Short-term holders’ renewed profitability is a positive signal for near-term price action, according to on observer.
Bitcoin’s (BTC) near-term outlook appears constructive as blockchain data show short-term holders of the cryptocurrency are moving coins at a profit.
The seven-day moving average of the short-term holder’s (STH) spent output profit ratio (SOPR) has recently moved back above 1, according to blockchain analytics firm Glassnode.
“After a brief stint of coins moving at a loss, STH-SOPR is now back above 1,” analysts at Blockware Solutions said in a weekly newsletter. “This is bullish for near-term price action as it shows capitulation from short-term holders.”
The short-term holder SOPR of more than 1 means the average short-term holder in the market is selling coins at a profit. A reading below 1 is considered a sign of capitulation, while a reading of 1 indicates the average short-term holder is just breaking even.
The SOPR is calculated by dividing the realized dollar value of a spent output (UTXO) by the value at output creation to reflect the degree of realized profit for all coins moved on-chain. The short-term holder SOPR is focused on all wallets that have held onto their coins for less than 155 days.
The STH SOPR has historically stayed above 1 during bull markets. That’s understandable, as rallies allow short-term holders – mostly new entrants, active traders or weak hands – to liquidate their holdings at a price higher than the acquisition cost.
Besides, the area around 1 tends to act as a support level during bull runs, as holders, expecting continued price rallies, see their cost basis as a profitable buying opportunity. On the flip side, level 1 acts as resistance during bearish trends.
The SOPR has moved above 1 (Glassnode) (CoinDesk/Glassnode)
The STH SOPR crossed above 1 in January, signaling a bullish trend reversal and has since tested the support twice. Bitcoin has rallied over 68% this year, according to CoinDesk data. At press time, the cryptocurrency was trading near $27,900, having put in a high of $28,441 during the overnight trade, CoinDesk data show.
Bitcoin’s long-term holders also turned profitable a month ago, signaling a major bullish period ahead.
A technical analysis indicator called Bollinger bandwidth suggests dogecoin’s unusual calm could soon end with a pronounced move in either direction.
Dogecoin (DOGE), the meme cryptocurrency known for its rapid price moves, has been unusually calm this year, underperforming market leaders bitcoin (BTC) and ether (ETH) by a significant margin.
One technical analysis indicator called Bollinger bandwidth suggests it may be the calm before the storm.
The indicator illustrates periods of varying volatility relative to the price gyrations and is calculated by dividing the spread between the Bollinger bands by the 20-day simple moving average (SMA) of the cryptocurrency’s price. Bollinger bands are volatility lines placed two standard deviations above and below the 20-day SMA average of prices.
Periods of rising volatility are marked by a sharp increase in the distance between the two bands and the widening of the bandwidth. Conversely, the two bands contract and the width narrows or declines during a volatility lull.
An usually wide or high bandwidth indicates the ongoing bullish/bearish trend is nearing an end. Meanwhile, an unusually low bandwidth suggests “the market may be about to initiate a pronounced move in either direction, as Fidelity
When the bandwidth is too high, it’s a sign the current bullish/bearish trend may be ending. Meanwhile, an unusually low bandwidth suggests the market may be about to exit a consolidation pattern with a pronounced move in either direction, as Fidelity’s explainer says.
Dogecoin’s daily chart shows the bands have recently tightened, pushing the bandwidth down to 0.06, the lowest since February 2019, according to TradingView.
The Bollinger bands have recently tightening, pushing the bandwidth to lowest in over four years. (TradingView/CoinDesk) (TradingView/CoinDesk)
So, dogecoin could soon see a volatility explosion in line with the bandwidth’s tendency to alternate between expansion and contraction. Note that the impending volatility explosion is agnostic to price direction, meaning the big move can be bearish or bullish.
At press time, dogecoin traded near $0.073. The world’s leading meme cryptocurrency, currently valued at $10.22 billion, has risen just 3% this year. Meanwhile, market leaders bitcoin and ether have gained 68% and 60% respectively, per CoinDesk data.
Companies that market crypto alongside traditional securities might mislead consumers about access to fair advice and compensation, the European Securities and Markets Authority worries.
Investment firms in the European Union that offer crypto alongside more traditional products could be misleading their consumers into a false sense of security, the European Securities and Markets Authority (ESMA) said in a Thursday statement.
The EU agency said it’s worried that firms may use a seal of regulatory approval they have to offer traditional finance (TradFi) stocks or funds to make customers believe they’ll have access to sound financial advice or compensation schemes in the event of crypto mishaps.
EU rules known as the Markets in Financial Instruments Directive (MiFID) ensure investment intermediaries promote only appropriate financial products to clients – but don’t always apply to more exotic investment opportunities like gold, real estate or non-transferable loans.
The EU’s Markets in Crypto Assets regulation (MiCA) is set to bring MiFID-style rules to the sector, but the regime will only take effect in around 18 months. In the meantime, ESMA, a Paris-based agency that groups and coordinates national regulators, is worried some companies are encouraging and exploiting the ambiguity.
“ESMA recommends that investment firms take all necessary measures to ensure that clients are fully aware of the regulatory status of the product/service they are receiving and clearly disclose to clients when regulatory protections do not apply,” ESMA said, adding that regulatory approval shouldn’t be used as a promotional tool.
ESMA has previously warned people crypto can be risky, while an October paper highlighted novel threats such as hacks and consensus manipulation. The agency is also set to consult shortly on detailed secondary laws that will put MiCA into effect.
A lawyer for the accused reportedly said he admits “the facts of the prosecution,” during a May 25 trial hearing.
A former executive of South Korean cryptocurrency exchange Coinone, who was accused of taking bribes in return for listing certain coins, has acknowledged the charges, local news agency Yonhap reported on Thursday.
“Mr Jeon,” Coinone’s former director of listing, was accused of receiving nearly 2 billion won ($1.51 million) in return for listing virtual assets such as “Furiever Coin,” which was listed exclusively on the exchange, and has since been linked to a kidnapping and murder investigation in the Gangnam district in Seoul. Jeon’s broker, known as “Mr Ko,” is accused of facilitating the listings.
At a trial hearing on May 25, a lawyer for the two reportedly said: “I admit the facts of the prosecution.”
“Basically, we are acknowledging the facts of the prosecution, but since we have not been able to view all the evidence, we will present a final opinion after review,” the lawyer added.
Coinone’s listing team leader and another broker have also been accused, but their lawyers said they have yet to finish reviewing evidence and will respond to the charges at the next trial hearing on June 15.
Coinone didn’t immediately respond to a CoinDesk request for comment.
The latest price moves in crypto markets in context for May 26, 2023.
This article originally appeared in First Mover, CoinDesk’s daily newsletter putting the latest moves in crypto markets in context. Subscribe to get it in your inbox every day.
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Digital Currency Group (DCG), the parent company of CoinDesk is closing down its trade execution and prime brokerage services unit, TradeBlock, citing crypto winter and regulatory uncertainties. The shutdown of the unit, which provides trading services to institutional investors, will be effective as of May 31, a DCG spokesperson told CoinDesk. TradeBlock was acquired in 2020 by CoinDesk, and was later spun out as its own standalone business. CoinDesk kept the index data operating from the deal, which was rebranded as CoinDesk Indices, and “has proven to be a successful acquisition,” the spokesperson said. The story was first reported by Bloomberg.
The number of ether (ETH) on exchanges has hit a low not seen since July 2016 as staking saps up available tokens. Data from Glassnode shows that as of Thursday, 14.85% of all ether was held in wallets owned by centralized exchanges. That’s the smallest proportion since ether was in its infancy during the summer of 2016. In contrast, during the bull market of 2021, the exchange balance was around 25%. Low exchange balances are typically thought to be a bullish sign as it means the supply of ether available for purchase is limited.
U.S. Bitcoin Corp. (USBTC) is set to become one of the largest miners in America following a deal to buy mining assets from bankrupt lender Celsius. The company is part of the Farenheit consortium that won a bankruptcy auction for the Celsius assets, which include a lending portfolio, cryptocurrencies and 121,800 mining machines. Once it brings all the mining rigs online, its fleet will total at least 270,000 mining rigs and computing power of 12.2.exahash/second (EH/s), the firm told CoinDesk, putting U.S. Bitcoin Corp. alongside other U.S. mining giants likes Riot Platforms (RIOT), Core Scientific (CORZ) and Marathon Digital Holdings (MARA).
More than 9.3 million tokens will be unlocked Sunday, representing 1.2% of AXAX’s total supply.
Millions of AVAX tokens – the native crypto of the Avalanche blockchain – will be unlocked on Sunday and distributed to key players in that ecosystem, adding a major 1.2% increase in total supply.
The 9.3 million tokens entering circulation on May 27 were worth roughly $130 million at press time. They’re set to go to the Avalanche Foundation, strategic partners and Ava Labs, as well as an airdrop, said Patrick Sutton, Avalanche’s communications chief.
“Tokens from unlocks aren’t automatically put to use. It just means the Foundation can now use them, but it is at their discretion when and how to use them,” added Sutton.
AVAX is the gas to Avalanche’s smart contracts ecosystem and also used to secure the blockchain via staking. It has remained stable in the past 24 hours, standing at $14.20, CoinDesk data shows.
“Token unlocks freak people out in general, but the upcoming Avalanche unlock has been mapped out for a while now and most sophisticated actors have adjusted for it,” said Lindsey Winder, CEO of token infrastructure firm Hedgey Finance.
Data from crypto analytics firm Token Insights shows 358.55 million AVAX remains locked, though Sutton says the figure of remaining locked tokens is 96.06 million, about a quarter of Token Insights’ figure.
The joint venture between Gulf Innova and Binance aims to begin offering crypto services in the country later this year.
Gulf Binance, a joint venture between crypto exchange Binance and Gulf Energy’s innovation arm Gulf Innova, has received a digital asset operator license in Thailand, according to a Friday press release.
The rubber-stamp from Thailand’s Ministry of Finance will allow the firm to advance plans to open a regulated crypto exchange and broker in the southeast Asian country. The platform will likely launch by year’s end, according to a press statement.
“By harnessing Binance’s expertise together with Gulf’s established local presence and network, Gulf Binance aims to showcase the full potential of blockchain technology to meet the needs of Thai users, Binance Head of Asia, Europe, and MENA Richard Teng said in a statement. Gulf Energy is one of Thailand’s largest private power producers.
Thailand has signaled it is warming up to positioning itself as an emerging Asian crypto hub. In January, the country’s regulators introduced a set of rules for crypto custody services, and later announced a $1 billion tax break for firms issuing digital tokens for investment. A 2022 ban on crypto lending and staking services and restrictions on digital asset-related advertising, however, indicates the nation is taking a careful approach to supervising the emerging market.
Lybra Finance was launched last month and uses liquid staking derivatives to offer a decentralized interesting-bearing stablecoin.
Lybra Finance, a protocol built on liquid staking derivatives that aims to provide a decentralized interest-bearing stablecoin, has seen its total value locked (TVL) skyrocket nearly 400% in the past two weeks, nearing $100 million as of Friday.
Launched one month ago, Lybra’s surge in TVL coincides with Lido upgrading to its second version on May 15, which enabled Lido users to unstake their stETH and receive ETH. According to Lybra documents, the protocol “leverages Lido Finance-issued ETH proof-of-stake and stETH as its primary components, with plans to support additional LSD assets in the future.”
LBR, the native token of the Lybra Protocol, which gives holders governance powers and access to the protocol’s revenue, has jumped 33.8% in the past 24 hours and 173% in the past seven days, standing at $2.23, CoinGecko data shows.
Decentralized exchanges hold 9.61% of the total LBR supply, a steady decline from 23% two weeks ago, according to blockchain data firm Nansen. Nansen also reports that smart money wallets hold 4.74% of the total LBR supply today, an increase from 0.82% on May 16, indicating that savvy crypto investors are accumulating the token.
Nansen considers a wallet to be “smart money” if it has profited at least $100,000 by providing liquidity or made multiple profitable trades on decentralized exchanges.
Bitcoin trades flat to move one step closer to logging its first losing month of 2023. Ether rises slightly but also seems headed for a negative May.
Bitcoin and ether took slightly divergent paths during the last full week of May. While ether rose 1.5%, bitcoin moved little to recently trade at about $26,700, a little below where it stood last Friday.
Ether’s year-to-date performance gap to bitcoin has narrowed to single digits with ETH gaining 52% YTD versus BTC’s 60% increase. Since May, the ETH/BTC ratio has increased 6.7%. Still both assets are in line to have their first losing month of 2023.
BTC and ETH’s seven-day performance ranked them sixth and 14th among cryptocurrencies with a market cap of $1 billion or more.
The weekly leaders were Render Token (RNDR) and Tron (TRX), up 21.9% and 7.6% respectively, while LDO and ALGO lagged, declining 8.5% and 9.3%
Investors have been focusing on President Joe Biden and U.S. House Speaker Kevin McCarthy’s debt ceiling negotiations. While it’s widely expected that a deal will be reached ahead of the June 1 deadline, the two sides had yet to reach an agreement going into the Memorial Day weekend.
Markets were also weighing Friday’s Personal Consumption Expenditure (PCE) report showing U.S. prices rising more than expected in April. Core PCE, which excludes volatile food and energy prices, rose 0.4%, versus expectations of a 0.3% increase.
The unexpected increase reduces the likelihood that the Federal Open Market Committee (FOMC) will pause interest rate hikes during its June 14 meeting.
According to the CME Fedwatch tool, the probability that interest rates would remain at the current target rate of 5%-5.25% declined from 83% to 38% this week. The probability of a 25 basis point increase rose from 17% to 62%.
Drawdowns across multiple sectors
All six sectors in the CoinDesk Market Index fell this week, with the Smart Contract Platform sector declining the least (0.2%). The Culture and Entertainment sector had the roughest week, falling 4%.
Of the 156 individual assets across the base of CMI sectors, only 20 finished the week in positive territory. Another standout, albeit one with a market cap of less than $1 billion, was decentralized computation token ARPA, up 88%. ARPA is trading 167.2% higher on the month, and over 200% higher over the last 12 months.
The dollar valued locked in the open futures contracts tied to AXS has surged to highest since February, signaling an influx of new money into the market.
Blockchain-based play-to-earn project Axie Infinity’s native cryptocurrency AXS rallied after CoinDesk reported on Axie’s card-based strategy game debuting on the Apple app store.
AXS surged over 12% from $7.16 to $8.04 after the news, becoming the top gainer on CoinDesk Indices’ leaderboard. At press time, AXS was on track for its best single-day percentage gain since Jan. 22. The cryptocurrency fell by over 3% in April, registering its third consecutive monthly decline amid the token unlock and risk aversion in the broader market.
Initially, Apple store users across Latin America and Asia in countries including Argentina, Colombia, Peru, Mexico, Venezuela, Indonesia, Malaysia and Vietnam will have access to the card-based game called Axie Infinity. The game already has 1.5 million installations across all platforms. Sky Mavis, the creator of the play-to-earn project, plans to expand the game’s outreach via Google and Apple mobile users.
Open interest spikes
AXS’s price rally was accompanied by a sharp increase in the notional futures open interest or the dollar value locked in open futures contracts. That’s a sign of an influx of new money into the market.
The notional open interest rose to over $75 million from nearly $40 million a day ago, reaching the highest since February, according to Coinglass.
However, the leverage appeared skewed to the bearish side, as funding rates in the perpetual futures market remained negative. Negative rates indicate the dominance of bearish short positions in the market.
Investors probably shorted perpetual futures contracts to protect the long position in the spot market from a sudden price drop, a reflection of lack of confidence in the sustainability of the price rally.
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The chart shows AXS’s funding rate tanked below zero as the cryptocurrency rallied. (Coinglass) (Coinglass)
