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First Mover Americas: Macro Retakes Front Seat, Pushing Bitcoin Down Below $21K

source-logo  coindesk.com 22 August 2022 14:52, UTC
  • Price Point: Bitcoin trades in line with U.S. equities, briefly dropping to levels below $21,000 on Monday morning. Some analysts are still optimistic for the wider market, which might give the cryptocurrency some momentum. Other analysts see BTC and ETH remaining choppy in the short-term.
  • Market Moves: Bitcoin fell over 10% last week, its biggest drop in two months. Analysts say the price slide has put bears in control ahead of the U.S. Federal Reserve's annual economic symposium in Jackson Hole, Wyoming, on Friday.
  • Chart of the Day: Ether-Bitcoin volatility spread widens.

This article originally appeared in First Mover, CoinDesk’s daily newsletter putting the latest moves in crypto markets in context. Subscribe to get it in your inbox every day.

Price point

It looks like macroeconomics has retaken the front seat as inflation fears caused jitters in the market on Monday. Bitcoin (BTC) dipped to levels below $21,000 at around 09:30 am GMT, with a sharp sell-off following the previous week’s surge.

  • The spread between ether and bitcoin implied volatilities determined by options expiring on Sept. 30 has widened to over 30 percentage points, the highest since June 2021, according to data tracked by Genesis Volatility.
  • It means two things: First, traders expect ether to see more volatility than bitcoin in the next five weeks or so, as the Ethereum Merge, the long-pending technological update, is likely to happen sometime in mid-September. Second, ether options are now too expensive relative to bitcoin options. Implied volatility has positive impact on option prices.
  • The spread will tank if the merge proves to be a non-event.
  • "Some traders are positioning themselves for a mean-reversion [in the spread], selling ETH against buying BTC long," options analytics platform Genesis Volatility said in a report last week.

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coindesk.com