Cointelegraph By Marcel Pechman
On Feb. 20, Ether (ETH) price rallied to a new high at $2,015, and this caused multiple indicators to display signs of excessive optimism. While the excitement could be easily justified by Ether’s year-to-date 176% gain, these warning signs should not be ignored.
One of the primary driving factors of the current bullish sentiment is the launch of CME ETH futures and Grayscale Investments’ ETH trust reaching $6.3 billion assets under management. The decentralized finance phenomenon also continues, as there is currently more than $21 billion worth of Ether locked in DeFi.
Currently, the Crypto Fear & Greed Index is at 93, indicating “Extreme Greed” according to its methodology. Many traders use the metric as a counter-trading signal — meaning, the extreme fear level can be a sign that investors are bullish and a buying opportunity is present. In contrast, when investors are getting too greedy, it could be a sign that the market is due for a correction.
Unlike the excessively leveraged retail traders, the more experienced market makers and whales have been skeptical of the never-ending rally in Ether. Regardless of the rationale for the price peak, the 36% price correction that followed was accelerated by large liquidations.
The liquidation of $2 billion in long futures contracts from Feb. 19 to Feb. 23 represented 28% of the total open interest. Thus, one should expect significant deterioration in market sentiment, as depicted on the previous Fear & Greed indicator.
Surprisingly, none of that happened on the Ether derivatives markets, as both the futures contracts premium (contango) and the options skew remained bullish.
The futures premium held very healthy levels
By measuring the expense gap between futures and the regular spot market, a trader can gauge the level of bullishness in the market.
The three-month futures usually trade with a 10% or higher premium versus regular spot exchanges. Whenever this indicator fades or turns negative, this is an alarming red flag. This situation is known as “backwardation” and indicates that the market is turning bearish.
The above chart shows that the indicator peaked at 39% on Feb. 20 as Ether touched its all-time high. Nevertheless, it has kept above 16% during the entire correction down to $1,300. This data shows that professional traders remained confident in Ether’s price potential.
The options skew remained neutral-to-bullish
When analyzing options, the 25% delta skew is the single-most relevant gauge. This indicator compares similar call (buy) and put (sell) options side-by-side.
It will turn negative when the put options premium is higher than similar-risk call options. A negative skew translates to a higher cost of downside protection and indicates bullishness.
The opposite holds when market makers are bearish, causing the 25% delta skew indicator to gain positive ground.
Over the past month, there hasn’t been a single incident of a sustainable positive delta skew. Therefore, there is no evidence that options traders demanded more significant premiums for downside protection.
This data is very encouraging, considering that Ether faced a heavy sell-off, but the futures and options metrics discussed above held bullish levels during the downturn.
As Ether managed to recover quickly from its recent $1,300 dip, investors gained further confidence that the uptrend had not been broken.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Bitcoin tumbles 10% in 12 hours to trade below $50,000
Cointelegraph By Samuel Haig
The price of Bitcoin has fallen below $50,000 for the first time since March, with BTC shedding roughly 10% in the last 12 hours.
On April 17, the $60,000 range was rejected, driving a crash in the Bitcoin price of nearly 20% in a single hour. While the markets consolidated near $55,000 for several days, bulls failed to defend the range on April 22, resulting in sustained bearish action over the past day.
Yesterday, Cointelegraph reported that significant profit-taking in the Bitcoin markets may suggest an impending local top, with today’s slump appearing to confirm the hypothesis. Analysts from JP Morgan similarly warned of sustained bearish action should BTC fail to reclaim the $60,000 level.
The move below the psychological $50K mark has prompted mixed reactions on Twitter, with Messari researcher Mira Christanto noting the markets have only retraced from the all-time high by 23% — significantly less than the typical pull-backs experienced during the 2017 bull run that produced losses of 35% on average.
But notorious gold bug and crypto-skeptic, Peter Schiiff, was also quick to comment on the market action, poking fun at Bitcoin proponent Anthony Pompliano.
— Peter Schiff (@PeterSchiff) April 23, 2021
Pompliano responded: “Bitcoin is up 600% in last year. Gold is up 3% in last year. No more tweeting until gold can beat inflation, Peter!”
Twitter-user “Fintwit” also replied to Schiff, noting that “gold is up 0% since 2011.”
Ethereum also tumbled today, shedding roughly 8% in the past 24 hours. However, Ether has outperformed BTC over recent days, rallying to tag a new all-time high above $2,600 on April 22.
Yesterday’s highs saw ETH/BTC trading at its strongest level since August 2018, with Ether trading for 0.047 BTC. Ethereum last changed hands for 0.045 BTC.
Ether has dropped 11% over the past seven days, while Bitcon’s is down 21% over the same period.
Ethereum hits $2.6K all-time high as Bitcoin market dominance falls below 50%
Cointelegraph By William Suberg
Ether (ETH), the largest altcoin by market capitalization, hit new all-time highs on April 22 despite a bearish phase sweeping through Bitcoin (BTC) and other cryptocurrencies.
Ether’s price claims new record
Cointelegraph Markets Pro and TradingView showed ETH/USD hitting $2,600 on April 22 for the first time, on the back of 9.2% daily gains.
Against Bitcoin, Ether was also on fire, hitting 0.047 — its highest since August 2018.
The second-largest cryptocurrency increasingly stood out against the rest on the day, as Bitcoin continued to consolidate lower and other altcoins suffered from a painful knock-on effect.
Analysts and investors, already buoyed by the previous action from this year’s “alt season,” were thus firmly bullish on the near-term prospects.
“To be brutally honest, I stare at the chart of ETH/BTC and I see an enormous rounded bottom with potentially huge breakout just above,” Real Vision CEO Raoul Pal told Twitter followers in a series of posts.
“When you price anything up in DeFi, NFT, community tokens or even metaverse worlds, everything is basically priced in ETH, including designers time etc. ETH is rapidly becoming the currency of the digital world and BTC is the pristine collateral and base layer.”
Pal noted Ether’s superior gains versus Bitcoin in recent times, part of a trend that has seen ETH/USD outperform by a considerable margin since the pit of the cross-asset price crash in March 2020.
Fees volatile as altcoins resurface from dip
As Cointelegraph reported, altcoins’ overall strength this month was already expressing itself in Bitcoin’s dwindling market cap dominance, which dipped below 50% for the first time in almost three years.
Such events tend to spark the most intense part of “alt seasons” in which tokens see a rapid surge to a peak before cooling off.
The latest ETH gains nonetheless came with a predictable pay-off: Gas fees for sending transactions began to spike on the day, a timely reminder for those caught unaware during previous phases of the bull market.
Other misgivings about the market’s overall strength included caution from professional traders based on Ether derivatives signals.
Other altcoins, meanwhile, were beginning to show signs of life at the time of writing, including Litecoin (LTC) and Chainlink’s LINK, both up around 6.5%.
NFTs for Trump-haters, carbon offsets, fractionalized CryptoPunks and more
Cointelegraph By Andrew Fenton
A group of anon uni students has come up with a way to hit former President Donald Trump where it hurts: by using his Tweets against him to raise money for charities they believe he “despises.”
‘Strategic Meme Group Incorporated’ has set up the website Drumpfs.io to sell Trump’s tweets, at least as recorded by the Trump Twitter Archive. However, there’s no digital certificate of authenticity and the legal status of “ownership” of Tweets outside of the Twitter platform is dubious to non-existent. One hundred of Trump’s most infamous Tweets are selling for 4.5 ETH each, while regular missives from the former Leader of the Free World change hands for 0.0232 Ether.
Around 97% of the money raised will be donated to Americares, Clean Air Task Force, ACLU, Southern Poverty Law Center, Doctors Without Borders, and NAACP, while the rest will fund overheads. Drumpfs can be resold on secondary platforms.
Carbon offsets for NFTs
NFTs have become an unlikely poster child for ruining the environment, ahead of other candidates like international flights, heavy industry and car commuters. Various estimates suggest OpenSea is responsible for a cumulative 67.8 million kilograms of carbon emissions, while the recent NFT drop from musical act The Weeknd apparently emitted more carbon than a plane flying from New York to London 86 times.
Environmentally conscious NFT purchasers can now paste in the address of an NFT drop into the Aerial platform and it’ll tell you how many carbon credits you need to buy from them to balance the scales. You can pay with either USD — or weirdly enough, Ethereum — a payment which itself presumably requires additional carbon credits. Aerial co-founder Andreas Homer said:
“We really want to shed light on the environmental consequences of blockchain transactions, and give people those ways to mitigate them through carbon offsets.”
CryptoPunks go to pieces
CryptoPunks are among the earliest, and consequently most valuable, NFTs on the Ethereum blockchain — with individual punks selling for more than $7 million each. In other words, most of us can’t afford one to hang in the digital pool room. The Unicly CryptoPunks Collection (uPUNK) will offer 250 million fractional shares in a collection of 50 CryptoPunks. It’s the largest collection of Punks to be tokenized so far (but it’s not the first attempt to do so).
At present, 80 investors have created 3.6 million shares at 5 cents each. While there’s growing interest in fractionalizing high value NFT collections, SEC Commissioner Hester Pierce has warned such tokens could run afoul of securities laws.
50 CryptoPunks have been fractionalized into uPUNK on Unicly.
This is the largest fractionalize CryptoPunks collection ever!
— Leia Fisher (@0xLeia) April 21, 2021
Drop it like it’s Dogg
When he’s not flogging food delivery services like Menulog in Australia (“chicken wings to the crib“) Snoop Dogg can be found toiling away in the NFT mines. He dropped an NFT collection on OpenSea on 4/20 (a day sacred among smokers) in collaboration with the artist behind the Nyan Cat meme. “Nyan Dogg”, which is pretty much exactly the same thing but with a dog, sold for a little over 14.2 ETH.
Meme based NFTs are hot property right now with the ‘Overly Attached Girlfriend’ NFT selling recently for $411K and ‘Bad Luck Brian’ selling for $36K. LA Mag notes that NFTs are finally allowing meme creators to profit from their work.
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