For the past four days now, bitcoin has been hovering around $11,000. Trading in the green, the digital asset today went as high as $11,185 but with the ‘real’ volume only about a billion dollars.
Much like the spot trading volume, futures had a lackluster performance as well. From $28 billion on Sept. 3rd, it has come down to just $7.2 billion. On CME, the volume kept between $262 million and $445 million since the mid of last week.
Open interest also followed the same path, going down from $5.1 billion to $3.7 billion in the first few days of September. But unlike futures volume, OI has been slowly trending upwards, making it to $4 billion. On CME as well, OI jumped back to $500 million.
However, during this whole ordeal, Bakkt came out the winner, making new records. On Monday this week, the total volume (physically-settled + cash-settled) was $183 million. Then on Wednesday, this record was broken with $191 million. But the OI on Bakkt had no such fun as it remains near $10 million.
What’s Looking Good?
While bitcoin looked good this week, with the price around $11,000, analyst DonAlt is all about the $10,600 area, which according to him, “is still one of the most important areas on the chart.”
“This week closes below it? I'll assume the top is in, and we'll trade towards $8k. We close above it? I'll close shorts and see what happens next,” he said.
Amidst this, European Central Bank will disburse its latest rounds of loans with interest as low as -1% that has led the funding costs to fall. ECB’s liquidity injections may raise excess cash in the euro area above 3 trillion euros ($3.6 trillion) for the first time.
Today, while BTC is looking green, altcoins are not having that great of a time which includes SAFE (-25%), BAL (-16%), KNC (-10%), CRV (-9%), Tezos (-8%), YFI (-7%), and LINK (-4%), with the top ones down between 1% to 3%.
Still, the likes of CREAM (43%), SASHIMI (42%), UNI (40%), YAMV2 (16%), BASED (8%), and Aave (5%) are making gains.
Signs of New Money Moving into Crypto
The leading cryptocurrency is taking its sweet time moving upwards. Up 50.5% YTD, in Q3 bitcoin, has made gains of only 20%, about half of Q2’s 42% returns. But it is still better than gold’s 10.15%, SPX 7%, dollar’s -3.69%, and WTI’s -6.5%.
Quarter third, however, hasn’t really been good for the cryptocurrency, except for in 2017, or stocks for that matter. The next quarter, on the other hand, historically has been dominated by greens — 82.8% in 2015, 62.60% in 2016, and 210% in 2017. In 2014, 2018, and 2019, however, Bitcoin recorded losses of 18%, 42.5%, and 13.60% respectively.
Also, as Juan Villaverde of Weiss Crypto Ratings notes, underneath the surface, we are seeing “crypto-assets establishing a solid base for a potentially explosive rally as we head into the final quarter of 2020.”
His takeaway from the current market action, where bitcoin is moving higher while altcoins are struggling in sharp contrast to the past couple of months,
“Bitcoin remains the benchmark for outside investor interest in the asset class.”
“I’ve often noted on these reports how no crypto bull market is sustainable without Bitcoin leading the way, at least in the early stages,” said Villaverde adding:
“it’s only when we see Bitcoin outperform the rest of the markets to the upside that we can say that new money is moving into the crypto space — a necessary prerequisite for a long-term bull market.”
But it also remains to be seen if bitcoin will continue to outperform over the next few weeks.