New trends in the crypto market
The Bybit exchange has released a new report on current trends in the crypto market.
New Bybit Exchange Report on Crypto Market Trends
What are the new trends in the crypto market and how is the market doing after going through one of the most difficult times in its entire history? These are some of the questions raised in Bybit and Nansens new report on the state of the crypto industry.
One of the first aspects that the report dwells on is the relentless analysis of the huge loss of capitalization, of the order of 67% in the last seven months, due to the major falls in the market, which has seen all cryptocurrencies plummet from their November highs by 60 to 80% of the value.
The beginning of the report reads:
“During the broader market sell-off in June, Bitcoin retreated due to the increasing market share of stablecoins. This potentially signaled that the flight-to-safety period was over and the market had officially entered the capitulation phase.”
June shows how the Fear and Greed index signaled a sense of extreme fear in the market. At the beginning of July, the index reached its lowest level since September 2019, before recovering slightly in the following days, although the level remains very low, given the difficult economic situation that also affects the cryptocurrency markets, which increasingly seem to follow one correlation with traditional marketsespecially for Nasdaq technology stocks.
Experts from Bybit and Nansen explain:
“The 30D correlation between stocks and BTC disconnected at 0.5 in July for the first time since March of this year, but resumed to an elevated level in August. With the Nasdaq 100 index back 19% from its lows at the time of writing, the there is likely to be a correction ahead in the short term, which indirectly constitutes a headwind for the cryptocurrency.”
Factors affecting crypto market performance
According to the experts who authored the report, the upturn in July-August was driven by futures and options, while spot trading volume appears to have behaved rather volatile. Another aspect highlighted by the report is the effect of what is to come Merge update for the Ethereum blockchain can have, which is expected to have a strong impact on the entire cryptocurrency market.
The experts then continue:
“Most Ether options expired in September, revealing that most traders appear to have bet on The Merge and could possibly realize profits any time before the highly anticipated upgrade event.”
Another factor that attracts the attention of many investors is that inherent in the stablecoin market, which has been hit hard by the failure of the Terra ecosystem and its UST algorithm number, which has rattled the entire industry for several days. Recent stablecoin movements and technical indicators seem to point a turnaround in the market.
August saw stronger outflows ($1 billion) than inflows ($2.1 billion and $1.4 billion in June and July, respectively) for the first time since May. The shift from inflows to outflows may indicate an early sign of a turnaround, where capital may return to DeFi space from the major stock exchanges after the flight of capital in the last three months.
The performance of the NFT sector
The report then goes to the state of The NFT market, which after booming in 2021 has declined sharply in the first 8 months of 2022. The decline in NFTs continues to be very high in August. While the market is bearish, NFTs have underperformed Ether in dollars since the beginning of the year for the first time this year. Due to the collapse in minimum NFT prices, the market has seen a drop in the number of first-time buyers while the number of repeat buyers remains high.
The report then looks specifically at the correlation that has occurred between the NFT market and the performance of Bitcoin and Ethereum:
“Following the recent broader price correction, NFT correlations with BTC have spiraled for both Ether and the dollar. The repeating pattern of NFT correlations with BTC rising when Bitcoin plunges, and falling when price pulls back or ranges, further confirms what we covered in last month’s report, that NFTs are not a good hedge against Bitcoin.
