Cryptocurrency Market Overview 12.09.2023
News block
1. Pressure on the crypto market from FTX
One of the most disturbing events in the crypto market this week is a court hearing on an application from the FTX exchange for the sale of digital assets. This hearing will be held on September 13.
According to court documents filed by FTX on August 23, the exchange hopes to start selling, mortgaging and hedging tokens belonging to it in order to return funds to creditors in fiat currency. As of April of this year, FTX owned cryptocurrencies worth $3.4 billion. If the court approves the sale, it may put pressure on the market. The media is already dispersing FUD (fear, uncertainty, doubt) about this.
However, the issue has not been resolved yet. And if the court gives the go-ahead, the liquidation of FTX assets will not begin immediately and will continue consistently week after week. In addition, it is highly likely that the sale will be carried out not through exchanges, but through the over-the-counter market in a form that does not affect market pricing.
The FTX portfolio includes:
- Solana is the largest part of FTX assets, worth about $685 million
- The exchange's own token (FTT) is estimated at $529 million
- The FTX portfolio also includes a large number of other cryptocurrencies, such as Aptos, Dogecoin, Polygon, XRP, etc.
2. The decline in the volume of the crypto market continues
Steadily low trading volumes on the cryptocurrency market in August-September reached a level not seen in the last few years.
According to Compass Point Research and Trading, the average daily volumes on centralized exchanges in August amounted to $8.4 billion, which is 16% less than in the previous month and 78% less than last year. And the average daily volume of decentralized exchanges (DEX) in August amounted to just over $1.8 billion, which is 8.5% lower than in July.
In an analytical note, Matteo Greco, analyst at Fineqia International, stressed that the current trading volumes on centralized exchanges are the lowest since the end of 2020.
In addition, according to Fineqia, about 75% of the total BTC now belongs to long-term holders (these coins have not been moved for more than 155 days).
Overview of the crypto market
🔸 The current capitalization of the crypto market is $1.065 trillion
🔸 Trading volume for the last day is $51.22 billion
🔸 BTC dominance 47.1%
🔸 Fear and greed index:
- today 30, yesterday 40 a week ago 42
where 0 is extreme fear (may be a sign that investors are too scared - often it's a good time to buy), and 100 is extreme greed (the market needs correction).
The last time the Fear and Greed Index was at such low levels was at the end of 2022!
Bitcoin lost more than 3% of its value on Monday amid fears that the FTX exchange could sell hundreds of millions of dollars worth of cryptocurrency after possible court approval this week. The asset briefly fell to $25.0k, but then compensated for a significant part of these losses.
The XRP token fell below $0.5 for the first time since July 13. During Ripple's trial with the SEC, the US regulator said it needed to appeal the judge's July decision that the blockchain firm had not violated the securities law against retail investors.
The decentralized Sushi exchange will launch on the first-level Aptos (APT) blockchain, which for the first time will make it available on a network incompatible with the Ethereum Virtual Machine (EVM). Considering that Sushi has more than 7 times the blocked value (TVL) than the entire Aptos blockchain, the expansion gives the network the potential to attract new capital inflows and compete with other non-EVM networks such as Solana and Cosmos.
BTC liquid Offer
Today we will consider such an indicator as a Liquid BTC offer. This is the part of BTC coins that belongs to short-term investors, and for the latter it is characteristic to react quickly enough to market changes.
Factors affecting BTC Liquid Supply:
- Price. Rising prices encourage short-term investors to sell, and long bear markets reduce the supply of liquid coins;
- Mining. During mining, new BTC coins are created, which increases the supply of liquid coins;
- Loss of coins. Every year, part of the BTC coins is irretrievably lost due to loss of access to the storage address. The longer the Bitcoin network works, the more coins go out of circulation for this reason;
- HODL. Long-term investors can hold their assets for years, which makes some BTC coins illiquid.
Current situation:
The liquid supply of bitcoins is currently small - only 4,120,775 BTC belong to short-term investors:
A significant part of BTC coins is stored by long-term investors today.
In turn, a reduction in the liquid supply of BTC (what we are currently seeing) may increase price volatility, since fewer coins are available for active trading.
The ratio of Liquid and Illiquid BTC Supply
Unlike short-term holders, who are always at the forefront of market movements, long-term holders of BTC tend to keep their coins for a long period of time (their investment horizon may cover the prospect of several years). This group believes in the intrinsic value of BTC and the potential for price growth. It is such holders that form an Illiquid coin Offer.
The on-chain analysis uses the ratio of the Liquid BTC Supply to the Illiquid One, which gives a unique prism through which the behavior of bitcoin holders can be interpreted:
Accumulation model:
When there is a decrease in this ratio, it often signals an interesting phenomenon – the accumulation model. This model indicates that long-term investors are quietly accumulating more bitcoins, which indicates their unshakable confidence in the long-term potential of BTC and the expectation of higher prices in the future.
The transition from short–term to long-term holders is not only about numbers - it is a reflection of changing market sentiment. This may mean a broader transformation of how investors perceive BTC and suggests that more and more participants believe in the long-term prospect of bitcoin, and not just treat it as a speculative asset.
