Market Wrap: Bitcoin Sticks to $11,000; Derivatives, DeFi Keep Growing

Markets

29 July 2020

Bitcoin, crypto derivatives and DeFi continue to be hot in late July.

Bitcoin (BTC) trading around $11,236 as of 20:00 UTC (4 p.m. ET). Gaining 2% over the previous 24 hours.
Bitcoin’s 24-hour range: $10,844-$11,312
BTC above 10-day and 50-day moving averages, a bullish signal for market technicians.

btcjul29 — Bitcoin trading on Coinbase since July 27.

Just one week ago, bitcoin’s price hit an intraday high of $9,568 in a low-volume environment. This week’s action, fueled by increased exchange volumes, has traders excited at the thought a long-term bull market may be back. As much as $446 million in trades were done on Coinbase Monday.

“The market has clearly jumped to a bullish stance,” said Vishal Shah, and options trader and founder of derivatives exchange Alpha5. “Volatility is higher and we’re now looking at the previous resistance of $10,550 as our new support region.”

skew_btc_spot__aggregated_daily_volumes-21 — Spot bitcoin volume on Coinbase the past month.

Some analysts say the move to $11,000 is just the start of the world’s oldest currency continuing on a price tear upward. “We do not see the move to $11,000 as significant and we are anticipating far higher valuations,” said George Clayton, managing partner of Cryptanalysis Capital.

Clayton noted the European Union passed a €570 billion stimulus measure, and a U.S. package in the works that could provide $1 trillion in new spending should an agreement between President Trump and Congress be reached. “These actions amount to rampant fiat currency debasement. The move in crypto is just beginning,” he added.

The crypto derivatives market is heating up again too, Shah added. “What’s most interesting to me is that CME volumes have been very strong the last two days.” Indeed, CME options volume has picked up significantly during a July that had previously been bereft of action; open interest is now well over $250 million.

cmeoptions — Options open interest on CME the past month.

Andrew Tu, an executive at quantitative trading firm Efficient Frontier, cautions the performance of equities plays a bigger role in the cryptocurrency markets than many might realize, especially if stocks take a dive. “A correction in traditional markets due to deteriorating fundamentals could also cause pullbacks in the crypto world,” Tu noted.

Balancer user count up 140% in July

Ether (ETH), the second-largest cryptocurrency by market capitalization, was up Wednesday, trading around $322 and climbing 1% in 24 hours as of 20:00 UTC (4:00 p.m. ET).

At the start of July, the total user count on the Balancer exchange was 7,184, according to data aggregator Dune Analytics. The number has swelled 140%, to 17,438 since then for the Ethereum-based DeFi project. “Balancer made an excellent product that allows you to create your own ETF and not pay a rebalancing commission and actually receive commissions for trading,” said Azamat Malaev, co-founder of HodlTree, a new DeFi protocol for interest-yielding tokens.

balancerusersjul28 — Balancer users over time.

Malaev also noted Balancer’s BAL token distribution and staking returns as another factor contributing to July’s growth, even though the token’s performance slipped 25% over the past 30 days, according to CoinGecko. “Balancer uses the Compound model in distributing their tokens. Now the percentages are lower, about 30% per annum, but also very attractive.”