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The latest moves in crypto markets in context for May 25, 2022.

Good morning, and welcome to First Mover. I’m Lyllah Ledesma, here to take you through the latest in crypto markets, news and insights.

  • Price Point: Bitcoin can’t seem to break the $30,000 threshold ahead of the Fed’s minutes release later today. Ethereum Classic is going against the market, trading up 10% on the day.
  • Market Moves: Bitcoin options traders are more focused on hedging exposure than ever before, according to data from Arcane Research.
  • Feature: A snapshot of the Terra blockchain is expected this week. Shaurya Malwa takes a look at how “new” LUNA will be distributed.

Price Point

Bitcoin (BTC) was trading up on the day but struggled to remain above the $30,000 threshold. The world’s largest cryptocurrency by market capitalization has lost more than half of its value from its all-time high around $69,000 reached in November 2021.

BTC briefly hit $30,000 in the early trading hours on Wednesday but has since dropped to around $29,600. It is up 1.1% over the last 24 hours.

Ethereum (ETH) was down 0.6% on the day and is struggling to stay above $2,000.

Ethereum Classic (ETC), which has a market capitalization of $3.19 billion, was going against the market and trading 10% up on the day. Ethereum Classic is a blockchain that was created after a contentious hard fork of the Ethereum blockchain took place in 2016. It is like Ethereum in that it supports smart contracts and decentralized applications, known as dapps.

In traditional markets, Asian stocks inched higher while U.S. equity-index futures reversed earlier gains as investors awaited minutes from the Federal Reserve’s latest policy meeting. Those are scheduled for release on Wednesday at 2 p.m. ET (18:00 UTC).

Market Moves

As investors await the Fed minutes, the crypto market is seeing relatively muted trade.

Matthew Dibb, co-founder of Stack Funds, said that he does not foresee any overly optimistic outcome from the release given the language that has been adopted recently by the Fed.

For crypto, Dibb does not predict much impact. “Our expectation for crypto is generally a continuation in the current range or slight downside if macro leads,” said Dibb.

Marcus Sotiriou, analyst at the U.K.-based digital-asset broker GlobalBlock, said that the Fed’s minutes could spark a relief rally in the short-term for crypto.

“As the FOMC makes key decisions about interest rates and the growth of the United States money supply, these meeting minutes will be pivotal for bitcoin’s price in the short term,” said Sotiriou. FOMC stands for Federal Open Market Committee – the Fed’s panel that sets monetary policy.

If the Fed hints dovishness for the first time in a long while by mentioning no 75 basis point hikes or a pause in tightening on return to neutral rates, Sotiriou said this would be bullish and could lead to a rally in the next one or two weeks for bitcoin.

On-chain metrics

Bitcoin options traders are more focused on hedging exposure than ever before, according to data from Arcane Research.

Options traders are hedging at large, proven by skews reaching new all-time highs across durations. The 25-delta skew shows the difference between the implied volatility for put and call options at the same maturity. A positive skew signals a higher demand for put options than call options, signaling that traders are leaning bearish.

“These skew levels are unprecedented in the bitcoin options market history, suggesting a very pessimistic outlook among options traders,” wrote Arcane Research in its weekly update.

CoinDesk - Unknown

Bitcoin Options 25D Skew (Arcane Research)

The one month (25D) skew reached a 24-hour average all-time high on May 12 of 24%, surpassing May peaks from 2020 and 2021.

The six-month 25D skew also shows a strong demand for puts, sitting at 12.57% currently, according to data from Arcane Research. The longer-dated maturities have not reached the current high levels before. On June 1, 2021, the six-month skew peaked at 4.75%.

Original Article – Coindesk

 
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