Market Wrap: Cryptos Climb Amid Lower Volatility; Sentiment Improves

Bitcoin (BTC) was up by 4% over the past 24 hours as volatility continued to fade. The cryptocurrency has traded in a tight price range over the past month, but so far has avoided a significant dip below $30,000 since May 12.

The bitcoin dominance ratio, which compares BTC’s market cap relative to the total crypto market cap, ticked higher on Monday. That suggests a lower appetite for risk among crypto traders despite short-term price bounces.

For now, bearish sentiment among crypto traders is starting to wane. The bitcoin Fear & Greed Index has stabilized over the past month, similar to what occurred in late January, which preceded a brief rise in crypto prices.

Alternative cryptos (altcoins) were mixed on Monday. For example, Helium’s HNT token rallied by as much as 13% over the past 24 hours, compared with a 5% rise in Solana’s SOL token. Meanwhile, The Graph’s GRT token declined by 2% on Monday.

Latest prices

Uptick in short liquidations

Bitcoin’s current price jump is similar to what occurred last weekend. This time, however, the rise in short liquidations is less extreme.

The chart below shows a lower amount of short liquidations over the past two weeks. That suggests a majority of sellers have not capitulated, which typically occurs at an extreme price low. Instead, long liquidations have been more severe, reflecting an unwind of bullish positions on each successive price drop over the past few weeks.

Liquidations occur when an exchange forcefully closes a trader’s leveraged position as a safety mechanism due to a partial or total loss of the trader’s initial margin. That happens primarily in futures trading.

Volatility fades, for now

The chart below shows the recent decline in bitcoin’s implied volatility. Option traders have been expecting fewer price swings as bitcoin’s price stabilizes between $27,000 and $33,000.

Still, short-term volatility has ticked higher over the past few days, which could point to a rise in trading activity this week.

“We have a market unwilling to move higher, establishing well-defined boundaries to the upside and downside,” Greg Magadini, co-founder of Genesis Volatility, wrote in a blog post.

Currently, the options market places a 63% probability that BTC will trade above $28,000 next month. The most active strike price is at $30,000, where puts outnumber calls. That means traders have been seeking protection against additional price drops.

Altcoin roundup

• Epic Games adds Gala’s Web 3 Wild West: Gala Games’s Grit – a Wild West battle royal – is now available for gamers on the Epic Games Store, according to a statement Monday. “Easy access to Web 3 games is a turning point for those players who have not yet seen how digital ownership can enrich the gaming experience,” John Osvald, Gala’s president of games, said. Gala’s GALA token was up by 4% over the past 24 hours and is down by 7% over the past week. Read more here.
• Stepn cyber attack: Stepn, a “move-to-earn” application on the Solana blockchain that gives users cryptocurrency rewards from walking or jogging, suffered multiple distributed denial of service (DDOS) attacks following a recent upgrade. Users were recommended to “get some rest” while Stepn worked to secure its servers and recover from the various attacks. Read more here.
• Binance Labs invests in PancakeSwap: Binance Labs, the venture capital arm of Binance, the world’s largest crypto exchange by trading volume, has made an investment in PancakeSwap, a decentralized exchange (DEX) built on the BNB Chain. CAKE, the native token of the exchange, was up by as much as 10% on Monday following the announcement. Read more here.

Relevant insight

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• Previewing the Regulatory Panels at Consensus 2022:Welcome to our annual shindig, now back in person after two years of virtual events.
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Other markets

Most digital assets in the CoinDesk 20 ended the day higher.

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.