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Good morning, and welcome to First Mover. I'm Lyllah Ledesma, here to take you through the latest in crypto markets, news and insights. In today's newsletter: |
- Price Point: Bitcoin is remaining steady at $19,500 despite bearish news and economic uncertainty and as U.S. stock futures surge.
- Market Moves: The bitcoin derivatives market has undergone a significant structural change in the past 18 months, making the asset class less vulnerable to volatility-inducing liquidation cascades.
- In The News: The Aptos Labs blockchain launched its mainnet on Monday, becoming the first of the Facebook spin-off networks to go live and putting to the test its multibillion-dollar valuation.
- Chart of the Day: Web3 developers are active despite the bearish crypto market.
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Bitcoin (BTC) managed to stay at about $19,500 on Tuesday, up 1% on the day. The world’s largest cryptocurrency by market value appears to be holding up well despite bearish news and economic uncertainty. The CoinDesk Market Index slipped 0.3%. U.S. stocks surged in premarket trading on Tuesday and European stocks gained as investors awaited another batch of corporate earnings. Bitcoin sold off last week after the U.S. Consumer Price Index came in worse than expected, but quickly recovered. “The fact that crypto is holding up so well with bearish news tells me that the market is already too well positioned for the downside and is happy to take on some risk going forward,” Matteo Bottacini, an analyst at Crypto Finance AG, wrote in a note Tuesday morning. Ether (ETH) made small gains over the last 24 hours, Lido DAO was up 5%, and Polygon’s MATIC was also up 5%. Exchange tokens were trading in the green with Crypto.com’s CRO posting a 5% gain on the day and Huobi’s token HT up 3.5%. |
Aptos Labs CEO Mo Shaikh (Tracy Wang/CoinDesk) |
The Aptos Labs blockchain launched its mainnet on Monday, becoming the first of the Facebook spin-off networks to go live and putting to the test its multibillion-dollar valuation. Sam Reynolds reports that the blockchain is not living up to its expectations according to on-chain data from its first day of transactions. |
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Popularity of Cash-Margined Bitcoin Futures Suggests Crypto 'Liquidation Cascades' Might Become Rare |
The blue line, representing payoff for crypto-margined contracts, shows a long position holder makes less as market rallies but loses more when the market drops. (BitMEX) |
The bitcoin derivatives market has undergone a significant structural change in the past 18 months, making the asset class less vulnerable to volatility-inducing liquidation cascades. The cash-margined contracts, which require traders to deposit the U.S. dollar or dollar-linked assets like stablecoins as collateral to take leveraged bets, now account for a record 65% of the total open positions (or open interest) in the BTC futures market, according to data tracked by analytics firm Glassnode. That's significantly higher than the 30% seen in April 2021 when the crypto-margined contracts dominated the futures market activity. The crypto-margined contracts, also known as inverse contracts, require traders to deposit a cryptocurrency as collateral. According to Glassnode, the growing popularity of cash-margined contracts represents an improvement in the health of the derivative collateral structure. "This acts to reduce the probability of an amplified liquidation cascade while also demonstrating the growing market demand for stablecoin collateral," Glassnode's analyst James Check said in a weekly note sent to subscribers. Liquidation refers to the forced closure of all or portion of a bullish/bearish (long/short) futures position when the trader cannot fulfill the margin or collateral requirements for a leveraged position. A liquidation cascade happens when an event leads to sudden bullish or bearish price action, triggering mass forced closures of long/short positions, which, in turn, exacerbate price turbulence, leading to further liquidations. In other words, a small move becomes larger as exchanges liquidate positions with margin shortfall, causing a feedback loop. |
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Biggest Gainers Biggest Losers |
Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk Market Index is a broad-market index of digital assets, weighted by market capitalization. A full description of the methodology is here. |
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Crypto Market May Be in Doldrums, But Web3 Developers Are More Active Than Ever |
The chart shows usage of two critically important web3 libraries: Ethers.js and Web3.js has skyrocketed. (Source: Alchemy) |
- Weekly downloads of crypto-related JavaScript codes have increased 10 times since 2018 and tripled in the past 12 months.
- Contrary to 2017 and 2020, which saw smart contract deployment drop 45% mid-cycle, smart contract deployments have increased 50% since 2021.
- It shows that "blockchain technology adoption continues strongly despite the drop in crypto prices," Ilan Solot, a partner at the Tagus Capital Multi-Strategy Fund, said.
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Check out the CoinDesk TV show “First Mover,” hosted by Christine Lee, Emily Parker and Lawrence Lewitinn at 9 a.m. U.S. Eastern time. |
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- Gennaro D’Urso, founder and chairman, Genetic Networks
- Brent Xu, founder and CEO, Umee
- Tony Peccatiello, co-founder and CEO, Parallel Markets
- Suzanne Elovic, president and head of partnerships, Parallel Markets
- U.S. Rep. Jim Himes, (D-Conn.)
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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments. |
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