Chart of the Week

CCData's weekly ‘Chart of the Week’ highlights topical digital asset developments with vital commentary and analysis.

This week

This week's COTW, we analyse Bitcoin's gains in price and market dominance, indicating a significant shift in the crypto landscape.

At the start of 2024, Bitcoin traded around $44,000 with a market dominance near 50%.

Earlier this week, it surged to past $73,600, lifting its dominance to 57.3%. This year, Bitcoin’s performance has outpaced most altcoins, driven by strong institutional demand.

CME has dominated BTC open interest, recently hitting a new all-time high.

The upcoming US election and recent developments including a new BRICS proposal exploring the potential use of Bitcoin for international payments have further bolstered its value. 

Previous Charts of the Week

In this week’s Chart of the Week, we analysed the fluctuations in BTC Open Interest following the FOMC meeting.

Yesterday, Bitcoin's aggregated open interest jumped 6% to nearly $27 billion after the Federal Reserve cut interest rates by 50 basis points.

The rate cut sparked increased trading activity, with Bitcoin's price rising above $62,000, reflecting a strong bullish response, which also saw altcoins perform considerably well, especially compared with US equities which experienced whipsaw price action.

This outperformance in the crypto market may underscore the belief that liquidity injections may follow as a result of the aggressive 50bp rate cut, which typically signals some macroeconomic weakness following the stringent multi-year rate hike cycle which depressed some areas of the economy.

If stimulation is required, risk-on assets will respond most sensitively, with an expectation of upward momentum.

In this week’s Chart of the Week, we examine the impact of the recent presidential debate on crypto liquidity. Despite the potential for political events to cause market uncertainty, our data shows that liquidity levels for BTC/USDT remained stable throughout the debate. 

In part, this is likely due to the fact that crypto and digital assets were absent from the discussion, with no significant shifts in the macroeconomic or regulatory outlook for the sector. 

This lack of discourse likely contributed to the muted market reaction, contrasting with previous political events that have triggered sharper fluctuations. For example, the Trump-Biden debate led to more noticeable fluctuations in liquidity.

In this week's Chart of the Week, we analyse Bitcoin's performance and volatility from September 2010 to 2023.

While history doesn’t repeat itself, September has consistently been one of the worst months for Bitcoin in terms of price performance, with only six positive Septembers recorded in the asset's history.

Since 2010, Bitcoin's average returns in September has averaged -4.51%, making it the worst-performing month on record.

In contrast, April and November typically show the highest average returns, followed closely by October - with returns of 35.6%, 39.2% and 28.7%, respectively.

Since 2017, September has reliably brought negative returns for Bitcoin, with particularly steep declines in 2019 (-13.60%) and 2014 (-19.40%). However, 2023 has bucked this trend with a modest return of 4.00%. Despite these returns, Bitcoin's annualised volatility in September isn't notably high compared to other months, averaging around 79.2%.

Recent developments in the Bitcoin market reflect a strong bullish sentiment, largely driven by expectations of interest rate cuts from the Federal Reserve and the positive stance of several U.S. presidential candidates on cryptocurrencies.

This optimism has been clearly indicated in the options market. On Deribit, the leading exchange for Bitcoin options, the open interest has seen a substantial increase of 32.5% since the beginning of the month, currently standing at around 230,000 Bitcoin, equivalent to approximately $14.3 billion.

A noteworthy aspect of this trend is the low put-to-call ratio, which signals a preference for call options over puts, indicating that investors are more focused on potential upward price movement. Furthermore, a significant portion of the open interest is concentrated in call options targeting the $100,000 strike price, followed closely by options at the $90,000 level.

This concentration underscores the bullish sentiment among market participants, reflecting widespread confidence in Bitcoin's potential to reach new highs in the near term.

In this week's Chart of the Week, we analysed the current top 500 coins by market capitalisation and compared their prices to the previous years from 2021. Out of the 249 coins listed in 2021 within the sample set, 119 are currently trading at price levels below their 2021 low.

More surprisingly, 80 of the coins are currently at price levels lower than the bear market lows of 2022. The recent price action of digital assets also meant that 72 of the current top 500 assets are currently trading at lower than their 2023 lows. This price action underscores the shift of capital towards a few select assets, contrasting sharply with previous bull markets. Notably, many popular assets from past cycles have dropped out of the top 500, highlighting the need to stay updated on emerging projects as capital flows toward newer, more promising coins.

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