Chart of the Week: All That Is Gold Does Not Glitter?

• Aside from being an excellent chance to quote from Lord of The Rings, this issue’s Chart of the Week looks at BTC’s correlation with gold. BTC has been in a drawdown over the past 1-year but its correlation (rolling 90-day) with gold, the traditional inflation hedge asset, has risen over the same time frame. 

• While this could tempt some to dust off the inflation hedge narrative, it could also be because asset class correlations tend to rise toward 1 during times of extreme market stress, as investors become indiscriminate (i.e., sell everything since cash is king).

Fund Flow Tracker

• The aggregated exchange balance for both BTC and ETH dropped over the past week. OTC desks balance of BTC continues to hover around yearly lows.

Derivatives Pulse

• Put-call ratio for ETH continues to drift down and is now at a yearly low. Implied vols are subdued; 1-month implied vol currently stands at 65.0% (vs. 66.5% a week ago) and 82.7% (vs. 90.9% a week ago) for BTC and ETH, respectively.

• Perpetual futures funding rates continue to print positive for BTC. While funding rates are still negative for ETH, they have been trending up towards neutral territory since mid-Sep.

• Asset managers’ net-long position in CME Bitcoin futures has ticked up since marking a yearly low in early-Sep 2022.

• Leveraged traders are typically hedge funds and various types of money managers, including commodity trading advisors and commodity pool operators. The traders may be engaged in managing and conducting proprietary futures trading, and trading on behalf of speculative clients.

• The asset manager category consists of institutional investors, including pension funds, endowments, insurance companies, mutual funds, and those portfolio/investment managers whose clients are predominantly institutional.

• The dealer category consists of participants typically described as the “sell-side” of the market. These include large banks and dealers in securities, swaps, and other derivatives. The other reportable category consists of traders mostly using markets to hedge business risk, and includes amongst others corporate treasuries. 

Price Movements

As of 2 Oct 2022     Source: CoinGecko.com, Crypto.com Research

News Highlights

• Crypto.com receives regulatory approval in France. It has been registered as a Digital Asset Service Provider by the Autorite des marches financiers following clearance from the Autorite de Controle Prudentiel et de Resolution.

• Meta launches its NFT sharing feature, enabling U.S. based users to connect their wallets and share their digital collectibles across Facebook and Instagram.

• Blackrock, the world’s largest asset manager, launched a new blockchain-themed exchange-traded-fund (ETF) to provide European customers with exposure to the blockchain industry. 75% of the ETF’s holdings will consist of blockchain companies such as miners and exchanges, while the other 25% will be companies that support the blockchain ecosystem.

• Deutsche Telekom, parent company of T-Mobile, announced that it will run a validator to support Ethereum staking. The company said it will work with proof-of-stake app and DAO StakeWise to operate a pool, allowing customers to participate in validating transactions without having to run a validator themselves.

• SWIFT, the global interbank messaging system that facilitates cross-border payments, partners with crypto data provider Chainlink on cross-chain interoperability protocol. It will enable SWIFT messages to instruct on-chain token transfers.

• The central banks of Israel, Norway, and Sweden have teamed up with the Bank of International Settlements (BIS) to explore how central bank digital currencies (CBDC) can be used for international retail and remittance payments.

Catalyst Calendar

* Forecasts from CME FedWatch Tool; dates shown are for Eastern Time

Disclaimer:

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