CRYPTO week ahead: November 21 – 27

21 нояб. 2022 г.

Last week in the news

Markets were traded in a mixed mode during the previous week. First part of the week was much more positive from the week-end, when markets closed lower. Analysts are stressing that it was a market readjustment based on the latest comments from FED officials on CPI expectations. The crypto market continues to be under the influence of FTX collapse and also had a mixed week. Major coins traded lower. BTC is finishing the week modestly above 16K, ETH is still holding above 1.2K.

The scandal over the crypto exchanger FTX continues to be the main topic in the news. Currently contingent spread is the main concern of investors on the market. It could not be estimated exact impact, considering that many large names on the market had exposure toward FTX. Shares of the crypto bank Silvergate Capital, dropped sharply during the week, due to market speculation that the bank could be exposed to FTX. The CEO of Silvergate bank tried to assure investors that the bank has sufficient liquidity, but it was without effect. Large pension fund in Canada, Ontario Teachers, announced that it will write off $95 million worth of investment in FTX. Price of Grayscale Bitcoin Trust shares were down by 43% relative to the underlying BTC price, after the announcement of its owner, Grayscale Investment, that they would halt customer withdrawals in case that similar situation occurs as with FTX. On the other hand, Cathy Wood`s ARK Investment was not concerned much about such statements, since the fund purchased additional 315.000 shares of GBTC.

In an interview with CNBC, the General Counsel of Ripple, Stuart Alderoty commented on the company's expansion outside of the US, noting that the majority of its income is now originating from outside the US. For a few years now Ripple has been in legal dispute with SEC defending the stand that XRP is not a security. In the meantime, the company expanded its operations outside the US, currently seeking a virtual asset service provider licence from Ireland authority. With this licence, Ripple is hoping to pass its activities to the rest of Europe.

The CEO of Input Output Global, Charles Hoskinson, announced during the previous week that the company is planning to release a new blockchain, named Midnight, with a token called Dust. IOG is a company behind Cardano, while the Midnight blockchain is supposed to deliver zero-knowledge-proof smart contracts.
During the week, president of the European Central Bank, Christine Lagarde, commented on the possibility for the ECB to continue to raise interest rates, even if such moves would push the EU economy into recession and slow down economic activity. Economists are noting that the current 1.5% level is neutral. This comment comes after the inflation in the EU zone is hitting historical heights at 10.6% y/y with its further estimated growth during winter months. Since this is far away from 2% ECB`s targeted level, there are not many other options for ECB, except to hike further interest rates in order to reduce its balance sheet.

Crypto market cap

After a shocking week of the FTX collapse, which led to a significant drop in prices of all digital assets, markets were trying to stabilise around current prices. However, there is still great fear of investors regarding the contingent effect of FTX on other major players on the market, which is the main reason why investors are still reluctant to enter into positions and push the market to previous levels. Total crypto market capitalization decreased during the previous week by an additional 20B or 3%, leading to total crypto market capitalization drop of little less than 25% within a period of two weeks. The drop was again led by the major coins on the market. At the same time, daily trading volumes significantly decreased, down to the level of 66B on a daily basis, from 152B traded during previous week. Evidently, the market is waiting for the dust of FTX collapse to settle down, in order to choose the trading side. Total funds outflow from the beginning of this year was further decreased to the level of 1.394B, which is a drop of 64% on a yearly basis.

Major coins on the market were leading the last week`s drop, while the performance of altcoins was in a more optimistic manner. BTC, ETH and BNB were participating with 64% in the total market cap drop of 20B. ETH for one more time was leading the market with a drop in cap of 7.2B, which is a decrease of almost 5%. BTC was following, with a drop in cap of 44B or 1.2% on a weekly basis. BNB was down by 3.5% or 1.6B. It was also interesting to see that Tether lost a significant amount of 1.5B or 2.2%, for the first time after the Terra collapse. In relative terms, the highest losers of the week were Solana, with a drop in market cap of 14%, followed by DOGE, who decreased its market cap by 7.2%. Among coins which managed to finish the week in green territory were Litecoin, with an increase in market cap of 6%, Monero, which surged by 5.6% and Algorand with an increase of 5.5%. Quite positive developments were with EOS, a coin which increased its cap by 7.8% and also increased its coins in circulation by additional 7% w/w. Filecoin continues to increase its circulating coins, adding 1.4% during the previous week.

Crypto futures market

In line with the spot market, the crypto futures market continued to trade lower during the previous week. BTC short term futures were traded modestly higher by some 2% on average, still holding modestly above 16K. Futures with maturity in December this year finished the week at level of 16.2K. Still, longer term futures lost between 7% and 10%, with closing price for December 2023 at 17.1K, lower from previous week`s close at 18.1K.

Negative expectations were also dominant for ETH futures. Short term maturities for ETH were closed by some 3% lower, dropping below 1.2K. Much higher drop was with longer term futures of some 10%, with December 2023 finishing the week at 1.1K.