Bitcoin Market Is Not as Leveraged as it Looks, Gas Spikes as Ether Hits a New ATH


Bitcoin is back above $61,000 ahead of the weekend after a sharp decline took the leading cryptocurrency to under $58k last night.

What's assumed to be an issue of a fat finger, it sent the price of Bitcoin crashing to about 10%, but it regained $62k back again soon enough.

While Bitcoin is currently struggling to move higher, Ether has gone ahead and hit its new all-time high just above $4,400. ETH is currently trading around $4,325; this jump in price has sent the funding rates higher, with the highest currently on Deribit at 0.0915%.

This latest bout of volatility has sent the gas prices on the Ethereum network to surge as demand picks up. The average fees jumped to $51.5, and gas prices went past 200 Gwei.

“Historically, when gas gets expensive, we’ve seen activity spike on alternative L1s. But now that Arbitrum and Optimism are live, L2s could wind up being the primary beneficiaries,” said Delphi Digital.

Ethereum scaling solution Arbitrum’s transactions went parabolic in early September, in less than two weeks of its launch. But since then, Arbitrum and another layer 2 Optimism, which went live in July and saw a jolt of adoption, have had their transactions fall and plateau for most of October.

Notably, Arbitrum currently has put a cap on network gas, and once that’s lifted, more activity could again be seen on the L2.

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As for Ether’s open interest, it also climbed to a new high of $12.52 bln, recovering fast from the drop to $$11.26 bln during this week’s volatility.

On CME, OI on Ether futures hit a $1.11 bln peak today, last seen last Wednesday. CME sits at 6th place in Ether OI, with Binance leading the pack with $3.06 bln notional OI followed by FTX’s $2.26 bln, according to Skew.

Unlike Ether, CME has the second spot for Bitcoin futures OI at $5.05 bln, having slipped from the top rank, Binance reclaimed its position again at $5.28 bln in OI. FTX at third place has some catching up to do at $3.89 billion.

Total OI has fallen to $24 bln from $26.47 bln early last week, while the highest Bitcoin funding rate on Bybit is at 0.0578%.

According to trader and economist Alex Kruger, the Bitcoin market is considerably less leveraged than people think because of investor protection; the regulated exchange CME requires 40%-50% in margin, which means maximum leverage is about 2x. On crypto exchanges, it's much higher.

Interestingly, with Bitcoin above $60k, the interest in the cryptocurrency has fallen to June levels and before that early December levels.

“When Bitcoin reclaims April's ATH, a lot of untapped demand will begin to unlock. Low retail engagement is shown in Google search results, which are as low as they were in May/June when Bitcoin was just $30K. Sustained highs will unlock demand for the next parabolic leg up,” noted Charles Edwards, founder of Capriole Investments.

However, greed in the market has flown high, with the Crypto Greed and Fear Index currently having a reading of 70, a fast shift in sentiment from ‘extreme fear’ last month at a reading of 24.

This is due to the interest of retail shifting to meme coins with SHIB, the latest darling. After SHIB dominated the market earlier in the week with an appetite for high risk still there, other dog coins are seeing the rotation of profits from SHIB and into them. SHIB -0.52% SHIBA INU / USD SHIBUSD $ 0.00
$0.00-0.52%
Volume 1.42 b Change $0.00 Open $0.00 Circulating 10 t Market Cap 20.52 b
6 d Terra Stablecoin Supply Surges by $5B In Under A Month, Bitcoin in Macro’s Clutches, SHIB Added to Balance Sheet 1 w Twitter CEO & Bitcoiner Jack Dorsey is Out, Ethereum Is In 2 w DOGE Pumps on Elon Musk’s Enquiry to Binance, CZ Strikes Back

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