Chart(s) of the Week: Crypto Volatility Freefall

• Crypto volatility continues to fall, as seen in the options implied volatilities (vols) downtrend for both BTC and ETH. Implied vols are derived from the options market and are typically used as forward-looking measures of risk. 1-week implied vol for BTC currently is at 43.7%, the lowest level this year. 

• While one interpretation of the low volatility could be less cautious sentiment, it could also be seen as a somewhat dull environment from a short-term trading perspective as the price is essentially stuck in a narrow sideways range. The low implied vols potentially also indicate relatively cheap prices for downside protection via options.

Crypto Fund Flow Tracker

• The aggregated exchange balances for both BTC and ETH continued to fall over the past week, potentially implying weakening sell pressure. No significant movements were seen in OTC (over-the-counter) desks’ balance for BTC. OTC desks are typically used by larger investors.

Crypto Derivatives Pulse

• No significant movements in BTC and ETH put-call ratios over the past week. BTC perpetual futures funding rates remain positive (longs pay shorts), while ETH funding rates continue to hover around neutral levels.

Crypto Price Movements

As of 24 Oct 2022     Source: CoinGecko.com, Crypto.com Research

Crypto News Highlights

• Ethereum (ETH) launches Shandong, a testnet to prepare for the Shanghai upgrade. Shandong will be a testing ground for numerous Ethereum Improvement proposals (EIPs) for selecting to include in the later Shanghai upgrade, one of which could potentially be allowing those that hold staked ETH to withdraw it. 

• The European Union is set to develop an energy efficiency label for blockchains. This is part of wider plans to control energy consumption of the Information and Communications Technology (ICT) sector. 

• Aptos (APT), a Layer-1 blockchain, launched its mainnet. Aptos was created by ex-Meta developers and includes among its investors Andreessen Horowitz. Following the launch, there has been some controversy about its tokenomics and transaction speed being slower than claimed.

• Fidelity’s crypto platform, Fidelity Digital Assets, will allow its institutional clients to trade ETH starting on 28 October. This follows Fidelity’s launch of an Ethereum Index Fund for accredited investors back in late-September.

• A single miner managed to capture a large portion of the Bitcoin SV (Bitcoin Satoshi’s Vision) blockchain by accounting for as high as 80% of the hashrate. The miner has been mining near-empty blocks, making the blockchain unusable for long periods of time.

Catalyst Calendar

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

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