Quiet before the storm?
Bitcoin didn't have the best quarter - consolidating around the psychological $10k level & currently indicating down 25%.
Most assets are well in the green this year
Bitcoin is still up 100%+ but had an alarming September - so did Gold.
Who said Bitcoin was too volatile for traditional markets?
Oil was in the spotlight this month!
Gold has been a key story this year as central banks pivot globally towards easing
We are watching the gold / digital gold narrative closely.
Institutional interest did not last in Q3 following record sessions in June at the CME
It seems like activity peaked when Libra was in the spotlights in June / early July with open interest halving since then.
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Bakkt launched last week with timid volumes - ~$1mln trading a day
Commercial hedging activity occurring on the platform will be key to watch to take advantage of physical settlements.
From a price action perspective, Bitcoin traded in the $8k - $12k range the entire quarter
We did cross $10k quite a few times!
BitMEX open interest tried to break out from $1bln on three distinct occasions
All were good sell signals in hindsight.
Over the quarter - total longs liquidated ~$5bln vs shorts $2bln
When open interest gets large, shorts seem to have a stronger hand as they might be less leveraged.
Bitcoin moved on average 4.15% daily over the quarter
Trend appears to have redeveloped.
Implied volatility drifted lower before spiking last week as we sold off
Pricing in a 4.63% daily move over the next quarter - slightly higher than bitcoin volatility in Q3.
Probability of making new highs repriced lower as vol and spot came off
Now seeing bitcoin > $20k by end of March at only 5% probability - the bulls took a hit!
Options market continues to develop - CME announced it will launch the product in Q1 next year
This quarter - options traded on average $35mln notional a day.
Ether had another challenging quarter
Down nearly 50% and coming back dangerously towards the $100 level.
Ether and Bitcoin are still very correlated on a daily basis
A sign of poor market internals which never really disappeared since 2018.
It's not all bad for altcoin markets
Ether recently bottomed relative to Bitcoin.
Volumes have also been picking up after a period of calm
Especially noticeable in ETH/USD.
It's worth watching DAI
As Ether gets closer to the $100-$150 range ~50% of total supply would be at risk of forced liquidation.
DeFi growth held steady
Compound did well this quarter relative to competition.
We announced our $2mln seed round last week
The round was led by London-based FirstMinute Capital, with participation from Kleiner Perkins, Seedcamp, Kima Ventures and QCP Capital.
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