Market Wrap: Stocks Tick Downward and so Does Bitcoin, to $9,200

Markets

9 July 2020

Bitcoin is back at $9,200 Thursday as crypto derivatives helped push its price down and equities closed lower.

Bitcoin (BTC) trading around $9,211 as of 20:00 UTC (4 p.m. ET), slipping 2.3% over the previous 24 hours.
Bitcoin’s 24-hour range: $9,154-$9,469
BTC below 10-day and 50-day moving average, a bearish signal for market technicians.

btcjul9 — Bitcoin trading on Coinbase since July 7.

When stocks overall trend lower, it often leads to bitcoin prices dropping, said Karl Samsen of Global Digital Assets. He added that as public companies continue to release their dismal quarterly business results, equities will drop even more. “We’re seeing a W-effect in terms of the COVID-19 reopening” of the economy, he told CoinDesk. Thus, the stock markets aren’t performing well Thursday.

Asia’s Nikkei 225 closed flat, eking out a 0.40% gain as transportation and real estate stocks pushed up the index.
Europe’s FTSE 100 index ended the day down 1.7%. Rolls-Royce stock fell 11% on poor first-half financial results.
The U.S. S&P 500 was in the red 0.56% as losses in retail hammered the index, even while tech stocks were mostly up for the day.

btcvsstocksjuly9 — Bitcoin (gold), S&P 500 (blue), Nikkei 225 (red), FTSE 100 (green) since June.

As spot bitcoin headed lower Thursday, the cryptocurrency derivatives market saw its first excitement in a week as sell liquidations popped up on BitMEX. Traders who were long bitcoin saw over $20 million in BitMEX positions exited as price dropped on the spot exchanges such as Coinbase.

skew_bitmex_xbtusd_liquidations-16 — Liquidations on derivatives exchange BitMEX the past week.

Meanwhile, traders continue to place fewer bitcoin option bets, a sign they don’t expect crypto volatility to return – at least not yet, according to Vishal Shah, an options trader and founder of exchange Alpha5.

“When volatility is much lower, as it is now, there is no natural game,” said Shah. “It’s not worth it to sell options down here, and hence activity comes to a standstill,” he added. Indeed, the volume on options market is much lower, and the amount of traders using the commodities exchange CME for bitcoin options have dried up in July.

skew_btc_options_volumes-1-2 — CME options volume since 1/1/20.

“Honestly, it is frustrating for all of us – lower volatility and a narrower range,” said Christopher Thomas of cryptocurrency broker Swissquote. “We’ll likely explode out of it at some point. We need a trigger.”

Nevertheless, things change, especially in uncertain times, said George Clayton, managing partner of New York-based Cryptanalysis Capital. “Crypto never stays in one place for long,” Clayton said. “I don’t like the technical picture, but a big move in either direction wouldn’t surprise me.”

Curve's value on the rise

Ether (ETH), the second-largest cryptocurrency by market capitalization, was down Thursday, trading around $239 and slipping 3.6% in 24 hours as of 20:00 UTC (4:00 p.m. ET).

The total value locked in Curve is $71 million, the second-highest for a decentralized exchange, or DEX. Curve is used to quickly trade between stablecoins and has $12 million in daily trading volume, just behind Uniswap for DEXs.

curvevaluejul9 — Value locked in the stablecoin DEX Curve.

Peter Chan, a trader at Hong Kong-based OneBit Quant, says Curve could see increased volume due to traders moving out of USDC and into other stablecoins amid recent news that CENTRE, the consortium behind USDC, froze $100,000 worth of the token in one account at the behest of an unspecified law enforcement agency.

“I saw this news about USDC freezing assets of a few addresses,” Chan said. “Quite concerned about it. Might see flow on USDC switching to other stablecoins”.