All-Time High, Don’t Think, Feel. Weekly Market Review by TokenInsight

Before Christmas, we witness a new history again.

On EST 08:42:11, Dec. 16 2020, Bitcoin went over the cliff of $20,000, finally. One small tick for the price, one giant leap for the crypto market. 

In this year, we have witnessed so many miracles from crypto markets: Bitcoin bucked up from $5,000 to higher than $20,000, DeFi’s booming starts changing the financial ecosystem fundamentally, crypto options market flourishes and mature gradually, and the crypto itself steps on the hall from the bleak corner and becomes to the new star welcomed by institutions and capital markets. Moreover, a series of new technologies and concepts will change finance, economics and the whole world from bottom to the top. 

The new year is coming, praying for the future? We are in the future.

Merry Christmas and Hallelujah. Enjoy your vacation and our review.

Bitcoin Stands above the New Peak 

Before that moment, the Bitcoin’s price and the trading volume kept comparatively flat, which are around $19,000 and $3 billion per day respectively until Dec. 16. However, Bitcoin had amassed enough power stealthily, when investors thought that 2020 will end with a flat rhythm.

From Dec. 16, the price of Bitcoin rose fastly and broke through $20,000 on 8:42 EST, Dec. 16 2020. The market seethes. Bitcoin’s daily trading volume jumps to $10 billion, which is the largest in the last 30 days. The price also does not stop its step. As of 9 pm Dec. 17, Bitcoin’s price once hit $23,652 and has kept above the $20,000 line for more than 40 hours.

BTC price and historical trading volume in the last 30 days, chart from 9pm EST, Dec. 17. Source: tokeninsight.com

Who is the First?

As Bitcoin price soaring up to all-time high, TokenInsight analysed the 6 minutes trading data around that breaking point from 5 major exchanges, which are Binance, Bitfinex, Coinbase, Huobi and OKEx, and we found something interesting. 

Breaking Time when Bitcoin Hits $20,000, Dec. 16. Source: tokeninsight.com

What Happened During the All-Time High Moment?

The following figure shows the comparison of the number of transactions on various exchanges within 6 minutes before and after Bitcoin broke $20,000.

Transactions Info when Bitcoin Hits $20,000, Dec. 16. Source: tokeninsight.com

Transactions are concentrated on small size orders less than 1 bitcoin. Among the 5 exchanges, 132,885 small transactions (orders less than 1 bitcoin) happened in total during that 6 minutes, accounting for nearly 98% of all transactions.  

Huobi and Binance contribute the most, accounting for 65,096 and 38,963 respectively. Huobi has 64,022 small transactions. OKEx has the highest proportion of small transactions, reaching 98.54% of its total. OKEx, Huobi, and Binance account for a significantly higher percentage of small transactions than Bitfinex and Coinbase.

Meanwhile, large transactions happen quite often on Bitfinex, reaching 164 in total. While OKEx only has 6 trades, but the largest order appears in OKEx is a 14.93 Bitocin buying order, dealing with $19,900. 

Bid Orders Three Times Surpass the Ask Orders in Large Transactions 

Bitcoin buying demand far exceeds selling demand. Among the executed orders, the quantity of the bid orders is 1.41 times of the ask orders The transaction volume of the bid orders is 1.82 times higher than the volume of the ask orders. At the same time, the larger the volume, the stronger the demand for bid orders. In large transactions greater than 5 bitcoins, the number and the transaction volume of bid orders are as high as 275 and 2,781 bitcoins, respectively. The number and the transaction volume of ask orders are 89 and 893 bitcoins.

Bitcoin orders amounts and volume comparison, Dec. 16. Source: tokeninsight.com

Ethereum Keeps Tepid

Nevertheless, is the rising of this time just flashes in the pan like before? From the perspective of Ethereum, reactions from the crypto market are not so hot seemingly. After the Ethereum 2.0 was issued officially, the price of ETH stabilized between $500 and $600, and it just went up by about 10% after 40 hours from bitcoin broke through $20,000, which is far lower than bitcoin, and the highest daily trading volume is just $3.33 billion, not the highest level of this month. 

BTC price and historical trading volume in the last 30 days, chart from 9pm EST, Dec. 17. Source: tokeninsight.com

ETH’s weekly performance is not shining like BTC either, and the trading volume of ETH spot and perpetual are just half of BTC’s volume approximately. Generally speaking, the fluctuation of ETH is more than BTC, but it is lower than BTC this week. When we think about the high correlation between them, this condition seems abnormal.

What’s the future trend of the crypto market? Maybe options markets’ performance can reveal some signs.

BTC and ETH trading volume info of this week, chart from 9pm EST, Dec. 17. Source: tokeninsight.com

Information From Futures, Options From Investors

Futures and options are one kind of derivatives which imply future information, including investors’ thoughts for the futures markets, for both futures and options, are executed at someday after the buying day. Investors often buy futures and call options when they feel optimistic, and they will sell futures and buy put options when they have a cautious attitude to the market.

The market is the aggregation of investors. Therefore, futures and options’ trading volumes are valid indicators for knowing the trend of the crypto market. Rising trading volume in the derivative market means investors have interests in the future, but shrinking trading volume means cautious view.

BTC futures and perpetual options historical trading volume in the last 30 days, chart from 9pm EST, Dec. 17. Source: tokeninsight.com and skew.com

When we have a look at the trading volume in last week, it is easy to find that investors’ confidence for the BTC is strengthened after Bitcoin hits $20,000: before that moment, the trading volume is lower than $25 billion per day on average, but after that, trading volume soared up to $80.4 billion. 

But we couldn't distinguish the future according to trading volume only. The open interest is another fitful indicator reflecting market participation. Compared with recent weeks, the open interest of bitcoin future reaches a new peak after bitcoin breaking all-time high records, which implies the market's flourishing.

BTC futures and perpetual options historical open interest in the last 30 days, chart from 9pm EST, Dec. 17. Source: tokeninsight.com and skew.com

Moreover, let’s think about two vital indicators: funding rates and implied volatility. We have explained the meanings of them in the last market blog (Phoney Silence? Weekly Market Review by TokenInsight), so we will unscramble these indicators directly.

Funding rates of BTC  in the last 90 days, chart from 9pm EST, Dec. 17. Source: tokeninsight.com

Compared with last week, the funding rate turns positive with a high rise, especially for the coin-margined contract. This indicates more investors are keeping a positive view for the future of the market, at least for the future of Bitcoin.

Recent implied volatility surface of BTC options, chart from 7am EST, Dec. 17, Source: gvol.io

Recent volatility surfaces reveal that investors tend to buy options. Combining volatility surfaces with funding rates, it is obvious that investors tend to buy call options, which can also prove investors’ confidence for the market. However, in the long term, the volatility surface reveals that investors still hold an optimistic but cautious attitude in general.

Term structure of BTC options, chart from 7am EST, Dec. 17, Source: gvol.io

The last but most vital information is from implied volatility’s term structure. These curves illustrate that investors show more confidence for short-term than long-term. In general, the next year’s implied volatility is upraised, which means that we will face a more fluctuant market in the future.

Highlights Picked by TokenInsight

Coinbase Submitted Files to SEC to go Public 

On Thursday (17 Dec 2020), U.S. major cryptocurrency exchange Coinbase confidentially filed preliminary documents, Form S-1, with SEC, getting ready for its initial public offering. Meanwhile, bitcoin’s prices soared above $20,000. 

HongKong Firstly Offers Virtual Asset License to a Cryptocurrency Exchange

HongKong digital asset platform OSL announced on 15 December 2020 that they are the first firm to become licensed by the Securities and Futures Commission (SFC) to conduct dealing in securities and automatic trading services of digital assets.

Pornhub Only Accepts Crypto Now 

The world's largest adult website, Pornhub is only accepting crypto for its premium service. The move was noticed on the 15 December 2020 after Visa and Mastercard cut off payments to the website last week.