Amber Group Market Weekly Review 220201 | Insights on Bitcoin and Ethereum markets, news highlights

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Bitcoin and Ethereum Market Insights:

• The price of Bitcoin has dropped nearly half from its peak, with unrealized profits accounting for 32.5% of Bitcoin's current market value. Approximately 59.3% of coins in circulation have been dormant for over a year without any transfers, a figure that has grown by 5.8% in the past three months. These numbers indicate that despite lower on-chain profits currently, long-term holders and users who accumulate coins patiently still exist in the market. This week, the price of Bitcoin has rebounded by 4.1%, and based on the data mentioned above and the trades we have observed, we expect Bitcoin to continue its rebound.
• The significant market downturn has not affected NFT trading activities. We found that the number of independent wallets purchasing NFTs this month has reached a new high. As most NFT markets use ETH-based pricing, the decrease in ETH prices benefits newcomers. If the NFT market begins to use U-based pricing, we may see an increase in NFT adoption, while reducing the correlation between NFTs and the overall cryptocurrency market.
• Degenbox boosts rewards on Anchor by allowing users to collateralize aUST to borrow MIM, sell MIM for UST, and engage in this cyclic operation. This operation results in a net short position in MIM, and this week we saw MIM trading around 0.98. Shorts on MIM need to forego yields on Anchor to seize this arbitrage opportunity of around 2%. We have seen a significant increase in rewards on the MIM pool on Curve, and we will continue to monitor whether this move can bring MIM back to around 1.

Options Market Insights:

With the sharp decline in the spot market at the beginning of the week, the options market has turned bearish. The put/call ratio for BTC options exceeded 1 at one point during the week, and the skew for short- to medium-term options hit its lowest level in nearly six months.

The drop has had a limited impact on IV's boost, with the term structure quickly flipping from contango over the weekend to backwardation. This is mainly due to the sell-off not extending post the Fed rate decision, prompting hedging positions to exit.

Given the current volatility and skew levels, spot investors with a need to reduce positions may consider timely purchases of bearish spreads or use risk-reversal combinations to hedge some spot positions.

Market News and Highlights:

• According to DefiLlama data, the total locked value of Fantom FTM has reached $12.06 billion, hitting a historical high and surpassing BSC BNB to rank third in the public chain.
• Digital bank Chime has hired Goldman Sachs to assist in arranging its initial public offering (IPO) in the United States. Chime, valued at $25 billion in a financing round led by Sequoia Capital in August last year, is expected to have an IPO valuation of up to $40 billion.
• DeFi wallet DeBank has launched a Web3 social platform where users can follow whale trading dynamics, NFT market trends, track Mirror article updates, and monitor real-time on-chain activities of Web3 friends.
• The cross-chain bridge protocol Multichain, formerly AnySwap, announced that its total trading volume has exceeded $50 billion. Over the past four months, the total trading volume has significantly increased from $10 billion to $50 billion.
• According to a report by Crypto.com, the global cryptocurrency population increased by 178% in 2021, rising from 106 million in January to 295 million in December. It is expected that by the end of 2022, the number of cryptocurrency users will exceed 1 billion.
• Digital asset custody platform Fireblocks completed a $550 million Series E financing round at a valuation of $8 billion, with D1 Capital Partners and Spark Capital leading the round, and participation from Parafi Growth Fund, Canapi Ventures, Altimeter, General Atlantic, Index Ventures, Mammoth, CapitalG, and Iconiq Strategic Partners.
• Apple CEO Tim Cook stated that the company sees tremendous potential in the metaverse, connecting it with their current virtual reality (VR) and augmented reality (AR) projects, and indicating investments in this area are underway.
• The decentralized asset financing protocol Centrifuge won the 9th parallel chain slot of Polkadot, along with other parallel chains in the second batch of Polkadot's parallel chain auction, set to launch on March 11.
• YouTube CEO Susan Wojcicki stated that YouTube is very interested in introducing Web3 elements, NFTs, and DAOs into the platform.

Market Trends:

• Trading volumes have decreased this week, with both BTC and ETH seeing active buying and selling orders executed.
• We continue to see some altcoin sell-offs, although not as prevalent as in previous times.

Traditional Financial Markets:

Following the FOMC meeting on the 25th and 26th, the U.S. stock market entered a retracement zone. While interest rates remained unchanged, a rate hike is expected at the March meeting, marking the first hike since 2018; the market has already priced in expectations of a total of five rate hikes in 2022. The progress of the Fed's tightening monetary policy, along with escalating tensions on the Russia-Ukraine border, continues to weigh on market sentiment.

At the close on Friday, the Dow Jones Industrial Average rose by 1.34% to close at 34,725.48 points; the S&P 500 Index rose by 0.77% to close at 4,431.86 points; and the Nasdaq rose by 0.11% to close at 14,454.61 points.

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About Amber Group

Established in 2017, with operations spanning major cities in Asia, Europe, and the Americas, Amber Group provides crypto financial services to over 1,000 renowned institutional clients. With a cumulative trading volume exceeding $1 trillion across more than 100 exchanges and assets under management surpassing $4 billion, Amber Group helps clients manage risks associated with various crypto assets, offering flexible investments and maximizing returns to optimize long-term value.

For product-related inquiries, please contact Amber's customer service team: [email protected]