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TI Weekly Research: speculator's tragedy, but ethereum's comedy

TI Research
TI Weekly Research: speculator's tragedy, but ethereum's comedy From: Google

This week, Elon Musk’s suspending of Bitcoin payments and Vitalik’s selling of SHIB had a significant impact on the market: after February 28, people were able to buy Bitcoins under $50,000 again. Musk's actions triggered the biggest panic trading wave in the past three months, with market volume and volatility rising to new highs. As the VFD turns from negative to positive, the market briefly enters a downward range. At least until the end of this week, no signs of market recovery have been seen.

The trading trend of the digital asset market in the past 90 days, as of 17:00 on May 14. Source:

"Bitcoin under $50,000" and "Ethereum under $4,000"

At a time when Bitcoin's marginal rate of profit continues to fall, any unfavorable news is going to influence its price and it will be slow to recover.

As one of the best known supporters of Bitcoin, Musk's remarks have a decisive influence on digital assets. After Bitcoin once again reached the 57,000-58,000 mark, Musk announced that he would give up support for Bitcoin payments "for environmental reasons", which caused market panic. On May 12, Bitcoin fell to $48,500 on the Coinbase exchange, and people once again bought Bitcoins under $50,000. As of 17:00 on May 14th, the price of Bitcoin had rebounded to $50,000, but compared to the last few months, the speed of price restoration has been much slower.

Price changes of Bitcoin in the past 30 days, source:

The lack of motivation to buy bitcoin may be an important reason: today, the diminishing marginal effect of bitcoin holding returns is obvious, and in the existing market with speculative sentiment, investors hold more cash to avoid risks but not investment. In pursuit of substantial returns, investors often choose Ethereum or other non-mainstream digital assets, as well as derivatives such as perpetual contracts, rather than Bitcoin spot.

In the past 30 days,  the main bitcoin exchanges have seen a net outflow of $1.25 billion, mainly consisting of small investors holding positions of about 0.1-1 Bitcoin. As the price of Bitcoin fell below $50,000, funds began to show an inflow trend again.

Bitcoin inflow/outflow in the past 30 days, source:

At present, investors with less than 0.1 Bitcoin have become the main investment force in the Bitcoin spot. In the past month, funds have been continuously flowing to small accounts, and the outflow of larger positions has been obvious. It seems that investors are changing Bitcoin to other investment targets with higher yielding.

Bitcoin spot inflows/outflows and real-time large tradings in the past 24 hours, source:

One major destination of funds is Ethereum. From the perspective of the price, the marginal income of Ethereum is still increasing. Although it is not as good as various altcoins (such as $SHIB), which have outrageously high returns, but as a mainstream digital asset, ETH’s performance appeals to all kinds of investors.

Price changes of Ethereum in the past 90 days, as of 18:00 on May 14th, source:
The inflow and outflow of Ethereum funds, as of 18:00 on May 14, source:

In the past month, the inflow of funds on Ethereum has reached $5.93 billion, and there have been obvious buying flows from small to large amounts. As of 18:00 on May 14, there have been a large number of buying orders of more than US$400,000 on major exchanges.

Changes in large amount trading on Ethereum, as of 18:00 on May 14th, source:

Compared with the spot market, derivatives traders are the main victims of this market turmoil: a large number of speculators broke their positions during the dump. From the perspective of trading volume, the scale of liquidation is no less than February 23, which was driven by institutions.

Changes in trading volume in the digital asset market in the past 90 days, source:
Deribit exchange bitcoin options and futures real-time clearing volume, as of 18:00 on May 14th, source:

Compared with Bitcoin, Ethereum derivatives are significantly less impacted. Except for a large-scale liquidation on May 11, there were no obvious liquidation records at other times, demonstrating Ethereum's relatively good market confidence and resistance to price fluctuations.

The real-time clearing volume of Ethereum options and futures on Deribit Exchange, as of 18:00 on May 14th, source:

SSI reaches high, and the downtrend may continue

In terms of non-mainstream digital asset certificates, $SHIB leads the sentiment of the entire market. As this DOGE quasi-fork token rose by 812.29% within a week, and its market value reached $8.03 billion, the market's SSI also reached a new peak. Despite the continued bear news, $SHIB tradings are still hot, with daily trading volume remaining above $5 billion.

Changes in $SHIB market value in the past 7 days, source:

Under high SSI, the downtrend of mainstream digital assets may continue throughout the weekend. The volatility shows that although the Bitcoin volatility has decreased, it is still positive, indicating that the market is still overheating; and the reduction in implied volatility also shows professional investors' hidden worries about the future performance of the market. Ethereum's volatility difference data also shows similar information.

Changes in historical volatility and implied volatility of Bitcoin options in the past 30 days, source:
Changes in Ethereum's historical volatility and implied volatility in the past 30 days, source:

However, in the downtrend, weekly trading data also showed some deep changes in the digital asset market. This week, the total Ethereum spot transaction volume exceeded Bitcoin’s $29 billion. Such a large gap is rare in the history of digital assets. The high yielding of Ethereum and the development of DeFi are finally reflected in the transaction volume. At the same time, the TVL of the Ethereum DeFi market has exceeded $100 billion this week; and from the perspective of market value, Bitcoin accounts for the proportion of the digital asset market has dropped to 40.7%, while Ethereum has risen to 19.8%, nearly 50% of Bitcoin’s.

The above information means that Ethereum will play a greater role in the digital asset market. The era of relying on Bitcoin-related elements to judge market trends is gone; investors will face even more complex and changeable markets in the future.

Mainstream digital asset spot and perpetual contract tradings this week, source:
TI Research

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