Crypto Market Review, Nov. 24

Arman Sherinyan

The second largest volatility of the cryptocurrency should return to normal thanks to these factors


  • Three sources of action
  • Bitcoin may face some selling pressure

Ethereum has been stagnating in the market for the past 12 days, likely due to the lack of open interest derivatives and a high level of fear among retail traders and investors. However, things may change next week, and here’s why.

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Three sources of action

The first factor that investors should consider as a potential source of volatility in Ethereum next week is the historical volatility of the asset. According to the indicator, ether’s volatility has fallen to a one-month low, which could cause an upward reversal of the asset’s volatility in the coming week.

In technical analysis, unusually suppressed volatility is a sign of an upcoming rally in either direction for an asset. Unfortunately, indicators based on volatility cannot be used to predict the direction an asset will move in the foreseeable future.

ETH chart
Source: TradingView

However, the unusually low volatility is not the only thing investors should watch. On November 30, the CEO of the infamous exchange FTX will speak at the DealBook Summit. While the SBF’s appearance at the event is indeed exciting news, investors should be prepared for a sudden spike in volatility caused by the breakouts that Bankman-Fried may bring itself to the event.

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Ethereum was one of the biggest holdings of FTX, which is also why the second largest cryptocurrency in the market faced selling pressure as soon as panic set in in the market.

Aside from the low volatility of Ethereum and the upcoming performance of the SBF, open interest is another factor that we should keep our eyes on. Derivatives are the main source of volatility and price movement for any asset in the cryptocurrency market.

The difference in volume between the spot and derivatives markets for assets like Ethereum and Bitcoin is massive, which is why futures, options and other financial ancillary products are the main drivers of the market.

Recently, the open interest of Ethereum derivatives reached a one-month low, indicating that investors are still very afraid of exposure to the leveraged asset. However, such low open interest is mostly temporary, especially towards the end of the month.

Bitcoin may face some selling pressure

If we exclude the FTX debacle from history, all the macros have been hinting at a recovery in high-risk assets, including bitcoin. The US dollar chart confirms this thesis.

Compared to a slice of forex, the US dollar has lost more than 7% of its value in the last 40 days. The growth of alternative investment vehicles such as gold shows how important a weak US dollar is to all types of assets. With less attractive prices and poor performance of the world’s largest currency, investors tend to look for alternative ways to invest their money.

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However, the digital currency industry will not gain anything from the weakness of the greenback due to the crisis of confidence among institutional investors, who will think twice before returning to the digital asset industry after the collapse of FTX.

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