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May 11: If You Can't Handle Me at My Worst, then You Don't Deserve Me at My Best…

Trading Crypto with Eugene is a series of daily commentary of market analysis and trading advice shared by Eugene Ng of Matrixport, a veteran trader with 10 years of experience in top-tier global investment banks. If you like the article, please follow us here on Blockchain.News so you won’t miss our future publications.

What a volatile Sunday for Bitcoin as it plunged from $9,800 to $8,100 in a single hour, a very large outsized move for a weekend trading session that even Coinbase suffered an outage. There was no news/catalyst, instead, I think it was a planned outsized sale that happened. A likely scenario is that coordinated selling or take-profit via OTC and exchanges. Despite $275 mln of BTC sell liquidations in the last 24 hours and around 10% of futures open interest declined across the board, open interest is still hovering $3bn and about 50% more than post-black Thursday’s crash in March. That says to me that there are just more longer-term investors sticking around. Predicting the price of Bitcoin post its halving isn’t going to be easy. If I have to make a guess, I would expect it to retrace some of its gains in the short-term. It depends on the momentum of Bitcoin’s price heading into halving. If the price continues to stay firm and head above 9,000, I would expect it to see a retracement albeit a less horrifying one compared to March 12. Even if BTC does continue to slide into $8k, I still think there is some likelihood of selling (i.e. miner captiluation) Why? Firstly, there have been quite a few funds, traders and market-makers who have positioned long, albeit less after yesterday. Secondly, miners selling into halving as the smaller players cant stay profitable.Trade strategy? I’ve been advocating to go Long Volatility in the last two weeks and that should play out quite well, I would start taking profit in 50% of them right now since implied volatility has now spiked higher. I also shared last Thursday to build put positions if BTC crosses 10k, that would have worked out quite nicely if you’ve bought some too. For spot, I am a buyer between $7,800 to $8,000, and if I own some BTC, seller between $9,300 to $9,500. Goodluck.

$9,300 level to watch today if we can breakthrough for us to continue the bullish momentum into halving, otherwise $7,900 may be tested… if that level breached, we may enter into another a lower range consolidation phrase…

If it does break $7,900, you can try buying at $7,200/$6,400/$5,400 to accumulate long term longs…

In the longer term, we are still in a healthy upward trending channel….

Implied volatility jumped on Sunday’s plunge! Time to sell some vol!

DisclaimerOpinions expressed are solely the analyst’s own and do not express the views of Matrixport the company.

The views and opinions expressed in this article are those of the contributor and do not necessarily reflect the view of Blockchain.News.

Cause for Concern? Ethereum's 15 Minutes of Extreme Volatility Explained

Ethereum’s price on the crypto market underwent a lot of fluctuations in the span of 15 minutes yesterday, causing quite a stir in the crypto community.

Market Experts on Ethereum

Across major coin exchanges, such as Binance Futures, Ethereum (ETH) peaked at $418, but within 5 minutes, it dropped by 25%. Eventually, it climbed back to $385 within a 10-minute span.

The reason behind ETH’s price fluctuations has been speculated upon by market experts, who are saying that the $410 to $420 range has always been a historical resistance area since 2017. Also, the sudden 25% drop of ETH led to a cascade of futures liquidations across major crypto exchanges and extreme movement for Ethereum.

Ethereum Has Big Plans for The Future

Global markets analyst Alex Krüger commented on Ethereum’s price fluctuation and said that though ETH underwent a “blowoff top” of 25%, a blowoff doesn’t have to be “the top”, meaning that Ethereum’s market value may still escalate further. Despite the digital asset’s sudden market correction, a lot of crypto investors still remain positive about the blockchain ecosystem’s outlook.

With the launch of ETH 2.0 testnet set for August 4, much is to be anticipated of Ethereum. Kelvin Koh, co-founder of cryptocurrency venture capital firm Spartan Black, stands by the belief that ETH is leading the crypto market’s uptrend. With the launch of ETH 2.0 testnet’s first phase, there is much to be expected of the blockchain ecosystem. Koh added:

“Depending on how hard ETH runs, the successful launch of phase 0 may culminate in a near term peak for ETH and other large caps.”

Ethereum Introduces Testnet Medalla

As Ethereum is transitioning from a Proof-of-Work format to a Proof-of-Stake, Ethereum 2.0, dubbed “Medalla” will be launched in at least 3 phases, the first being phase 0. Ethereum hopes that by separating the testing in phases, aspects of the new blockchain can be covered methodically and perfected before release.

Phases 0, 1, and 2 each outlines a different concept. Phases 0 focuses on all the machinery behind ETH 2.0’s consensus, and it tracks the validators and their transaction balances. Phase 1’s main objective is to handle the addition and storage of new and old data associated with ETH 2.0. Finally, Phase 2 adds execution to ETH 2.0, and it enables programs to be run on top of it.

Ethereum Dominates The DeFi Scene

Ethereum Foundation has come a long way since its beginning, with new projects such as ETH 2.0 in the horizon. Last Thursday marked the anniversary of Ethereum’s official network launch. The blockchain ecosystem has since expanded its growth, with it currently holding the majority of DeFi applications run on a blockchain. As the pioneer of DeFI applications and with their rising popularity, Ethereum seems to be having a pretty good bull run this year, despite its setback on the crypto market on August 2.

The new multi-client testnet that Ethereum has been planning for quite some time is set to launch on August 4, at 1 pm UTC. However, all pre-launch criteria must be met beforehand.

Bitcoin Price Bull Run Intact Despite $1700 Price Dive on Sunday

The Bitcoin price went on a wild ride over the weekend, with the bulls pushing the Bitcoin price up to $12,100 before the world’s biggest cryptocurrency plunged back to $10,640 within a matter of minutes.

The cryptocurrency world was at attention last week as the Bitcoin price surged past $11,300 on Monday July 27 after months of little price action. Over the weekend, things got more interesting as the Bitcoin bulls pushed the Bitcoin price past $12,100 on Sunday, only to see it lose 13 percent half an hour later and fall to $10,640.

In an article by Bloomberg on August 2, Rob Sluymer, Technical Strategist, Fundstrat Global Advisors LLC suggested that despite dropping $1700 in a few minutes, the Bitcoin market will continue on its bull run after needing a correction from being overbought. He added that the Bitcoin price is in for some interesting movements in the short term.

Sluymer said, “Clearing resistance at $10,000-$10,500, which coincided with the downtrend line from the late 2017 highs and first-quarter 2020 highs, established a higher high for Bitcoin confirming a new tactical uptrend.” He added, “In the short-term Bitcoin’s daily momentum indicators are overbought (as they are for gold), but beyond some very near-term choppy trading, Bitcoin is likely to continue to trend to its next resistance level at $13,800.”

A popular cryptocurrency trader Scott Melker appeared to agree with the overbought assessment and highlighted that there were many indicators prior to the drop. Melker said that after such a strong Bitcoin price rally in a short period, the market was bound to stabilize from being overbought.

Melker said in a tweet: “A $1700 BTC hourly candle (mostly in a few minutes) on extremely high volume, including a similar sell-off on ETH in the middle of the night? Cool. There were bear divs everywhere as I mentioned.”

Buckle Up Says Winklevoss

Since Bitcoin plunged to almost as low as $4000 in the March Black Thursday crash, the Bitcoin price quickly recovered to around $9000 in May—where the price would slowly rise for the following months often stagnating.

While the Bitcoin price action has been less than interesting until last Monday, the drop in volatility, as well as the Bitcoin price recovery since the crash, has added to institutional investment interest and maturity toward Bitcoin. In a recent tweet, Cameron Winklevoss stated that it was for reasons like the influx of capital from mainstream investors and institutions that this coming Bitcoin bull run will be dramatically different to any seen before.

Compared to previous bull markets, the billionaire crypto philanthropist Winklevoss said that with the rise of infrastructure, the influx of capital, and better projects at hand, Bitcoin price is set for its next bull run:

Winklevos tweeted, “The next Bitcoin bull run will be dramatically different. Today, there’s exponentially more capital, human capital, infrastructure, and high-quality projects than in 2017. Not to mention the very real specter of inflation that all fiat regimes face going forward. Buckle up!”

Ripple Sees 1760 Percent Increase in Institutional Over-the-Counter Sales of XRP in Q2 2020

Ripple reported an increase in over-the-counter (OTC) sales of its XRP cryptocurrency in the second quarter of 2020, totaling $32.55 million, compared to $1.75 million in Q1 2020.

Ripple’s quarterly report is released to provide transparency and regular updates on the company and views of the state of the XRP market.

Ripple continued the pause of its programmatic sales, however, its institutional direct sales on over-the-counter sales to increase liquidity of XRP to RippleNet’s on-demand liquidity (ODL) customers has been its core focus.

Ripple has increased its total sales as a percentage of total volume from 0.006 percent to 0.18 percent, totaling an increase of 3000 percent.

Although Ripple has increased its institutional OTC sales in Q2 compared to Q1 of this year, in comparison to the same period last year, the current sales are 70 percent less. Total XRP volume also fell, from 29.68 billion in Q1 to $17.86 billion in Q2 2020.

XRP’s volatility was 3 percent in Q2, a notable decrease from 6.2 percent in Q1. XRP’s volatility in Q2 was lower than Bitcoin (3.4%) and Ethereum (4.2%).

Ripple also revealed that the company has been purchasing XRP in the secondary market:

“A healthy, orderly XRP market is required to minimize cost and risk for customers, and Ripple plays a responsible role in the liquidity process. As more financial institutions leverage RippleNet’s ODL service, more liquidity is added into the XRP market. That said, Ripple has been a buyer in the secondary market and may continue to undertake purchases in the future at market prices.”

Ripple further noted various key integrations of XRP, including Binance, which has launched an exchange-traded options contract, and Huobi XRP perpetual.

One of the largest telecommunications providers in Europe, Swisscom Blockchain, successfully launched XRP on its platform, enabling access to the XRP Ledger for enterprises for a variety of use cases. The first fully regulated crypto bank, Sygnum Bank, added XRP to its custody solution and financial platform. Uphold, a mobile payments startup also completed the integration of XRP into its wallet.

The company believes that these integrations helped contribute to the “health of XRP markets.”

US Crypto Exchange Kraken Predicts Bitcoin Price Crash in September

US-based crypto exchange Kraken has released its August 2020 volatility report which predicts that Bitcoin’s price will likely crash and perform negatively in September.

According to Kraken’s August 2020 volatility report, Bitcoin is due for a very negative performance in September that could see the pioneer crypto’s price crash before returning to a state of extreme volatility.

According to the Kraken report:

“Historically, September is Bitcoin’s worst-performing month, with an average return of -7%. With Bitcoin underperforming its average monthly returns for most of the year, we could see returns below -7%.”

The Kraken report warns that Bitcoin volatility will be on the rise soon due to “lesser-known market dynamics.” The report reads:

“Twelve times in the past, Bitcoin’s annualized volatility bottomed between 15% and 30% before climbing, on average, to 140% and returning +196% over 94 days. As of the end of August, 38 days have passed since the volatility low of 23% set on July 24, with volatility rising to 44% and price gaining +25%”

Bitcoin Whales and Long Term Holders

The only bullish indication for the Bitcoin price that Kraken notes is the amount of Bitcoin being hoarded over the last 12 months, and indicator which usually precedes a new bull run.

Bitcoin’s monthly high $12,480 coincided with Nasdaq-listed MicroStrategy announcing a $250 million Bitcoin purchase as part of a new capital allocation strategy.

There have also been on-data reports that there are more Bitcoin Whales— with more than 2000 BTC wallets are currently holding over 1000 Bitcoin, or more than $11 million in Bitcoin per wallet.

According to Kraken in its August volatility report:

“As of August 31, a record 63% of Unspent Transaction Outputs (UTXOs) on the Bitcoin blockchain have not moved in +1 year, indicating that an unprecedented number of Bitcoins are in the hands of long-term holders. Historically, this dynamic has foreshadowed a new bull market.”

US Crypto Exchange Kraken Predicts Bitcoin Price Will Rally in October

US-based crypto exchange Kraken has released its September 2020 volatility report which predicts that Bitcoin’s price will likely rally in October after a further separation in correlation from traditional markets and the US dollar.

According to Kraken’s September 2020 volatility report, all indicators show that Bitcoin’s correlation to legacy markets and the US dollar is continuing to weaken.

According to the Kraken report:

“Bitcoin’s correlation with the S&P 500 sank to an 8-month low of -0.27 in the first week before rebounding and finishing the month at 0.60. Inversely, bitcoin’s correlation with the U.S. dollar index (DXY) momentarily turned positive before resuming a 5-month trend of negative correlation.”

The Kraken report states that with Bitcoin coming off what is historically the least volatile month of the year—September—one ought to expect incremental market volatility to surface as of 4Q2020.

The report adds that several factors have not yet been exhibited in Bitcoin’s price. Per the report:

“The ever-growing number of addresses containing between 1,000 BTC and 10,000 BTC and the number of coins held in these addresses suggests that Bitcoin’s strong fundamentals and vigorous demand from “smart money” is not entirely reflected in bitcoin’s price.”

What to Expect in October?

The Kraken report predicts better returns on Bitcoin in October stating that historically, Bitcoin sees and average return of around 11% following the conclusion of its lowest month, September.

Per the Report:

“With bitcoin’s worst-performing month now behind us, October may outperform September, just as it has for 8 of the past 9 years, with an average return around +11%. Note that bitcoin has underperformed its monthly average in 6 of the past 9 months.”

The report also indicates that a large number of BTC whale addresses containing “1,000 BTC and 10,000 BTC continues to grow strongly” as well as the total number of coins held in these addresses. The numbers indicate “a strong pattern of accumulation that started about 7 months ago.”

Along with the amassing BTC whale wallets, further positive signs for the Bitcoin price have been highlighted by the increased institutional demand. At the time of writing, there is almost $7 billion of Bitcoin currently held by 13 publicly listed companies, notably MicroStrategy, Square, Galaxy Digital and Grayscale.

Fidelity Digital Assets Demystifies Common Misconceptions Surrounding Bitcoin

Fidelity Digital Assets, the US-based crypto arm of Fidelity, has taken it upon itself to debunk common misconceptions revolving around Bitcoin.

Being a firm believer in Bitcoin as a foolproof investment as good as any, the lead research director at Fidelity, Ria Bhutoria, addressed common criticisms of the mainstream digital asset.

Popular notions of Bitcoin that have been circulating since the digital asset’s launch include critiques that it is “too volatile to be a store of value,” that it is a failed means of payment or that it is often used for illicit activities.

Bitcoin’s trade-off is volatility

Bitcoin, though it has been increasingly adopted and touted as a “safe-haven” asset amid the coronavirus pandemic, still remains a relatively new concept for many.

The fact that Bitcoin is volatile has translated to it being classified as a risky investment in many instances. Bhutoria refuted the argument. Per the lead research director of Fidelity Digital Assets, the volatility of the digital asset is merely a trade-off of holding a “rising store of value asset” that is not controlled by a centralized government. She said:

“Another way to understand bitcoin’s volatility is that it is a consequence of the asset’s perfectly inelastic supply.”

As Bitcoin’s max supply is capped at 21 million, it makes the digital asset scarce and valuable. Also, Bhutoria makes the case that the decentralized feature of Bitcoin makes it a driving point, and volatility may be one of the trade-offs. With Bitcoin, there is no centralized entity that can intervene and reduce its volatility.

In addressing Bitcoin as a failed means of payment, Bhutoria said that Bitcoin offered core properties, such as decentralization and immutability, as a trade-off. She also said:

“Bitcoin has properties that make it a viable payment tool – it is portable, fungible, and divisible.”

Bitcoin for crime – not as common as you think

Finally, though Bitcoin has often been deemed as a gateway for illicit activities, research from Chainalysis indicates that less than 1% of Bitcoin transactions are allocated towards criminal activities. As shared by Fidelity Digital Assets, US Department of Treasury executive Jennifer Fowler said:

“Although virtual currencies are used for illicit transactions, the volume is small compared to the volume of illicit activity through traditional financial services.”

Bhutoria indicated that just like cash, Bitcoin has properties that “may be valuable to good actors and bad actors.”

Diversifying your investment portfolio with Bitcoin

Fidelity Digital Assets have long been touting virtual currencies as a brand-new asset class, and in particular, Bitcoin. According to them, Bitcoin’s movement on the market is unlike any other asset such as gold or stocks, making the mainstream cryptocurrency an ideal investment. Per Fidelity’s research, investors could benefit greatly from allocating 5% of their investment portfolio into the safe-haven asset.

At the time of writing, Bitcoin has been trading at $16,007.34 on CoinMarketCap, displaying bullish behavior over the past week.

Whether 16K could be flipped into a support level remains in question, but market sentiment seems to be positive, and many market experts have affirmed that this was only the beginning of Bitcoin’s price run, as it was sure to gain more in the future.

Bitcoin Price at $30,000 Could Mean BTC is Rising too Far too Fast, says Tone Vays

Crypto Analyst and Bitcoin trader Tone Vays has warned that should the Bitcoin price hit $30,000 this week, the crypto will be in the “rising too far too fast zone” which has typically lead to drastic price plunges.

Bitcoin surged above the $24,000 level and recorded a new all-time high over the weekend. Breaking past its resistance level at $24K, Bitcoin managed to reach over $24,200, but is not consolidating and trading slightly lower, at a BTC price of $23,839 at time of writing.

Sharing a chart analysis presentation, Tone Vays tweeted:

“I remain bullish going into Monday but if #Bitcoin is hitting 30k by end of week we would be in that Rising too far too fast Zone which historically ends badly.”

Tone Vays argues in his presentation that as Bitcoin tops the $23,000 to $24,000 range, a pull back to just $20,000 is not “healthy enough” and the popular crypto trader argues the market will soon correct lower than $20K.

However, a pullback to $20,000 for the Bitcoin price seems likely to Vays if the Bitcoin bull run’s momentum manages to carry it to $30,000, as it would represent a huge correction of 30%—but dependent on the speed of BTC’s rise Vays argues that the correction could be far more drastic.

Vays said in the attached video presentation that Bitcoin may be rising too fast:

“If we go to $30K really really quickly, that creates an unsustainable environment that opens up sub $14,000.”

Drawing comparisons to Bitcoin’s rapid rise to $14,000 last year which saw Bitcoin plummet nine months later to under $5,000. While Vays is referring to the Bitcoin price swan diving with the rest of the traditional markets when the covid-19 market crash occurred in March this year, the trader argues that the drop was exacerbated by Bitcoin rising far too quickly to $14,000.

While Vays remains bullish on the Bitcoin price, he argues that the market is on the verge of going up too fast, far too quickly, and believes if the Bitcoin sees another monster increase this week, the correction could be equally devastating. He said, “This could be a $5,000 week” for Bitcoin.

Bitcoin’s Volatility has Slowed Down, according to CoinShares Chief Strategist

Despite the grappling effects of the Covid-19 pandemic, some notable market indexes have hit record highs, and this has made Bitcoin (BTC) look “less volatile,” according to the chief strategy officer at CoinShares Meltem Demirors.

CoinShares is a digital asset management firm that offers financial products and services.

Signs of slowed down volatility

Speaking during CNBC’s “Squawk Box Asia, Demirors acknowledged:

“As we know, volatility is a relative measure. In the current environment, Bitcoin is actually less volatile than it has been in the past.”

To cement her point, she compared BTC’s gains and electric carmaker Tesla’s stock. The strategist added:

“Tesla’s shares, which were added to the broader S&P 500 index on Monday, have soared more than 676% so far this year. Meanwhile, Bitcoin has risen about 220% year-to-date as of midnight EST Tuesday.”

Therefore, Demirors asserted that everything has become more volatile compared to BTC because its rise doesn’t feel that wild compared to the astronomical surge in the equities market. Her sentiments come at a time when the leading cryptocurrency breached the all-time high (ATH) price of $20,000 it set in December 2017. Its present bull run has seen its price smash the $24,000 mark.

Bitcoin becomes the talk of the town

Demirors alluded to the fact that engaging in Bitcoin seemed risky before, but the narrative has changed because a lack of its exposure has become a career risk. She noted:

“It used to be a career risk to get exposure to Bitcoin. Now it is a career risk to not have exposure to bitcoin. The world has certainly changed a lot over the last nine months.”

Bitcoin has become the talk of the town because it is continuously emerging as a safe-haven in the eyes of institutional investors based on their striking spending spree. For instance, Nasdaq-listed Microstrategy recently disclosed another BTC purchase worth $650 million. This wave of institutional investments is what has made Bitcoin’s price to skyrocket, as echoed by BTC billionaire Tyler Winklevoss’s point of view that the leading cryptocurrency is the gift that keeps on giving.

Ethereum Sinks Below $600 as Altcoins Undergo Extreme Volatility

Ethereum has plunged below the $600 level, a crucial mark that analysts have said will determine whether the cryptocurrency stays in a bullish position.

The cryptocurrency market has been trading in the red lately, partially due to the news that Ripple is being pursued in an official lawsuit by the US Securities and Exchange Commission. XRP has been the altcoin that has undergone the most volatility on the market lately, losing about 40% in value on leading exchanges. Amid the strong selling pressure experienced by the altcoin market, Ethereum (ETH) has dipped below $600, trading at around $573 and down by a near 8% in the last 24 hours.

Altcoins experience high volatility

Ethereum is currently trading below its marked technical support level of around $580 that has sustained its rally for the past three months. Bitcoin has pulled back as well, trading at $22,880.01 on CoinMarketCap at the time of writing. However, it has not experienced as much volatility as altcoins, and the latter’s fluctuations may be normal, per market experts.

Per Pantera Capital’s CEO Dan Morehead, it is normal that altcoins have more fluctuations than Bitcoin, as they tend to have “high beta,” or bigger movements on the market.

Volatility is often what dissuades seasoned investors from dipping their toe in the cryptocurrency pool, but if Bitcoin’s market cap and progress are telltale, Ethereum (ETH), the second-largest cryptocurrency by market capitalization, may follow suit eventually. Many industry experts have explained that Bitcoin, over the years, has matured into a less volatile asset.

Bitcoin the least volatile crypto of them all

This year, Bitcoin’s narrative has significantly changed, going from levels of $4,000 at the beginning of the year to astronomical gains of over $24,000. Bitcoin has been backed by institutional investments in 2020, which has significantly served to assert its reputation as a hedge against inflation and a safe investment. Per Chief Strategy Officer at CoinShares, Meltem Demirors:

“As we know, volatility is a relative measure. In the current environment, Bitcoin is actually less volatile than it has been in the past.”

According to Demirors, Bitcoin has experienced less volatility than the equities market this year, which serves to illustrate its growth. Perhaps in the years to come, Ethereum will follow suit, as the cryptocurrency industry continues to gain awareness and ETH receives increased support, with the development of its new mainnet ETH 2.0 in the works.