RESEARCH
BEQUANT Crypto&Coffee
The market showed a lot of resilience and dip buying interest to shake off any immediate questions about the sustainability of the recent upside. So much that Bitcoin moved above the $18,000 level and remains on track to re-test the highs from earlier on in the week. In addition to that, the demand for risk saw the open interest (OI) rise yet again to a new record high. In particular, the trend of turning to stablecoin margined products is particularly supportive for the price action and removes some of the unfavourable price action, since Bitcoin margined futures can amplify downside due to convexity. Similarly, in the options market, the OI also recorded a new all time high, with the skew showing plenty of evidence of bullish market positioning. Elsewhere, Ethereum looks set to break through the key $500 level. Despite the recent liquidity exodus from Uniswap, the overall levels of liquidity has since stabilised. In addition to that, instead of flooding the market with Ethereum, yield farmers turned to Sushiswap and others, to look to alternative yield plays. This in itself is very supportive for Ethereum. Also, as a reminder earlier in the week, Ethereum co-founder Vitalik Buterin recently answered a number of community questions as part of an "ask me anything," or AMA, session on Reddit. During the AMA, hosted by the Ethereum Foundation’s ETH 2.0 research team, Buterin said that he expects noticeable network improvements sooner rather than later. “TLDR: merge happens faster, PoS happens faster, you get your juicy 100k TPS faster,” Buterin said on Wednesday as part of the foundation’s fifth AMA on ETH 2.0. Furthermore, as pointed out by The Block, Ethereum's mining hashrate, or the network's computing power, also reached a new all-time high after it crossed 256 terahash per second (TH/S) in terms of a seven-day moving average (7DMA).
There has been a lot of talk that the upside by Bitcoin has been in part driven by Chinese miners’ inability to sell their BTC because of a regulatory crackdown, and that has led to a "liquidity crunch". Lucas Nuzzi from CoinMetrics pointed out the following. Looking at the supply held by mining pools and individual miners shows that pools have not been selling, which is part of a long-term trend. Individual miners remain sellers in the market, which goes against the narrative of a liquidity crunch. Furthermore, looking at miner outflows, which directly measures outgoing payments from both pools and individual miners. Again, the data invalidates that narrative. The recent spikes in funds sent shows that miners are moving assets, which signals ability to sell. the 30-day miner rolling inventory also suggests that nothing out of ordinary is taking place in mining pools or their individual constituents. Also, consider the size of Bitcoin markets vs miner rewards. At the current volume (billions of USD), miners are unlikely to play this significant of a role in liquidity, as their daily payout rarely surpasses 20M USD. So, based on this data, it appears unlikely that this rally is being driven by a liquidity crunch in China.
In other news, CoinDesk writes citing Goldman Sachs, that the digital yuan, China’s planned national virtual currency, would account for 15% of total consumption payments in ten years, helping commercial banks gain more ground from fintech companies. Goldman Sachs said consumption payments – meaning the transactions in which users make purchases via a digital payment platform – will be where banks and fintech providers compete most aggressively.
