Bitcoin’s trading volume continued to decline over the past week as alternative cryptocurrencies (altcoins) such as ether rose to new price highs. BTC, the world’s largest cryptocurrency by market cap, sank about 2% over the past week, compared to a 1.5% rise in ETH and a 17% rise in Solana’s SOL token.
“Active speculators in the cryptocurrency market are jumping from one coin to another, trying to ride the small waves,” Alex Kuptsikevich, an analyst at FxPro, wrote in an email to CoinDesk. “This is a positive-sum game if the tide is turning; that is, if the overall capitalization of the crypto market is rising,” Kuptsikevich wrote.
Some analysts expect bitcoin to eventually catch up to the rise in altcoins next week, which could push BTC’s price past $64,000 resistance.
“Historically, there has been a slightly delayed positive correlation with traditional markets and the crypto market, helping to build the case for a bullish November for digital assets,” Will Morris, a trader at the U.K.-based digital asset broker GlobalBlock, wrote in an email to CoinDesk.
Bitcoin (BTC): 60,956.33, -0.30%
Ether (ETH): 4,484.81, -0.01%
S&P 500: 4,697.53, +0.37%
10-year Treasury yield closed at 1.45%
Traders will also be monitoring Coinbase’s (NASDAQ: COIN) third-quarter earnings report on Nov. 9. The crypto exchange delivered a negative earnings surprise in the second quarter because of declining trading volume. The cryptocurrency exchange’s shares are up about 40% over the past month compared to a 10% rise in bitcoin and a 25% rise in ether over the same period.
Bitcoin correlation with stocks rise
Bitcoin’s correlation with the S&P 500 continued to rise over the past month, suggesting investors’ appetite for risk remains strong. On the other hand, demand for Treasury bonds, once deemed to be safe investments, has declined given market expectations of rising inflation and slowing economic growth.
The chart below also shows the declining correlation between bitcoin and long-term Treasury bonds. A similar dynamic occurred in 2019 when the crypto bear market stabilized and monetary policy became more accommodating, which benefitted assets such as equities and cryptocurrencies (deemed to be risky).
For now, it appears that investors are positioning away from long-duration assets, which are more sensitive to rising interest rates as a result of tighter monetary policy. In this scenario, correlations involving bitcoin, equities and long-term bonds could rise as investors reduce their exposure to risk.
Further, during crisis episodes, such as the 2020 coronavirus pandemic, the correlation between bitcoin and the S&P 500 can rise significantly.
Bitcoin’s average funding rate, or the cost of holding long positions in the perpetual futures market, remained slightly positive over the past week, which reflects bullish sentiment among traders.
“The persistent positive funding rates suggest that demand for long exposure remains high in the market, but the relatively low long liquidation volumes in the market suggest that traders are less reckless with leverage now than during the spring rally,” Arcane Research wrote in a report earlier this week.
Still, Arcane warned that there is risk of high volatility if crypto markets turn lower.
Bitcoin cash briefly spikes on fraudulent press release: Bitcoin cash (BCH) rose a sharp 4.6% to $630.70 in under 15 minutes on Friday after a fraudulent press release went public, CoinDesk’s Jamie Crawley reported. The release stated that U.S. supermarket giant Kroger would start accepting the cryptocurrency as a form of payment during the year-end holiday season this year. However, the news – which was issued on PR Newswire and appeared on Kroger’s website – was quickly taken down after a spokesperson confirmed that it was fake news. The BCH price declined again and stood at $601.74 at press time.
Argo blockchain shares fall after workers share non-public information: Shares of London-based crypto miner Argo Blockchain (ARBK) fell as much as 5% on Friday after the company said in a filing that some employees had inadvertently disclosed potentially material, non-public information in a conversation, CoinDesk’s Aoyon Ashraf reported. The discussion contained information about the potential increase in the company’s hashrate, or computing power, and the expected cost to build its planned facility in Texas, according to the filing. Argo listed its American depositary shares on Nasdaq in September; they are up roughly 3% since the listing.
FTX, Lightspeed, Solana Ventures to invest $100 million in Web 3 gaming: FTX, Lightspeed and Solana Ventures are investing $100 million in Web 3 gaming development, CoinDesk’s Eli Tan reported. The funding will go towards the development of new titles as well as help with the integration of Solana’s blockchain into existing games, creating in-game economies centered around non-fungible tokens (NFT) and Solana wallet payments. The initiative has already made a first investment, with FTX and Lightspeed leading a $21 million funding round for gaming studio Faraway.
Most digital assets in the CoinDesk 20 ended the day lower.
Notable winners as of 21:00 UTC (4:00 p.m. ET):
Damanick is a crypto market analyst at CoinDesk where he writes the daily Market Wrap and provides technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio manager at Cannon Advisors, which does not invest in digital assets. Damanick does not own cryptocurrencies.