On Thursday, bitcoin (BTC) peaked at ,455 per coin around 7 a.m. EDT but dropped to approximately ,516 by noon. The volatile movements resulted in 8.82 million in liquidations across the crypto economy, with long positions accounting for million of that total. Bitcoin’s Rapid Rise and Fall Triggers Major Liquidations in Crypto Economy Bitcoin […]
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Ethereum Investors Take On Sky-High Leverage: Brace For Volatile Storm?
Data shows the investors in the Ethereum derivatives market have been taking on very high leverage recently, something that could lead to volatility for the asset.
Ethereum Estimated Leverage Ratio Has Been At Extreme Levels Recently
As pointed out by an analyst in a CryptoQuant Quicktake post, the ETH Estimated Leverage Ratio has been on the up recently. The “Estimated Leverage Ratio” (ELR) refers to an indicator that keeps track of the ratio between the Ethereum Open Interest and Exchange Reserve.
The former of these, the Open Interest, here is a measure of the total amount of derivatives positions related to ETH that are currently open on all centralized exchanges.
The second metric, the Exchange Reserve, naturally tells us about the total number of tokens of the cryptocurrency that are sitting in wallets attached to all exchanges.
When the ELR’s value rises, it means that the Open Interest is increasing at a faster rate than the Exchange Reserve. Such a trend implies that investors are opting for a higher amount of leverage on average. On the other hand, a decline in the indicator suggests the derivatives market users are moving towards a lower amount of risk as they are deleveraging their positions.
Now, here is a chart that shows the trend in the Ethereum ELR over the last few years:
As displayed in the above graph, the Ethereum ELR has observed some steep growth recently. This sudden sharp uptrend in the asset came about as news around the spot exchange-traded funds (ETFs) gained traction in the buildup to the approval.
The cryptocurrency’s price also registered a sharp rally during the same time. Thus, the conditions were perfect for attracting fresh speculation related to the coin, so it’s not surprising that the indicator’s value saw a spike.
The rise has also continued beyond the approval of the ETFs, but the price has fallen to a sideways movement. It would appear that the investors are willing to take even higher risk despite this consolidation, trying to bet big on where Ethereum could escape from here.
Historically, a high value of the leverage ratio has meant a higher volatility for the asset’s price. This is because mass liquidation events can become more probable to take place when the investors are sitting in overleveraged positions.
With ETH trading sideways recently and all these positions building up, it might take only one break in either direction before a lot of these positions come crashing down. A large number of such liquidations happening at once would only fuel further into the price move that caused them, thus amplifying it.
It now remains to be seen how the Ethereum price develops in the coming days and if a volatile move is waiting for it given the trend in the ELR.
ETH Price
May has been a good time for Ethereum investors as the asset is looking to close the month with positive returns of more than 18%.
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As bitcoin flirts with the boundaries of its recent trading range, its price oscillation reflects a vibrant yet undecided market, standing at a pivotal ,259 per unit, after testing waters between ,522 and ,902 within a 24-hour frame. Bitcoin Presently, bitcoin’s (BTC) oscillators present a mixed view but lean toward a cautious sentiment. The relative […]
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Bitcoin, Ethereum Technical Analysis: BTC, ETH Consolidate Following Volatile Week of Trading
Bitcoin consolidated around the ,000 level to start the weekend, as traders attempted to find a firm price floor on Saturday. The market has been volatile during the past week, as recent winners took profits, following the XRP-related bull run. Ethereum remained below ,900 on Saturday.
Bitcoin
Bitcoin (BTC) started the weekend trading close to the ,000 level, as markets consolidated following recent price volatility.
BTC/USD rose to an intraday high of ,046.00, which comes following an earlier low of ,746.12.
The move sees bitcoin climb back above a recent support point of ,800, which has held mostly firm for the past week.
One of the reasons for the stabilized floor is due to the relative strength index (RSI), which is hovering close to a support of its own at 49.00.
Currently, price strength is tracking at 49.77, with the next visible resistance point at the 50.00 mark.
In order for BTC to climb beyond the ,000 mark, this ceiling on the RSI will first need to be broken.
Ethereum
Ethereum was also consolidating during today’s session, as the cryptocurrency remained below ,900.
Following a high of ,905.39 on Friday, ETH/USD slipped to a bottom of ,885.30 earlier in today’s session.
Similar to BTC, ethereum’s decline saw the cryptocurrency fall to a key support point of ,880 to start the weekend.
This comes as price strength hovers around its own floor around the 50.00 zone, which has been in place since the start of the week.
Despite this, it still appears that the 10-day (red) moving average is trending higher, however this could begin to shift in the coming days.
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Will markets continue to consolidate this weekend? Leave your thoughts in the comments below.
Microstrategy Founder Michael Saylor to Argentines: ‘You Need Bitcoin’ — Critics Insist BTC Is Too Volatile
Micheal Saylor, the founder of Microstrategy, has told people living in inflation-stricken Argentina that they now “need bitcoin.” While many bitcoiners have welcomed Saylor’s suggestion, a few critics have said the top crypto asset’s volatility makes it an unsuitable alternative for the faltering local currency.
The Dollarization Option
As the Argentinian currency — the peso — continued with the slide that has seen it depreciate by more than 40% over the past twelve months, Micheal Saylor, the founder of Microstrategy, has chimed in by tweeting that people living in the South American country now “need bitcoin.” In a subsequent tweet, Saylor, a bitcoin critic turned advocate, also shared news about the South American country’s inflation rate after it topped 7.58% per day.
If you live in Argentina🇦🇷 right now, you need #bitcoin.
— Michael Saylor⚡️ (@saylor) April 22, 2023
The tweets by Saylor, whose firm is one of the largest corporate holders of BTC, came as reports suggested that some Argentinian politicians favor replacing the peso with the U.S. dollar. As reported by Bitcoin.com News, the Argentinian presidential aspirant Javier Milei has said dollarization can put the brakes on inflation, which officially stood at 103.4% in March.
Milei, who is seen as a frontrunner in presidential elections set to be held on Oct. 22, said he plans to shut down the central bank before starting the dollarization process. Steve Hanke, a professor of applied economics at Johns Hopkins University, has similarly suggested the South American country can only escape its present predicament by dollarizing.
Argentina has turned into an over-indebted IMF deadbeat. By my measure, the Argentinian peso has depreciated against the USD by 52% since Jan 1, 2022. ARG must dump the peso and dollarize NOW. Argentina, THE WORLD’S BIGGEST DEADBEAT. pic.twitter.com/4HyFei1WzO
— Steve Hanke (@steve_hanke) April 25, 2023
Yet, despite the apparent widespread support for dollarization in Argentina, critics of the U.S. dollar, including Saylor’s followers on Twitter, have voiced their support for his call on residents to choose bitcoin instead.
Policy Brief: Argentina’s Fiscal Imbalances Will Not Go Away After Dollarization
However, some of Saylor’s followers on Twitter like Manu Ferrari B, a self-proclaimed “liberty maximalist,” have said BTC is too volatile and therefore it cannot be a viable alternative to the falling peso just yet. The user suggested that while it is possible for a bitcoin-backed stablecoin to become the solution, more still needs to be done. He added:
But the whole tech is not ready, yet. Most bitcoiners not living in Argentina, Líbano, Venezuela will not understand this. Most bitcoiners talking about Argentina don’t know what they are talking about. Completely centralized stablecoins running on fiat legacy rails are also not a solution.
In addition to being an expensive undertaking, dollarizing the Argentinian economy would result in the country’s central bank becoming subservient to the policies of the U.S. Federal Reserve. Dollarizing would also see the country’s central bank losing seigniorage — the profit earned from printing currency.
A policy brief published by the Policy Center for the New South on April 28, 2022, described the calls for dollarizing the economy as the “revival of a zombie idea.” Denouncing the Argentinian Congress’ proposal to retain the greenback as the country’s primary currency, the brief warned that the country’s “fiscal imbalances will not be eliminated by dollarization.” The brief also said dollarization would further require “a selective default of domestic currency liabilities, a brutal devaluation, and/or a unilateral conversion of public deposits.”
What are your thoughts on this story? Let us know what you think in the comments section below.
Crypto Firms Should Ditch Banks To De-risk From Volatile Systems, Says Cardano Founder
Some crypto-friendly top banks have crashed due to regulatory uncertainty, market downtrend, and shortage of operational funds. The three banks that sent the digital asset market into a downtrend were Silvergate, Silicon Valley, and Signature bank. These banks serviced top firms such as Paxos, Coinbase, Yuga Labs, Circle, Panterra Capital, and Avalanche.
The sudden crash exposed these crypto firms to risks leading to a bearish trend in the crypto market. Notably, the trend changed when the US Federal Reserve announced support funding to protect depositors of the shuttered bank. This incident has propelled Cardano founder, Charles Hoskinson, to propose that the crypto industry ditch the banks.
Banks Are Volatile And Unstable, Cardano Founder
Charles Hoskinson’s tweet reflected his thoughts on the ongoing crisis in the banking sector. In his message, the Cardano founder stated that the banks are unstable and that the industry should reconsider using them.
While responding to Hoskinson’s tweet, a user named Crypto Dojo agreed to his suggestion, pointing out that the industry needed a decentralized digital asset bank. In response, Hoskinson stated that the banks wouldn’t matter once the industry digitalized treasuries.
Other Twitter users supported Hoskinson’s idea of ditching banks. One Twitter user who goes by KG pointed out that the US Dollar de-pegged from the gold standard to become a standalone medium of exchange. As such, the digital sector needs to de-peg from USD and become a “self-sustaining and perpetuating ecosystem.”
Still, on Hoskinson’s post, another user suggested that Bitcoin should also distance itself from many unstable coins and tokens to align with other positive projects pursuing a better tomorrow.
Implications Of Bank Implosions On The Crypto Sector
The three banks that crashed recently were crypto-friendly institutions. By going out of business, they have exposed many crypto firms to a desperate search for suitable institutions to support their operations. Moreover, it will take time for the industry to reestablish a solid connection with the traditional banking system.
In the past, it was very challenging for some crypto firms to gain the support of banks. Now, the situation is replaying once again. Some crypto companies even suspended USD bank transfers due to the disconnection of banking support.
With the current situation, Hoskinson’s suggestion may not seem farfetched, given that some people blamed the crypto industry for the collapse of these banks. Even though it may not be true, shutting down these banks suggests increased regulatory scrutiny on the financial industry, including crypto. It also shows that the crypto industry is seen as a huge threat to the traditional finance system due to its decentralized nature.
Many supporters of the crypto industry have envisaged a time when it will overtake the traditional finance system. While such a day remains a futuristic reality, the industry has to struggle to reconnect to the banking system to continue running smoothly.
Featured image from Pixabay and chart from Tradingview.com
Biggest Movers: SHIB, LTC Marginally Higher During Volatile Start to the Week
Shiba inu started the week trading marginally higher, despite cryptocurrencies mostly consolidating on Feb. 27. At the time of writing, the global market cap is currently up 0.83%, as volatility has intensified. Litecoin also rebounded on Monday, hitting a four-day high.
Shiba Inu (SHIB)
Shiba inu (SHIB) continued to move away from a recent support point to start the week, as prices rose marginally higher on Monday.
Following a low .0000124 on Sunday, SHIB/USD raced to an intraday high of .00001307 earlier today.
This move comes as the meme coin bounced from its long-term price floor at the .00001230 mark.
Overall, SHIB is down 7% in the last seven days, and this comes following a downward cross of the 10-day (red) and 25-day (blue) moving averages.
In addition to this, the relative strength index (RSI) of 14 days has also failed to move past a ceiling at the 52.00 mark
The index is now tracking at 50.44, which comes after bulls rejected a breakout of a floor at 49.00.
Litecoin (LTC)
In addition to SHIB, litecoin (LTC) also climbed higher, hitting a four-day high in the process.
LTC/USD moved to a peak of .58 to start the week, after ending the weekend trading at a bottom of .79.
As a result of today’s gains, the token is now trading at its strongest point since last week, Thursday.
The initial move came following a breakout of a resistance point of 50.00 on the RSI indicator.
As of writing, the index is hovering slightly above this mark, with a current reading of 50.43.
LTC has since declined, and is now at .64, which appears to be a result of price strength tracking near a ceiling.
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Do you expect litecoin to climb above 0.00 this week? Let us know your thoughts in the comments.
Will Bitcoin Become More Volatile As US Inflation Hits 8.2%
The impact of macroeconomic factors on crypto and Bitcoin is increasing as inflation gets stronger. Both the crypto and the traditional market are facing a raging storm. Many international bodies fear that a possible global recession will soon break out.
Another round of volatility has commenced in the crypto market. The cause is the US Consumer Price Index (CPI) report. The data is at 8.2% for the September record.
The United States CPI data serves as a gauge for measuring the inflation rate in the country. It records the average price change consumers pay for goods and services over time.
Core US Inflation Reaches 40 Year High
A measure of the US CPI revealed that inflation exceeded many people’s expectations. The September record indicated the value had reached a 40-year high.
The Labor Department gave further details on the report on Thursday, September 13. The core consumer price index, which excludes food and energy, surged by 6.6% over the past year.
This value is the peak mark since 1982. In addition, it noted that from the earlier month, the core CPI increased by 0.6% for the following month. Hence, the overall CPI surged by 0.4% in September to hit the high value of 8.2% year-to-year.
Recall that in August, the CPI data rose to 8.3%. In June, the annual CPI peaked at 9.1%, the highest value since November 1981.
The latest CPI data is increasing the pressure on the Federal Reserve to spike interest rates. However, the Fed has maintained an aggressive disposition in curbing inflation and bringing the rate down to its coveted target of 2%.
Hence, there’s the possibility of getting another 75-basis points as an increase in interest rate by November. The Federal Reserve has already implemented such a spike in rates three times in the year.
Crypto And Bitcoin Volatility
The crypto market was red as most crypto assets lost value within the week. Prices are going to the south drastically with little or no restriction for the tokens.
Bitcoin has seen a case of constant fluctuation. Not only did the primary crypto asset lose its grab on its critical level of K, its southward movement even continued.
While it crashed to the ,000 region, the primary crypto assets stalled for a few days around the level, but BTC later plummeted below K to hit ,500. This inconsistency has created fear and doubts for several participants in the crypto space. Some are even highlighting signs of massive volatility for the token.
Bitcoin trades sideways after climbing above ,000 l BTCUSDT on Tradingview.com
At the time of writing, Bitcoin has shown a slight move in recovery. The token is trading at around ,131.69, indicating an increase over the past 24 hours. Its dominance over altcoins is at 40.19%.
Featured image from Pixabay and chart from TradingView.com
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