The Derivatives Magazine #25

The Derivatives Magazine #25

As many analysts assumed, within the last week there was an expected surge of volatility on the cryptocurrency market. And, to the joy of many participants, its vector was directed towards market growth. Starting the week at $887.4 billion, the total capitalization index rose throughout the period, with a pause in the middle of the week. The market growth occurred in two consecutive waves, which reached two price peaks: $963.95 billion and $988.6 billion, respectively. The period we are considering ended at $982.1 billion, with a final increase of 10.7%.  

The correlation between the cryptocurrency market and technology stocks has dropped sharply. Last week's big tech reporting season (the results were poor) led to a sharp drop in the value of major companies. For example, during the period we are looking at, Amazon's shares collapsed by almost 20%, while Meta dropped more than 30% of its capitalization. Against this background, cryptocurrencies looked very stable, showing a smooth growth: the bitcoin price touched the resistance level of 21 000, and the price of ethereum exceeded 1600. The capitalization growth of many top altcoins showed double-digit numbers. These events are likely to strengthen cryptocurrencies' positions in the eyes of many investors.

The local rally was obviously caused by the increased activity of buyers in the market. And what about sellers? According to CryptoQuant data, on October 26th there was a big bitcoin withdrawal from derivatives exchanges: only that day more than 94 000 BTC were withdrawn. This is a record for the last few months and a strongly positive indicator for the market. Mass cryptocurrency outflows from exchanges are usually associated with reduced pressure on the market by sellers.

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Despite positive on-chain data and gradually decreasing fear among investors (indicator of fear and greed level has recently shifted from "extreme fear" sector to "fear" sector), macroeconomic indicators are still restraining the positive attitude of market participants.  In particular, we are speaking about the situation with rates of world central banks. Last week we saw the release of data on record inflation in the Eurozone, which amounted to 10.7% on an annualized basis. In connection with this, the European Central Bank rate was raised by 2% (increase by 0.75%). During the press conference that followed, it was stated that further rate hikes would be appropriate. Market participants also expect the Bank of England rate hike of 75 points at the end of the meeting on November 3.

The key event in this area will of course be the US Fed rate decision on November 2, which is expected to raise the rate to 4% (by 75p). While the probability of a rate hike of only 50p is not zero (according to CME FedWatch Tool it is 15%), the market is hardly expecting it. With congressional elections coming up on November 8, the Fed's rate announcement will be more of a political nature, as high inflation and the success of the fight against it is a major concern for voters and could affect their decision.

Given the latest inflation data, no reason to reverse the monetary policy of the leading central banks is expected yet, the pressure on the markets will remain.

Elon Musk bought Twitter
On Thursday last week, after months of entangled negotiations, the social network finally came under the control of a new owner. Musk, backed by a group of investors including Sequoia, Fidelity and Brookfield, among others, acquired Twitter for $44 billion. After obtaining a new status, the entrepreneur immediately began with actions: he fired some of the company's central management, announced plans to reduce the company's advertising revenue from 80 to 45%, as well as the desire to increase revenue by 4 times by 2028. According to many experts, the economic feasibility of this purchase under current conditions is virtually non-existent. However, it is clear that Elon Musk himself and those who gave him money for this deal are betting on the transformation of Twitter into something larger with a deep integration of Web3 technologies in the product. Against this backdrop, the "pump genius'" favorite meme-coin DOGE, as well as its brother Shiba, reached new highs against BTC (according to the Sentiment platform).

Visa Files Trademark Applications for Crypto Wallets, NFTs and the Metaverse
Visa, the international payment giant, has filed two applications with the U.S. Patent and Trademark Office to register trademarks related to the methodology, NFT and cryptocurrency wallets. This news shouldn't come as much of a surprise, since organizations like Western Union, NYSE, PayPal and American Express have also already filed similar applications. It seems that in the not too distant future we can see the giants battling for market share in Web3.

Telegram team launches Fragment platform for selling usernames
The Telegram messenger team launched the Fragment marketplace to sell account IDs for Toncoin cryptocurrency. Telegram's founder announced the launch of the marketplace in August. On the new platform, he said, username holders will be able to transfer them to interested parties within the secure blockchain transactions through "NFT-like smart contracts." He said that for the first time in the history of social networking, a "fair and transparent" market for usernames has been established. According to the entrepreneur, "this is just the beginning, the power has begun to pass into the hands of users." Durov also explained that the usernames will be protected using the TON blockchain technology.

This overview was prepared by the analytics department of the Biqutex, an innovative crypto derivatives exchange. Trade an extended list of instruments (Perpetuals Swaps, Futures, Options, Calendar Spreads etc.) with up to 125x leverage and deep liquidity!