Welcome to another edition of Qume Market Mondays!
Bitcoin is sending mixed signals after last week’s rally, which carried its price to $12,100+ levels in perpetual markets and $11,800+ levels in spot markets.
Aggregated average Bitcoin futures trading volume was around $20bn, which signals a strong momentum of its price movements.
The 10-day BTC-USD volatility has spiked up to 88% this week, making bitcoin’s third-quarterly returns up to this point to be around 27%, which is remarkable seeing that its last quarter returns were 42.33%.
Given that this rally has increased the bitcoin spot volumes and the average transaction fee for the network,
adding on to that, the ratio of total bitcoin in the top 100 addresses (by quantity) to the rest has dropped, which means the recent wealth accumulation of bitcoin has greater dispersion among total addresses and are usually lagging bullish indicators.
Options flows have changed pattern over this week. Call sells now dominate the flow in the options markets by attracting almost half of the total purchases. This implies that the professionals have a bearish outlook of the bitcoin markets but call sells can also be to take advantage of higher volatilities to earn yield while holding BTC, it’s not bearish as such.
ETH-BTC correlation has fallen as well at the end of this week, which usually means a big upcoming price move.
A second 51% attack in a week
Late Thursday, the Ethereum Classic network was again subjected to a 51% attack when 4000 blocks of the network were rearranged. Although these attacks have had insignificant effect on its price, they put the future of Ethereum Classic in grave danger.
US stock indices closed at weekly gains as the US released its latest unemployment report, key takeout being the unemployment rate falling to 10% as businesses added 1.8M new jobs last month, which is significantly higher than projections.
As markets heal, investors’ risk appetite is bound to increase. ETFs tracking government debt has been bleeding money out. Investors are putting money in corporate debt backed ETFs and most of the money is going in Short (1–3Y) to Intermediate (3–10Y) term to maturity debt securities.
China in multiple feuds
As the US-China feud escalated, President Trump has threatened to ban TikTok under his executive powers, which is followed by India banning 51 Chinese apps including TikTok a few weeks ago when the armies of the two Asian nations collided over a conflicted border.
President Trump has said he will ban TikTok unless a deal can be reached to sell the domestic assets to an American company, and Microsoft has been in talks with ByteDance over TikTok. However, Microsoft is only interested in TikTok operations in the US, Australia, Canada and New Zealand.
Other the other hand, Japan has accelerated its move to become self-reliant and is providing businesses with subsidies to diversify their supply chains. Southeast nations such as Vietnam and Thailand are riding the bandwagon to profit from the growing backlash against China.
ETF Data source — Bloomberg