2022/04/26

Macro factors weaken cryptocurrencies

Last week's highlights

Correlation with the stock market remains high

It's hard to find topics other than rising interest rates, growth rates, inflation, and wars

Options market remains subdued, but long-term upside demand remains strong

By region, Europe and the Middle East were the main buyers, and by customer category, banks and high net worth individuals were the buyers.

Last week
Cryptoasset trends last week lacked cryptoasset-specific themes and were in sync with the stock market. Bitcoin started below the $39,000 support, failed to sustain below $39,000 and rallied to $43,000 on Thursday, April 21. However, stocks fell amid hawkish comments from Federal Reserve Chairman Jerome Powell that "the May meeting will pick 0.5 points." Bitcoin also fell, falling again to the $39,000 level earlier this week on Monday, April 25.

Looking at the trading trend, Bitcoin and Ethereum are buying, indicating a risk-off trend. Looking at other crypto assets, SOL, LUN, MATIC, and BNB were strong performers, while ADA, LINK, XTZ, and AVX dominated the buying. By customer category, banks and high net worth individuals are the largest net purchasers. By region, Europe and the Middle East were the top buyers.

The OTC lending market remains calm, with visible demand for altcoin lending, but limited interest in stablecoins. In addition, the crypto asset futures market remained flat.

The options market stabilized on the back of bearish demand. Due to the low historical volatility (volatility calculated based on the price movement of the underlying asset price over a certain period of time), the situation of a short gamma (risk arising from selling an option) position is easy to manage even if the spot price falls. The volatility of Bitcoin ATMs (at the money) in May was around 56-59%, and the volatility of Ethereum in May was around 61-65%. Additionally, buybacks of long-term Bitcoin and Ethereum call options continue to be visible, with significant trading in Ethereum call options seen last Friday.


Future Outlook
This week, Federal Reserve's policy rate announcement and outlook report is scheduled for Thursday, April 28. On Friday, April 29, the US PCE deflator, Eurozone April CPI and key price indices will be released. Also, it was an event-filled week for the stock market, with earnings announcements from major tech companies and GAFAM5 stocks. Risk positions are likely to continue to shrink this week as the Bank of England, FOMC, U.S. jobs data and more important events next week emerge. Additionally, the protracted war in Ukraine due to increased U.S. arms supplies could be a risk factor for the market.

(Provided by IB Liquidity Market. This report was created by IB Liquidity Market based on data from B2C2, the world's largest crypto asset market maker.)
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