The implementation of the “corporate flow” idea, the ease of opening a short trade against a falling market, and the growing popularity of pair trading with other cryptocurrencies explain the weak dynamics of bitcoin relative to other digital assets.
1/ BTC outperforms other crypto assets over the last cycle
Most traders intuitively feel that BTC is “heavy” trading – why is this happening?
There are two simple metrics we can look at to validate what we feel intuitively: pic.twitter.com/wOB30wJi6X
— Joshua Lim (@joshua_j_lim) 29 August 2022
Joshua Lim, Head of Genesis Trading Derivatives, explained that this “weight” of digital gold has come out well in ETH/BTC ratios and the dominance of the first cryptocurrency.
The first metric (0.0733) rose to an all-time high (0.088). Ethereum’s preference for bitcoin is also evident in the ratio of sales to calls in the options markets – 0.24 to 0.53. The second metric remains close to an all-time low of 40% despite the bear market. The expert explained this with the increase in the share of the second cryptocurrency in terms of capitalization.
Lim explained that as bitcoin is available through futures, the flow factor from institutions has exhausted itself. CMEthrough exchange-traded products and even private equity (Coinbase shares).
The first cryptocurrency already makes up a significant portion of digital assets in the portfolio for most traditional investors. This means an asset that not only survives when the market turns, but is closed as a beta hedge.
Secondly, confirming that Bitcoin futures have a daily trading volume of $30 billion and account for 44% of open interest despite the surge in interest in Ethereum speculation, Lim is convinced.
The expert noted that the value proposition of the second-largest cryptocurrency, with capitalization due to the upcoming The Merge, defies bitcoin expectations.
Digital gold may also be affected by the distribution of coins as part of Mt. Gox and Bitcoin’s disinflation thesis not being verified.
According to Lim, the relevance of the factors he mentions will resist time after the merger. Prior to this event, he sees no reason for Bitcoin to trade “better than the market”.
Recall that on August 26, the first cryptocurrency was minimally updated since mid-July, after the speech of the head. fed Jerome Powell. The next day, Bitcoin failed at the $20,000 level.
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I’m Sandra Torres, a passionate journalist and content creator. My specialty lies in covering the latest gadgets, trends and tech news for Div Bracket. With over 5 years of experience as a professional writer, I have built up an impressive portfolio of published works that showcase my expertise in this field.