Jay Hao is the CEO of crypto alternate OKEx.
After I wakened this morning, I obtained many messages from my associates, who advised me, “Shares have skyrocketed. Can we brief bitcoin (BTC)?” Then I opened my Bloomberg and noticed the next chart. The Shanghai Shenzhen CSI 300 Index has reached its highest degree in practically a 12 months. And the financial restoration in mainland China has pushed Hong Kong shares to rise, with the Hong Kong Dangle Seng Index reaching a brand new excessive since April. Even Nasdaq has reached a file excessive. That is actually loopy, proper?
So again to our query, ought to we brief bitcoin now? I feel we will discover solutions from the information. First, let us take a look at the buying and selling quantity on exchanges. The info from Cryptocompare exhibits that spot buying and selling quantity has reached a brand new low for half a 12 months. Particularly for the reason that starting of Might, it may be clearly seen that the buying and selling quantity has continued to say no.
Spot Alternate Complete Quantity
This isn’t solely the case in terms of spot buying and selling quantity. Analyzing knowledge from Skew exhibits that BTC futures buying and selling quantity is continuous to say no too, this decline additionally started in Might.
BTC Futures – Aggregated Every day Volumes
The worth of bitcoin derivatives is principally mirrored in hedging market dangers. Whether or not it’s bitcoin futures or bitcoin choices, there’s a sturdy buying and selling demand during times of excessive volatility. The decline in BTC futures buying and selling quantity is principally as a result of continued decline in BTC volatility. Knowledge from Coin Metrics exhibits that bitcoin’s 30-day volatility reached its lowest degree in a 12 months.
Bitcoin 30D Volatility vs Bitcoin Worth
The downturn in BTC spot and futures buying and selling volumes appears to recommend that we may brief bitcoin. However, not so quick. Let’s proceed to take a look at extra knowledge.
Along with buying and selling quantity on exchanges, over-the-counter (OTC) buying and selling can also be an important indicator within the crypto market. It’s because the buying and selling quantity on exchanges could be fraudulent, making OTC buying and selling quantity extra reliable. Knowledge from Coin.dance exhibits that quantity on the 2 main OTC buying and selling platforms, Paxful and Localbitcoins, has not decreased considerably. Even on Paxful, as a result of impression of the epidemic and the fluctuation of the fiat forex Exrates, the OTC buying and selling quantity has elevated considerably.
Weekly LocalBitcoins Quantity (World)
Weekly Paxful Quantity(World)
After speaking about exchanges and OTC buying and selling knowledge, let’s check out the on-chain buying and selling knowledge. Not like the earlier two, on-chain knowledge usually represents the wants of extra rational teams. To a sure extent, the on-chain knowledge represents the underlying help of bitcoin costs. The info from Glassnode clearly exhibits that the variety of bitcoin on-chain transactions has remained at a median degree for practically a 12 months.
Bitcoin: Transaction Depend
This might recommend that the established order of bitcoin is just not as unhealthy as you assume. There’s additionally yet another indicator which will provide you with extra confidence, and that’s the Stablecoin Provide Ratio (SSR). The Stablecoin Provide Ratio (SSR) is the ratio between bitcoin provide and stablecoins provide, or: Bitcoin Marketcap/Stablecoin Marketcap. When the SSR is low, the present stablecoin provide has extra “shopping for energy” to buy BTC. Knowledge from Glassnode exhibits that the SSR indicator has refreshed its minimal since final 12 months.
Bitcoin: Stablecoin Provide Ratio (SSR)
Total, the surge within the inventory markets could certainly result in the lack of funds within the crypto market and be behind the decline in buying and selling exercise. Nonetheless, from the OTC and on-chain buying and selling perspective, bitcoin’s recognition has not decreased. And from the SSR, BTC even has its strongest upward momentum in a 12 months. The shift of consideration attributable to the rise of different funding merchandise is just short-term and, as a person investor, I’m nonetheless very optimistic concerning the return of bitcoin as a wholesome funding.