Bitcoin volatility falls

Bitcoin and the rest of the crypto market continued to trade range-bound, increasing slightly over the last week. Interestingly, bitcoin’s 20-day rolling volatility has, for the time being, fallen below that of the Nasdaq 100 and S&P 500 for the first time since 2020, according to crypto data provider Kaiko.

When bitcoin has reached low-percentile volatility lows, it was superseded with breakouts to both the upside and downside. In four past examples, three were to the upside and one significantly to the downside. Although not enough data to draw any conclusions from, the market seems to be waiting for a larger move one way or the other.

At the time of writing, bitcoin is trading at around US$19,161. Ethereum outperformed bitcoin for the week, up 1.99% vs bitcoin’s 0.19%.

Bitcoin’s market cap is US$367.8B, with the total crypto market sitting at US$921.9B. Bitcoin’s market dominance is at 39.9%.

Price High Low Change from previous week
BTC (in US$) $19,161 $19,667 $18,770 0.19%
ETH (in US$) $1,308 $1,339 $1,264 1.99%

Source: CoinMarketCap. As at 23 October 2022. Past performance is not indicative of future performance. Performance is shown in US dollars and does not take into account any USD/AUD currency movements.

Source: Glassnode. Past performance is not indicative of future performance.

Crypto news we’re watching

Crypto in the middle of technological disruption

Walmart’s global CTO, Suresh Kumar, thinks that crypto lies in the middle of three areas of technological disruption: product discovery, payment, and delivery. He believes that customers will discover new products in the Metaverse and crypto will be a tool of payment for both physical and virtual goods. Walmart has been slowly getting involved with crypto and virtual worlds by filing trademarks for virtual currencies and NFTs and demonstrating a virtual reality shopping experience in the Metaverse.

In comments last week at the Yahoo Finance All Markets Summit, Kumar said: “Crypto will become an important part of how customers transact. We want to make sure that we make it as friction free for customers to be able to transact, and to be able to buy, and how they are able to derive value out of it.”

FTX to analyse listed assets

Sam Bankman-Fried, CEO of crypto exchange FTX, says the exchange will not list assets that may be deemed securities. Although BTC and ETH are generally not considered securities, there are a number of cryptoassets, the status of which is unclear. Bankman-Fried wrote in an FTX Policy blog that until legislative, regulatory, or judicial clarity answers whether a particular asset is or is not a security, the legal team at FTX will “do an analysis of the asset according to the Howey Test and other relevant case law and guidance. If that analysis finds it to be a security, we will treat it as such.”3

Fidelity to offer custody and trading for Ethereum

Fidelity Digital Assets, the crypto arm of Fidelity Investments, will reportedly offer custody and trading services for Ethereum. The service will be for institutional clients and is expected to begin on 28 October. The firm already offers the  service for bitcoin. The move follows the launch of the Ethereum Index Fund for accredited investors earlier this month.3

On-chain metrics

Bitcoin (BTC): MVRV Z-Score

This metric is an analytical tool used to assess whether BTC is looking cheap or expensive on a relative historical basis. The metric measures the difference between an asset’s market capitalisation (number of tokens outstanding times the spot price) and its ‘realised cap’ (the number of tokens times the price at which the bitcoin last moved on the blockchain). That difference is then divided by the standard deviation of the asset’s market cap. Theoretically, it may indicate whether an asset is overvalued or undervalued.

According to the data on Glassnode, the MVRV Z-score now suggests the cryptocurrency has been trading at historically undervalued levels since June. The last time BTC’s MVRV Z-Score reached this level was in March 2020.

Source: Glassnode. Past performance is not indicative of future performance.

Bitcoin (BTC): Percent of Supply Last Active 1+ Years Ago

This metric looks at the percent of circulating supply that has not moved in at least one year. Historically, this metric has fallen sharply prior to the market reaching a local high, often bottoming out at the beginning of a bear market, before starting to increase once more. The reason for this is that long-term holders often distribute their holdings prior to a new all-time high, and then scale back in once the price reaches a perceived bottom.

According to data from Glassnode, this metric is at an all-time high, currently sitting at 65.19%. BTC’s active supply has continued to shrink. Historically, low active supply has often occurred after a prolonged bear run.

Source: Glassnode. Past performance is not indicative of future performance.

Altcoin news

In altcoin news, one of the top-performing cryptocurrencies within the Top 30 has been Quant Network’s QNT token. Over the last 30 days, it has returned close to 54%, and enjoyed 450% gains since June. Past performance is, of course, not indicative of future performance.

According to a blog written by the Moralis Academy: “Quant is a next-level protocol supporting the mass adoption of distributed ledger technology (DLT). The Quant network provides interoperability for various types of DLTs with development tools for enterprise-grade applications. The native Quant token (QNT) is used to gain access to Quant’s Overledger DLT Gateway.”4

Investing in crypto assets or companies servicing crypto-asset markets should be considered very high risk. Exposure to crypto assets involves substantially higher risk when compared to traditional investments due to their speculative nature and the very high volatility of crypto-asset markets.

Investing in crypto assets or crypto-focused companies is not suitable for all investors and should only be considered by investors who (i) fully understand their features and risks or after consulting a professional financial adviser, and (ii) who have a very high tolerance for risk and the capacity to absorb a rapid loss of some or all of their investment.

Any investment in crypto assets or crypto- focused companies should only be considered as a very small component of an investor’s overall portfolio.

 

1. https://blockworks.co/walmart-cto-weighs-in-on-the-role-of-crypto-disruption/

2. https://www.ftxpolicy.com/posts/possible-digital-asset-industry-standards

3. https://www.coindesk.com/business/2022/10/19/fidelitys-crypto-platform-to-add-ethereum-trading-for-institutional-clients/

4. https://academy.moralis.io/blog/what-is-quant-network-and-the-qnt-token


Off the Chain is published every Tuesday. It provides the latest news on bitcoin and the rest of the crypto market, along with analysis and insights into the world of crypto.

It provides general information only and is not a recommendation to invest in any crypto asset, crypto-focused company or investment product.

Photo of Justin Arzadon

Written by

Justin Arzadon

Director, Adviser Services & Head of Digital Assets.

C4 Certified Bitcoin Professional (CBP) and Blockchain Council Certified Bitcoin Expert™ with over 18 years’ experience in the ETF market. Passionate about the future of money.

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