The TIE
March 15, 2021

The TIE Weekly Insights (Mar 15, 2021)

Some highlights from last week:

Trending Topics

Market Overview

The total cryptocurrency market cap increased by 9.5% over the past week, growing from $1.67T to $1.83T. Bitcoin currently makes up 61.7% of that total, as the price of BTC has surged past $60,000 to hit a new all time high. The major asset’s performed rather positively this week, with a median 7 day return of +4.2% while assets like BTC (+16.2%), LTC (+13.4%), and BNB (+10.6%) increased by double digits. Long term sentiment has increased once again, a growing theme in our recent weekly insights. Trading volume was down -11.7% while Tweet volume was up 3.3%.

Market Overview

Weekly Performance of the Crypto Market

While most crypto sectors moved in a highly correlated fashion throughout the week, there was one outlier. The Sh*t Index, made up of 50 lower cap altcoins, outperformed the rest of the market by a whopping 30%. DeFi and the MID Index were the only sectors to end the week in the red.

Performance of Market

Bitcoin Reaches $60k

The price of Bitcoin has trended upwards nearly all week on the back of several significant developments and spikes in investor sentiment. On Monday, Galaxy Digital Capital Management confirmed that CI Galaxy Bitcoin ETF would likely start trading this week. Additionally, BTC tech company NYDIG raised $200M led by Stone Ridge Holdings Group and Morgan Stanley. These events caused investor sentiment to shift from negative to positive, as indicated by The TIE’s hourly sentiment score, helping push BTC from $50k to a new all time high of $60k. We saw 3 other significant developments impact price and sentiment throughout the week: Grayscale hiring for ETF specialists, JPMorgan launching a ‘crypto exposure basket’, and BlockFi raising $350M in a Series D round.

Bitcoin Price vs Sentiment

Rebound of the Century

It has been exactly 1 year since Bitcoin fell -40% in a single day to mark its worst-performing day in history. The price of BTC has increased by 1,104% since this day. What a rebound.

Bitcoin 1 year

UMA & YAM Collab

On Monday, Yam Finance announced a collaboration with UMA Protocol. Together they launched a new product called uSTONKS, a synthetic tracking an index of the ten most bullish stocks according to WallStreetBets. Put another way, this synthetic tracks the sentiment, or excitement level, of the r/WSB community. The price of UMA surged 23% at its peak, with a +155% increase in Tweet volume.

UMA

Coinbase Lists MATIC, SKL, & SUSHI

To add to its growing list of tradable assets, Coinbase Pro announced that MATIC, SKL, & SUSHI will be available to trade starting on March 11th. All three of these assets experienced price increases within 24hrs after the announcement (peak returns): MATIC +31% SKL +87% SUSHI +8%

MATIC, SKL, SUSHI

Social conversations surrounding MATIC and SUSHI surged shortly after Coinbase Pro announced that the assets will be launching on the exchange. MATIC Tweet volume has grown from 449 to 2,528 (+463%) since the announcement, continuing to reach for new highs. SUSHI Tweet volume spiked +253% but has since fallen from its high.

MATIC SUSHI Tweets

Derivatives Overview

Bitcoin futures are in bullish contango as market participants continue to expect future prices to outpace the current market price. Over the weekend, October contracts soared to over $70,000, however, after the market dip this Monday morning, they have slid back to reality, now trading at just under $63,500.

Note: Prices in backend months can typically show an aggressive premium as traders try to avoid funding rates of perpetual contracts and establish speculative positions in the futures contracts instead, further expanding the premium.

Bitcoin Futures Curve

Image courtesy of @btc_status

In contrast, the CME curve shows a slight dip and bump and has quite a substantial discount to the rest of the market. Why is that? Traditional market participants love low-risk yield strategies and have made aggressive use of “cash-and-carry” to arbitrage the premium between spot and futures (also known as basis), pocketing the difference between back-end and front-end months, as well as current spot prices and futures premiums.

Funding

Aggregated funding rates reset last week with a low reading of 0.002% as Bitcoin prices lingered near $47,000. As Bitcoin broke $58,000 and again made new all-time highs, aggregated funding rates shot up to a high of 0.184% as trader excitement dislocated perpetual contract prices from their spot index. Funding drifted down as Bitcoin sold off below $60,000, settling at a slightly elevated 0.07%.

Image courtesy of CryptoQuant

Premiums

Coinbase showed a consistent premium to Binance over the last week until Bitcoin surged past $58,000. Coinbase fell under Binance as spot selling pressure led to an early Monday crash. Coinbase premiums have whipsawed +/- $100 as Bitcoin hovers around $56,000, showing indecision in the market.

Since February 23rd, Grayscale has lost its premium to Bitcoin, sliding to -11.92% last week, causing ripples of fear in the crypto-community. The premium rebounded to -1.7% but quickly lost ground the next day, falling again to -7.1%

Image courtesy of bybt.com

Since Bitcoin last printed all-time highs, the Korean (Kimchi) premium has not reclaimed its former vigor, but has also not fallen into backwardation for any length of time, most recently going into a brief -0.21% backwardation. Korean exchanges have rebounded slightly, currently hovering at a middling 2.04% premium.

Open Interest and Liquidations

Since February 28th, aggregated open interest has increased 41% from $14.93B to $21.07B. Binance and Bybit take the lion’s share, showing a peak increase in open interest at 57% and 122% respectively! In under a month, Bybit has surpassed both Okex and CME, ranking it second in open interest right under Binance.

Some of this growth perhaps sheds a light on the risk appetite of the market and its participants. As Bitcoin lost its footing, $2.01B in liquidations lit up the market, with the majority of liquidations coming from the heavily retail-focused platforms, Binance and Bybit, taking up 39.89% and 28.31% respectively of the total liquidation volume over the last twelve hours. Combined, they have been responsible for 68.2%, or $1.37B, of total liquidation volume.

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Notable News

CBOE Seeks Approval for Bitcoin ETF

PayPal Acquires Curv

Contact us for a demo of our SigDev platform to view all market-moving events in real-time.

This Week's Podcast Episodes

Ep. 39 The Rise of Crypto Derivatives and DeFi with Shane Ai (Bybit)
Shane Ai (Product R&D at Bybit) joins The TIE's Fundamental Value Podcast to chat about the rise of crypto derivatives, heating up competition around layer 1s, how we can use derivative data to make smarter decisions, and the massive growth of DeFi. Listen here