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Over the past weekend, the crypto market continued its sideway movements within a tight range as geopolitical tensions and macroeconomic concerns raged on. In the early hours of Monday (Asian trading hours), BTC shed 3% of its market value within a matter of hours to plunge to the $37.4k level after a single long wick shattered the $38k support. Since then, the largest crypto by market cap has been gradually inching its way back up, and has managed to stabilize back above the $38k support as of the time of writing. ETH kicked off the week with a marginal percentage gain from Sunday, while most major altcoins remain in the red in spite of BTC's comeback in the past hour.
Of course, this is once again with the exception of LUNA, whose winning streak since the Thursday post-all-time-high fallback doesn't seem to be snapping anytime soon, as it has just experienced another 3% increase in the past hour. LUNA's case seems to be an isolated one, however, as the broader crypto market looks set be plagued by increased volatility in the interim, at least until the market's next direction is more definitively determined by the U.S. Federal Reserve's interest rate decision on Tuesday. On-chain metrics may paint a slightly more optimistic picture. For one, the BTC Illiquid Supply Shock Ratio has experienced a significant uptick in the past week or so, hinting at the increased likelihood of a supply squeeze in the near-term. For another, the short-term BTC holders' basis cost has just crossed over the dormancy floor, suggesting that the current accumulation phase will likely reach a bottom in the near future (via a possible capitulation event) before BTC bounces back strongly to reach greater heights.
The uptick in volatility within BTC's spot market seems to be taking place in the absence of a corresponding surge in spot volume, strongly suggesting that the violent fluctuations may mainly be driven by speculative trades within the derivatives market. Next, the aggregated Bitcoin futures open interest has seen a slight increase, while the funding rates across major exchanges have also witnessed an uptick. This highlights that the $38k support level and the $46k resistance level are the more salient levels closely monitored and followed by traders. However, it may still be too soon to decide the market's next direction from here. Finally, and within the options market, BTC's implied volatility can be observed to be consistently lagging behind the commodity asset class since the start of the geopolitical conflicts in eastern Europe. This points toward a possibility that BTC's volatility levels might increase even further in the near-to-mid-term on the back of risk asset correlations.
Yuga Labs, the creators behind the iconic Bored Ape Yacht Club NFT collection, has recently acquired the intellectual property (IP) rights of CryptoPunks and Meebits from Larva Labs. Despite being the two most prominent names within the NFT space, Yuga Labs and Larva Labs have taken very different approaches in developing their respective projects. On one hand, Larva Labs adopted a hands-off approach during the NFT mega-boom of last year, and has often faced criticism for its lack of initiatives in spearheading community engagement. On the other hand, Yuga Labs was extremely hands-on in its efforts to commercialize the Ape image by actively pursuing celebrity collaborations, while also ensuring that attractive benefits are provided to its exclusive members at the same time. In a blog post last Friday, Larva Labs openly acknowledged its inability to cope with the growing demands of running a NFT profile picture project, and declared that it has decided to hand over the CryptoPunks and Meebits mantles to Yuga Labs. This does not mean that Larva Labs is going away anytime soon though, as they are set to continue to experiment with new generative art projects.