Nov. 26, 2024

CoinDesk 20 Index: 3,108.77 -9.55%
Bitcoin (BTC): $92,029.63 -6.72%
Ether (ETH): $3,319.02  -4.95%
S&P 500:  5,987.37  +0.3%
Gold: $2,632.36  +0.57%
Nikkei 225: 38,442.00  -0.87%

A bitcoin-led crypto market correction entered a third day as the asset lost a further 6% in the past 24 hours, falling below $93,000. BTC has pared weekly gains from over 10% to just less than 1% amid profit-taking on the expected pullback. Major tokens have followed the tumble, with Solana’s SOL, BNB, Cardano’s ADA and DOGE falling as much as 7% in the past 24 hours. The broad-based CoinDesk 20 (CD20), a liquid index tracking the biggest tokens by market capitalization, minus stablecoins, is down nearly 3%. Analysts view a correction of as much as 10% from the peak as perfectly natural while maintaining a short-term target of $100,000 per BTC.

Some indicators point to an ongoing correction in BTC's price, sending it as low as $90,000. Among them is the 25-delta risk reversal. This measures the volatility premium of out-of-the-money (OTM) calls, used to bet on price rallies, relative to OTM put options, which offer downside protection. On Deribit, calls expiring this Friday now trade at a cheaper valuation to puts, resulting in a negative risk reversal, according to data source Amberdata. The first negative reading in at least a month indicates a bias for protective puts. Perhaps sophisticated traders are prepping for an extension of Monday's price slide. On Monday, traders sold call spreads and bought put options tied to BTC on the over-the-counter liquidity network Paradigm.

After a prolonged downtrend relative to bitcoin, ether is showing signs of a resurgence. ETH climbed to over $3,500 for the first time since June on Monday, while BTC was falling from its recent highs. Ether has since been caught by the wider market correction, trading 5% lower in the last 24 hours while still outperforming the broader market, which has lost over 8%, as measured by the CoinDesk 20 Index (CD20). Investors have started to rotate capital to smaller, riskier cryptocurrencies over the weekend following the stall of bitcoin's near-vertical surge since Donald Trump's election victory. The ETH/BTC ratio, which measures ether's strength vs. bitcoin, plummeted to as low as 0.0318 on Thursday, its weakest reading since March 2021, but the gauge has gained 15% since to 0.3660 at press time.

Ethereum is witnessing a surge in "blob" usage, an effective data-management tool introduced earlier this year.

The number of blobs, or binary large objects, posted to Ethereum has consistently averaged more than 21,000 this month, matching the March's record, according to pseudonymous data analyst Hildobby's Dune Analytics dashboard.

Blobs were introduced in Ethereum's Dencun upgrade. They attach large data chunks to regular transactions, storing data off-chain without congesting the mainnet. Think of blobs as a consolidated large box filled with letters and paying for the entire box, whereas call data is akin to paying for each letter posted separately.

The spike in the number of blobs posted points to increased adoption of layer-2 protocols. These protocols use blobs to bundle transactions together, process them off-chain and then post them to the Ethereum main chain for verification.

"Transactions for ETH and its L2s are continuing to reach all-time highs, now +40% vs. the Summer. Meanwhile, the average blob count has increased ~20% driving L2's Blob Fees to a 30-day high," Matthew Siegel, head of digital assets research at VanEck, said on X.

- Omkar Godbole