendix B), where gasoline pricehas increased over 20% since the the beginning of 2023.
As concern over inflation rises, long-dated Treasury Securities yields have climbed above November 2022 peak, suggesting investors' growing apprehension regarding near-future inflation and higher for longer interest rates policy. Meanwhile, the Unemployment Rate for July has remained relatively stable, registering 3.5%.
1.2 Cryptocurrencies Trailed A Broader Market Correction
The decline in Bitcoin's value in August was concurrent with a broader market correction, including declines in the S&P 500, Nasdaq, and Gold prices. The correction began after the latest Federal Open Market Committee (FOMC) meeting, where Chairman Powell signaled a likely prolongation of interest rate hikes and was exacerbated by the increase in the Consumer Price Index (CPI) for July, which marked the first uptick in 12 months.
2.0 Digital Assets Market Commentary
2.1 Commercial Traders Are at Record High Net Short in Bitcoin CME Futures
Commercial Traders on CME turned net short on Bitcoin in August. Indeed, the net short stance of commercial traders currently represents the highest level recorded thus far in the calendar year 2023. This concentrated shorting behavior among commercial market participants signals apprehension towards favorable near-term price performance for Bitcoin against a backdrop of deteriorating risk sentiment globally. The continued accumulation of short positions by this cohort warrants monitoring.
In mid-August, the price of Bitcoin fell below the Short-Term Holder Cost Basis, indicating a potential transition into a downtrend. In the meantime, Long-Term Holder Cost Basis and Realized Price remain relatively unchanged at $20,300.
2.3 Aggregate Circulating Supply of Top 4 Stablecoins Continued to Decline and Number of Total Staked ETH Rose
In August 2023, the combined circulating supply of stablecoins, namely USDT, USDC, TUSD, and BUSD, experienced a continued decline, reaching $114.96 billion by August 31st. Additionally, the Total Value Locked (TVL) in Decentralized Finance (DeFi) also saw a decrease, recording $22.38 billion. However, the total amount of ETH staked continued to rise, registering 29.23M ETH staked. The market capitalization of Bitcoin dropped to $505 billion. Notably, the Stablecoin Supply Ratio Oscillator indicates a neutral price condition for Bitcoin.
2.4 Trading Volume of Popular Cryptocurrency Exchanges
On the 18th of August, there was a spike in trading volume across centralized exchanges (CEXes) and decentralized exchanges (DEXes) following the sell-off on the previous day. Despite this outlier, trading volume, in general, remained subdued in August.
2.5 Bitcoin and Ethereum SPOT/Perpetual FUTURES Trading Volume on Binance
In August 2023, Binance saw continuously diminishing Spot (USDT pair) and Perpetual Futures trading volumes for both Bitcoin and Ethereum. BTCTUSD Spot market trading volume increased slightly compared to July 2023.
2.6 BTCUSDT/ETHUSDT SPOT and Perpetual FUTURES Trading Volume on BYBIT
In August 2023, Bybit saw continuously diminishing Spot and Perpetual Futures trading volumes for Ethereum. The Bitcoin Spot and Perpetual Futures market trading volume increased slightly compared to July 2023.
2.7 BTCUSDT/ETHUSDT SPOT and Perpetual FUTURES Trading Volume on OKX
In August 2023, OKX saw continuously diminishing Perpetual Futures trading volumes for both Bitcoin and Ethereum. The Bitcoin and Ethereum Spot market trading volume increased slightly compared to July 2023.
2.8 Relative Trading Volume of Major Cryptocurrencies in August Remained Stagnant After A Spike During Sell-off
In mid-August, the relative trading volume of Bitcoin, Ethereum, Litecoin, and Bitcoin Cash experienced a notable spike as the market underwent a sell-off. However, the heightened trading activities were not sustained for Litecoin and Bitcoin Cash, and the markets subsequently witnessed a decline in trading volume, with relative volume dropping below 90-Day benchmark, resulting in a subdued trading environment. Trading activities primarily focused on Bitcoin and Ethereum.
2.9 30-day Rolling Volatility of Major Cryptocurrencies, Measured on an Annualized Basis
From on 15th August, the Annualized Volatility of Bitcoin and Ethereum reached its lowest point in 2023. However, the subsequent sell-off led to a spike in their volatility. In light of ongoing macroeconomic conditions constraining risk appetite and the fact that Bitcoin Spot ETF applications are still being processed by the SEC, we anticipate that trading activities will continue to remain subdued.
2.10 Trading Traffic Analysis by 15-Minute Interval
In August, trading activities concentrated during the period between 14:00 - 16:45 (UTC) where London Trading Session overlaps the opening of New York Trading Session. August also saw increased trading activities towards the end of New York Trading Session. The spike in Average Daily Displacement is likely due to the sell-off and a cascade of long liquidations which took place at 21:30 (UTC).
2.11 Bitcoin Aggregate Open Interest, Funding Rate and Liquidations
During August, the U.S. Dollar Index demonstrated strength, coinciding with a decline in Bitcoin's performance. A significant sell-off occurred on August 16th, resulting in the elimination of $5 billion in Aggregate Open Interest and the cascade of liquidation of long positions worth over $150 million. The deleveraging event reduced approximately 25% of leverage on Bitcoin in aggregate. On August 29th, the United States Court of Appeals for the District of Columbia Circuit ruled that the Securities and Exchange Commission (SEC) was obligated to re-examine its previous rejection of Grayscale Investments' application to convert its Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund (ETF). In response to the court's decision, the price of Bitcoin increased by approximately 6%. Additionally, data from exchanges indicated that aggregate open interest across Bitcoin futures contracts grew by $2 billion subsequently. This substantial rise in open interest suggests that speculators may have initiated new positions in expectation that regulatory approval for the first Bitcoin ETF remained a possibility pending the SEC's evaluation.
2.12 Bitcoin Sell-off Order Flow Visualised
A series of liquidation events occurred within a 5-minute timeframe on August 17th, between 21:41 and 21:45 (UTC). The above visualization indicates that the Perpetual Futures market of Bitcoin on Binance exhibited a significant sell-side skew, causing the price to deviate from that of the BTCTUSD spot market during the liquidation period. Furthermore, it is evident that speculative buyers entered the market at 21:45 when the Buy/Sell Skew climbed back above equilibrium. At the same time the price of Bitcoin Perpetual Futures dropped just below its previous low ($24777) on June 15th at 11:17 (UTC) which reasonably triggered remaninng stop-loss and liquidation orders. It is noteworthy that the spot price did not reach its previous low ($24720) from June 15th at 11:17 (UTC).
2.13 Ethereum Sell-off Order Flow Visualised
The above visualization indicates that the Perpetual Futures market of Ethereum on Binance exhibited a significant sell-side skew, causing the price to deviate from that of the ETHUSDT spot market during the liquidation period. Furthermore, it is evident that speculative buyers entered the market at 21:45 when the Buy/Sell Skew climbed back above equilibrium. ETHUSDT Binance Spot also saw a spike in buyside skew at 21:45 where spot buyers stepped in and bought the dip.
2.14 Layer 1s Price Performance (August)
Hedera Hashgraph (HBAR) demonstrated strength amidst the market sell-off, as Federal reserveâs FedNow lists its micropayments platform, Dropp. Most Layer 1 blockchains experienced a decline. Bitcoin and Ethereum recorded an 11% decline, while other popular Layer 1 blockchains also faced a significant downturn.
2.15 Layer 2s Price Performance (August)
Layer 2 blockchains also experienced a sustained sell-off throughout August.
2.16 DeFi Price Performance (August)
Rune demonstrated strength amidst the market sell-off, as most DeFi protocols experienced a sustained decline.
2.17 GameFi Price Performance (August)
Most of the GameFi protocols experienced a sell-off in August.
2.18 CEX Tokens and Memecoins Price Performance (August)
BitMEX Token (BMEXUSDT) outperformed other CEX Tokens. Memecoins tanked.
2.19 September Historically Sees Broader Market Sell-off
The sell-off observed in Bitcoin during August aligned with its historical seasonality for that month. Looking ahead, September is generally characterized as a relatively downtrodden period, with the potential for a broader market downturn such as the S&P 500 and Nasdaq.
2.20 Greyscale Bitcoin Trust Premium/Discount to NAV
As the SEC is required to re-evaluate the application for the conversion of Greyscale Bitcoin Trust into an ETF following a court's ruling, the gap between Greyscale Bitcoin Trust's Net Asset Value and Market Price/Share is narrowing, indicating growing investor optimism towards the recent developments. For your information, GBTC is a closed-end fund that holds Bitcoin. Unlike ETFs, which can create or redeem shares based on investor demand, GBTC has a fixed number of shares. This structure can lead to imbalances in supply and demand, resulting in a discount or premium to the underlying asset's value.
3.0 News Highlights
Open interest on $CRV futures skyrockets amid recent exploit and its founderâs large loan position
SEC sues Hex founder Richard Heart on unregistered securities and fraud allegations
DCG close to reaching agreement on Genesis Capitalâs Chapter 11
Tether reported $850M net profit for Q2 2023
Curve founder deploys new liquidity pool on Curve
Microstrategy plans to raise up to $750M to purchase more $BTC OKX adds new account abstraction feature to its Web3 wallet Six entities have filed applications with the SEC for an $ETH ETF
Curve founder sells $CRV tokens OTC to Justin Sun, DCFGod and others
Binance lists zero-fee BTC/FDUSD and ETH/FDUSD trading pairs
Binance approves Shiba Inu as collateral asset
Coinbase to launch L2 Base on August 9th
Huobiâs stablecoin reserves dipped >30% amid reports of executive arrests
Tether is reportedly the 11th largest $BTC holder in the world
Paypal launches its own stablecoin $PYUSD on Ethereum
Paxos is the issuer of Paypalâs $PYUSD stablecoin
Cathie Wood expects another delay for ARKâs proposed $BTC ETF
Microsoft partners with Aptos to explore innovative solutions related to asset tokenization, digital payments and CBDCs
Europeâs first $BTC ETF gets listed in Amsterdam under the ticker $BCOIN
Crypto custodian Prime Trust files for bankruptcy protection
Chinese Filecoin mining firm charged for orchestrating $83.3M pyramid scheme
SEC delays $BTC ETF approval to early 2024
Valkyrie files for $ETH ETF
SEC to appeal Ripple decision
Hashdex applies for spot $BTC ETF
Binance is considering a full exit from Russia
US appeals court ruled in favour of Grayscale in its ongoing case against the SEC to convert its Grayscale Bitcoin Trust into a spot ETF
X, formerly Twitter has obtained money or currency transmitter licences in seven US states
4.0 September Volatility
5.0 Appendix
Fig. A. Fed Balance Sheet, U.S. Treasury General Account (TGA), Reverse Repurchase Agreements (RRP) and Euro Central Banks Total Assets
The Fed Balance Sheet and total assets of Euro Central Banks continued to contract in August. Additionally, there was a persistent outflow of funds in Reverse Repurchase Agreements (RRP) as investors sought higher yields from short-dated Treasury Securities. As of August 31st, the RRP Award Rate stood at 5.3%, while the 1-month Treasury Market Yield reached 5.55%, the 3-month Treasury Market Yield was at 5.56%, and the 6-month Treasury Market Yield stood at 5.51%.
Fig. B. CPI (YOY), WTI Crude Oil Prices, U.S. Regular All Formulations Gas Price
The uptick in inflation is concurrent with a surge in oil and gasoline prices, where gasoline price has increased over 20% since the beginning of 2023.
Fig. C. Liquidation Heatmap
Liquidation zone above market price:
$32,000 - $34,000.
Liquidation zone below market price:
$22,000 - $24,000.
Source: Hyblock Capital., as of September 1, 2023.
For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security or cryptocurrency.
Disclaimers
The information, opinions, estimates, and projections contained in this cryptocurrency market commentary (collectively "Information") are provided by LIQUIDITY TECHNOLOGIES INC. (the "Company"). This Information is for informational purposes only and is not intended to serve as investment advice or any form of endorsement or recommendation. The company has taken reasonable measures to ensure the accuracy and validity of the Information provided but makes no warranty as to its accuracy or completeness. The opinions expressed reflect the judgment of the authors at the date of publication and are subject to change without notice.The Information should not be construed as an offer or solicitation to buy or sell or trade in any cryptocurrency, security, or financial instrument. It does not account for individual investment objectives or the financial situation of any readers. Cryptocurrencies are volatile and complex products and are subject to significant risks including the risk of sudden and substantial price movements.Investments in cryptocurrencies are not protected by any statutory compensation arrangements in the event of the firm's failure. The value of cryptocurrencies may be affected by changes in currency exchange rates, regulatory interventions, or other political and economic developments.Investors should be aware that the value of their investments can fall as well as rise, and they may not receive back the original amount they invested. If you are in any doubt about the contents of this document, you should seek independent professional advice. Any historical information contained in this Information is based on our own analysis and is provided for illustrative purposes only. Past performance is not indicative of future results, which may vary.In no event shall the company, nor its directors, employees, agents, partners, suppliers or affiliates, be accountable or liable for any indirect, incidental, special, consequential or punitive damages, including without limitation, loss of profits, data, use, goodwill, or other intangible losses, resulting from the use of this Information. The company reserves the right to change, modify, add, or remove portions of this Information for any reason at any time without notice.
Bitcoin Plummeted amid Inflation Fears and Strengthening Dollar: Over $100M in Longs Liquidated
U.S. Long-dated Bond Yields Surged as Inflation Fears Mounted
Long-dated treasury securities have breached 2022 highs, with 10-Year reaching 4.34%, 20-Year reaching 4.45% and 30-Year reaching 4.64% as of 23rd August. The market is pricing in a prolonged and higher interest rate policy, which may trigger further downside in equities and risky assets if the upcoming U.S. Core PCE Price Index release on 31st August indicates a rising inflation situation.
Bitcoin Trailed A Broader Market Downturn
The recent decline in Bitcoin's value has been concurrent with a broader market downturn, including decreases in the S&P 500, Nasdaq Composite, and Gold prices. This downtrend began after the latest Federal Open Market Committee (FOMC) meeting, where Chairman Powell signalled a likely prolongation of interest rate hikes, and was exacerbated by the 3.2% increase in the Consumer Price Index (CPI) for July, which marked the first uptick in 12 months.
Bitcoin Sell-off Wiped out $4B in Aggregate Open Interest
Throughout July and mid-August, the price of Bitcoin has been trading within a range-bound consolidation pattern, coinciding with the strengthening of the Dollar Index. However, on August 16th, the release of the July FOMC Meeting Minutes triggered a sell-off in the cryptocurrency market, as the Fed indicated that they would maintain a restrictive monetary policy until there are clear signs of inflation containment. This resulted in the liquidation of over $150 million in long positions and a decline in open interest of approximately $5 billion in aggregate. The deleveraging event also caused funding rates to turn negative. Notably, the sell-off paused at $26,000, funding rates have returned to neutral territory, while aggregate open interest has remained relatively unchanged, suggesting ongoing uncertainty in the market.
Liquidation Order Flow Visualised
A series of liquidation events occurred within a 5-minute timeframe on August 17th, between 21:41 and 21:45 (UTC). The provided visualization indicates that the Perpetual Futures market on Binance exhibited a significant sell-side skew, causing the price to deviate from that of the BTCTUSD spot market during the liquidation period. Furthermore, it is evident that speculative buyers entered the market at 21:45, as the price of Bitcoin Perpetual Futures dropped just below its previous low ($24777) on June 15th at 11:17 (UTC).
It is noteworthy that the spot price did not reach its previous low ($24720) from June 15th at 11:17 (UTC). Consequently, it is reasonable to assume that stop-loss orders placed below $24,720 remained untouched and may be revisited in the near future.
Aggregate Liquidation Heatmap (Hyblockcapital)
According to the aggregate liquidation heatmap from Hyblockcapital as of 23rd August, significant liquidation orders ranging from $22,000 to $25,000 are still present. These orders are triggered when the market price reaches or falls below the specified level, resulting in the automatic liquidation of their positions.
The existence of such substantial liquidation orders suggests that there is a considerable amount of selling pressure in the market, particularly in the range of $22,000 to $25,000. Traders who have placed their stop-loss orders at these levels are likely anticipating further price declines and are prepared to exit their positions if the market moves against them.
It's important to note that this information is based on the provided aggregate liquidation heatmap from Hyblockcapital, and it represents a snapshot of the market conditions at a specific point in time. Market dynamics can change rapidly, so it's crucial for traders and investors to stay informed and monitor the market closely for any updates or shifts in the order book.
Disclaimers
The information, opinions, estimates, and projections contained in this cryptocurrency market commentary (collectively "Information") are provided by LIQUIDITY TECHNOLOGIES INC. (the "Company"). This Information is for informational purposes only and is not intended to serve as investment advice or any form of endorsement or recommendation. The company has taken reasonable measures to ensure the accuracy and validity of the Information provided but makes no warranty as to its accuracy or completeness. The opinions expressed reflect the judgment of the authors at the date of publication and are subject to change without notice.The Information should not be construed as an offer or solicitation to buy or sell or trade in any cryptocurrency, security, or financial instrument. It does not account for individual investment objectives or the financial situation of any readers. Cryptocurrencies are volatile and complex products and are subject to significant risks including the risk of sudden and substantial price movements.Investments in cryptocurrencies are not protected by any statutory compensation arrangements in the event of the firm's failure. The value of cryptocurrencies may be affected by changes in currency exchange rates, regulatory interventions, or other political and economic developments.Investors should be aware that the value of their investments can fall as well as rise, and they may not receive back the original amount they invested. If you are in any doubt about the contents of this document, you should seek independent professional advice. Any historical information contained in this Information is based on our own analysis and is provided for illustrative purposes only. Past performance is not indicative of future results, which may vary.In no event shall the company, nor its directors, employees, agents, partners, suppliers or affiliates, be accountable or liable for any indirect, incidental, special, consequential or punitive damages, including without limitation, loss of profits, data, use, goodwill, or other intangible losses, resulting from the use of this Information. The company reserves the right to change, modify, add, or remove portions of this Information for any reason at any time without notice.
Inflation Fears Grow, Bitcoin Remains Stable, Market Saw Increased Trading Activities on Binance Futures New Listings #$YGG #DODO #BNT
Consumer Price Index for July 2023: Year-Over-Year Inflation Rate Experiences First Increase since June 2022, Rising from 3% to 3.299%.
The United States Consumer Price Index for July 2023 has shown a notable uptick in its year-over-year inflation rate, rising to 3.29% from 3% in June 2023. This marks the first increase in the inflation rate after a consecutive 12-month decline, which began in June 2022. The inflation rate had previously peaked at 8.93% in June 2022, before steadily decreasing over the following months. The uptick in inflation is concurrent with a surge in long-dated Treasury Securities yields since May, which have approached their November 2022 peak, suggesting investors' growing apprehension regarding near-future inflation and higher for longer interest rates policy. Meanwhile, the Unemployment Rate for July has remained relatively stable, registering 3.5%.
The price of gasoline has increased by $0.30 per gallon in July, while the price of crude oil has risen by $13.00 per barrel. This recent surge in energy prices has raised concerns about the potential for rising inflation in the near future.
As we enter August, the Commodity Futures Trading Commission (CFTC) reports that commercial traders are not holding significant net long or net short positions. This neutral stance follows a period of profit-taking in July, during which commercial traders reduced their net long positions, taking advantage of the rally in June.
YGG Futures was enabled on Binance on August 5th, and since then, the Open Interest has rapidly increased, surpassing its total market capitalization of $144M as reported by Coinmarketcap on August 6th, 2023. The introduction of YGGUSDT futures on Binance has attracted a significant number of traders, contributing to increased volatility and trading volume in the market. On August 7th, the rally abruptly ended, with more than $100 million in open interest being eliminated. The sudden reversal of uptrend led to liquidations and subdued trading activities in the subsequent period.
DODOUSDT was enabled on Binance on August 8th, and since then, its open interest has been rapidly accumulating, reaching $150 million as of August 11th. The open interest is currently three times the size of its market capitalization, which stands at $53 million according to Coinmarketcap, indicating that traders are eager to take positions. The introduction of DODOXUSDT (the contract name on Binance) has led to increased speculative activity. The increased speculative activity of DODOUSDT on both Bybit and Binance suggests that traders are anticipating potential price movements in DODO, and are keen to take advantage of any opportunities that may arise. This heightened interest in DODO could be a sign of increased volatility in the near future, as traders scramble to take positions and react to any changes in the market. It's worth noting that the open interest in DODOUSDT is still relatively small compared to other cryptocurrencies, but the rapid growth in interest suggests that as more traders take notice of DODO and its potential for price movements, we may see further increases in open interest and volatility in the coming days and weeks.
BNTUSDT Futures was introduced on Binance on August 10th, and since then, there has been a significant increase in aggregate trading volume and open interest on both Bybit and Binance. As of August 11th, the open interest of BNTUSDT has reached $40 million, with a market capitalization of $78 million reported by Coinmarketcap.
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The information, opinions, estimates, and projections contained in this cryptocurrency market commentary (collectively "Information") are provided by LIQUIDITY TECHNOLOGIES INC. (the "Company"). This Information is for informational purposes only and is not intended to serve as investment advice or any form of endorsement or recommendation. The company has taken reasonable measures to ensure the accuracy and validity of the Information provided but makes no warranty as to its accuracy or completeness. The opinions expressed reflect the judgment of the authors at the date of publication and are subject to change without notice. The information should not be construed as an offer or solicitation to buy or sell or trade in any cryptocurrency, security, or financial instrument. It does not account for individual investment objectives or the financial situation of any readers. Cryptocurrencies are volatile and complex products and are subject to significant risks including the risk of sudden and substantial price movements. Investments in cryptocurrencies are not protected by any statutory compensation arrangements in the event of the firm's failure. The value of cryptocurrencies may be affected by changes in currency exchange rates, regulatory interventions, or other political and economic developments. Investors should be aware that the value of their investments can fall as well as rise, and they may not receive back the original amount they invested. If you are in any doubt about the contents of this document, you should seek independent professional advice. Any historical information contained in this Information is based on our own analysis and is provided for illustrative purposes only. Past performance is not indicative of future results, which may vary. In no event shall the company, nor its directors, employees, agents, partners, suppliers, or affiliates, be accountable or liable for any indirect, incidental, special, consequential or punitive damages, including without limitation, loss of profits, data, use, goodwill, or other intangible losses, resulting from the use of this Information. The company reserves the right to change, modify, add, or remove portions of this information for any reason at any time without notice.
In July FOMC meeting, the Fed raised 25bps. Despite inflation data dropping to the yearly low, during the FOMC press conference, Chairman Jerome Powell stated that the process of getting inflation back down to 2 percent has a long way to go. After the announcement, CME FedWatch Tool reflected that an additional rate hike is expected in the Sep FOMC.
Major Cryptos Experienced Low Trading Volume, $LTC Remained Volatile, $BTC Bounced Off Q2 Fair Value
July FOMC
On 26th Jul, 2023, the Fed raised the interest rate by 25bps. Despite inflation showing signs of moderation and dropping to 3% (YOY) in June, Chairman Jerome Powell stated that the process of getting inflation back down to 2 percent has a long way to go.Â
In the latter half of June, commercial traders on the CME trading Bitcoin futures closed most of their short positions and aggressively built up long positions upon bullish Bitcoin adoption news in the industry. This shift in sentiment represents the most bullish market sentiment since 2023, with commercial traders' net long positions reaching a yearly high.
Despite this positive bullish sentiment, the SEC has not approved the Spot Bitcoin ETF yet. $BTC being a volatile asset could fluctuate rapidly and unpredictably based on a variety of factors...It's always important to take profits, manage risks and preserve capital because this is a long game.