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Ben Lilly Discusses Bitcoin’s Market Dynamics

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Ben Lilly Discusses Bitcoin’s Market Dynamics | Crypto Briefing


















Ben Lilly says that Bitcoin’s recent drop had been on the horizon since February. He also thinks it will be take some time for the uptrend to resume.


Shutterstock cover by TeeStocker

Key Takeaways

  • Bitcoin’s negative price action continues, with BTC down 7.6% this week.
  • Market analyst Ben Lilly told Crypto Briefing that weakness has been creeping into the Bitcoin market since February.
  • Lilly is optimistic about Ethereum because of its rising prominence in the traditional finance world.

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The slump in the crypto market continues. Bitcoin’s price fell below $35,000 to lows of $32,150 this morning. It’s now down 7.6% this week and only 12.5% higher than its yearly opening at $28,900. In an interview with Jarvis Labs analyst Ben Lilly, Crypto Briefing attempts to understand the underlying dynamics that have moved since last year and what may lie ahead for the asset.

The Market’s Leading Players 

Traders cannot justify the volatility of crypto assets on Elon Musk’s tweets or assuming that weaker hands sold alone. 

To understand the noise, there is on-chain data that can help identify trends. Jarvis Labs has designed several on-chain models that help them spot short and long-term trends. They deploy AI techniques and trading bots to identify the leading players in the market. Their meticulous analysis reveals that there is always a phase gap or time-lapse before a trend plays. 

The dominant players in any trading niche are market makers. They sustain the market’s liquidity by constantly buying and selling to capture spreads in the order book. Market makers often change their strategies according to the market conditions. Usually, their strategy involves low-risk income opportunities from the premiums paid by retail traders on crypto-related products—for instance, the premium arbitrage trade of Grayscale shares. 

There are other categories of metaphorical fish in any market ecosystem. The most important among them are whales: the large investors with deep pockets. Then there are market movers, otherwise known as sharks. Market movers are active traders and investors who feed on the weaknesses of the market. Finally, there is the market itself: the ocean, which consists of all other investors in the ecosystem. When Crypto Briefing spoke to Jarvis Labs analyst Ben Lilly, he started the conversation by explaining how market movers have impacted the rest of the ecosystem.

“The most influential market movers appear to be tied not necessarily to one another, but with the media,” he explained. “Tracking specific wallets and their movements can often help us anticipate news drops or regulatory announcements. This is a bit of a change from what we saw in 2018 when pods of whales were more common.”

Bitcoin is trading at around $32,150 today—roughly 50% off its all-time high. According to Lilly, the recent drop is the result of sharks “attacking the softness in the market that was building up from whales and miners selling.” The weakness in the market can be traced back to late February when the demand for Bitcoin started to slow.

Bitcoin’s Bear Build-Up 

Lilly added that the early stage of the bull cycle through late 2020 and early 2021 was heavily focused on the spot market. “In late 2020, it was all about the spot market,” he said. “This is why we saw such incredible price action that spilled over into 2021. But with this price action came some larger players unloading some of their Bitcoin. This is a normal activity.”

The decline in the spot market set the stage for derivatives to shine, which led to a surge in the futures market. Lilly explained that the high spreads in the futures market were a factor in the market’s slowdown because so much capital was allocated to derivatives rather than spot buys for Bitcoin or any other asset. He said:

“The demand in the spot market slowed a bit, and we saw the derivatives market take over once again. This was on full display, with spreads in the futures market expanding to more than 40%. With this spread, larger firms began to allocate capital towards this spread. It’s a great trade as firms can hold a neutral position relative to price and capture that 40%+ spread. The trade-off was capital was no longer being used to buy bitcoin, buy altcoins, or any other instrument. It was being used to capture this spread. This contributed to the market losing upside momentum.”

futures spot
Source: Skew

Lilly added that the peak in open interest on futures matched the peak in the spread. As whales began to distribute their capital, the spot market lost some of its strength.

“A telltale sign this was taking place was the rising amount of capital being used in the futures market,” he said. “Note how the peak in Open Interest pairs up with the peak in the spread. So in Q2, we had the spot market losing a bit of momentum with whales distributing and more and more capital getting tied up into a trade, taking advantage of the market getting overheated through more shorting. Eventually, these spreads compressed, and the momentum shifted to the downside.”

bitcoin price analysis
Source: Skew

Market Movers Plucked the Wound

The market suffered a particularly hard blow throughout May. On May 12, Elon Musk revealed that Tesla would stop accepting Bitcoin payments citing environmental concerns. China also doubled down on mining bans and pledged that it would tighten crypto regulations.

The worst blow came on May 19 when three self-regulatory organizations in China clarifying the country’s stance on cryptocurrencies, reiterating bans from 2013 and 2017 that blocked payments services from offering crypto services and ICOs. On the same day, it was revealed that Inner Mongolia had set up a hotline for reporting Bitcoin miners (the region had banned mining in April). Bitcoin’s price dropped 30% to lows of $30,000 from $42,800. This was when the market movers struck to initiate the downtrend, Lilly says. 

“It’s important to note a lot of these inflows were not just a one-off from the ban,” he explained. “We saw miners selling more coins than they generated since May 5, well before the selloff. But what’s interesting is with this drop, we had multiple areas of crypto involved in selling. Miners were one group. We also had market movers taking part.”

Lilly added that Binance is generally the dominant exchange market movers and miners use for selling, adding that “the most recent selloff was no exception.” Although there was some activity in other China-friendly exchanges following the miner ban, the selloffs paled in comparison to Binance. Jarvis Labs recorded significant inflows from market movers they had tracked before and during the crash.

Is the Bull Market Over? 

Since the selloffs, many crypto enthusiasts have begun to ask “Is the bull market over?” Lilly pointed out that as spreads have returned to near neutral, the spot market could be due for an uplift. He said:

“Now here we are with virtually neutral spreads. This means it is now time for the spot market to gain momentum for another run higher. It’ll take a bit of time.”

The institutional inflows of Q2 2020 have certainly dried out in 2021. Tesla, Ruffer, and many others have booked profits from their BTC investment above $50,000. Grayscale’s demand has also decreased with premiums mostly in the negative since February. Still, Lilly is mildly optimistic about the return of premiums and Grayscale getting an ETF approval. He added: 


“The end of unlockings in 2020 created an immense amount of new GBTC shares in the market. This fresh injection of supply takes time to get eaten up. And to be honest, it’s taken longer than I expected. An excellent way to think of this is like a halving event. It takes a bit of time before the drop in new supply issuance impacts price.”

He also said that it will be some time before the new equilibrium works itself out, explaining that the recent drop sped the process up, and “acted as a rest for the Trust.” He added that when the discount moves closer to a premium, “the impact GBTC has on spot prices is likely to return as private investors accumulate BTC on the spot to allocate towards the Trust.”

Bitcoin vs. Ethereum 

Lilly also shared his thoughts on the second-largest cryptocurrency by market cap, Ethereum. He commented on the blockchain’s strengthening narrative among institutional investors and key players in the traditional finance world. Ethereum futures went live on CME Group in February, while data shows that whales have been accumulating ETH. “I don’t see this slowing down,” Lilly said.

Lilly added that he thinks it “makes more sense” to many investors in the traditional finance space to invest in ETH over BTC. He said:

“I know I’m flying against the wind on this one, but if you reside in traditional finance and understand the dance regulators and Bitcoin are having, the “threat” Ethereum poses to the U.S. dollar is less. Which is not to say Bitcoin is in trouble or anything like that. Ethereum is just less.”

Lilly expanded on his thesis by explaining that Ethereum’s network effect is one of its key strengths. Ethereum has long established itself as the home of DeFi and NFTs this year, with billions of dollars in value locked across protocols like Aave, Uniswap, and MakerDAO. He added that while Bitcoin acts as a competitor to traditional currencies, Ethereum could complement a government’s plans, explaining:

“[Ethereum] is expanding further into traditional FinTech channels than Bitcoin. To me, this is something I’ve heard from investing professionals that view the asset as having more use cases from a financial plumbing point of view. It’s not competing as a currency like Bitcoin is. Ethereum acts more like a facilitator to a country’s global agenda, not as a competitor.”

Lilly also pointed out that Ethereum has EIP-1559, its highly anticipated “ETH buyback” fee burning proposal, on the horizon. EIP-1559, due to ship on Jul. 14, could make ETH a deflationary asset if the network sees enough activity. Lilly said that he expects Ethereum’s investment narrative to grow “in the coming months” as EIP-1559 approaches.

In conclusion, crypto’s bullish and bearish phases in the last two quarters have highlighted the rising and falling in demand since Q2 2020. Consolidation is likely to begin among whales and market movers in a comparatively stable price range. Moreover, these inflows and the eventual break-out will take time to develop.

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Source: https://cryptobriefing.com/ben-lilly-discusses-bitcoin-market-dynamics/

Blockchain

Dogecoin Gets Hit the Hardest Among Top 10 Coins, Plunges Over 20%

Dogecoin has gotten hit the hardest among the top 10 coins and saw its second-worst day of the year on June 22 by plunging down over 36% to $0.17.

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Meme-based cryptocurrency Dogecoin gets hit the hardest among the top 10 coins and saw its second-worst day of the year on June 22 by plunging down over 36% to $0.17, the lowest level since Apr. 23.

Dogecoin Gets Hit the Hardest Among Top 10 Coins

On May 19, joke cryptocurrency Dogecoin shed over 55% within a single day, but it managed to climb back to almost half of the losses before the daily close.

The meme-based coin is currently trading 77% lower since May 8, from its current all-time high of $0.74 on May 8. The market cap, which was $34.97 billion on June 21, has now slid down to $27.22B in just the last 24 hours.

READ  Crypto Market Hits $200 Billion, Bitcoin Rallies To $7K: BCH, LTC, EOS, ADA Analysis

Dogecoin is currently the biggest loser among the top 10 cryptocurrencies, plunging over 20%, despite major altcoins like XRP, Binance Coin, and Polkadot experiencing double-digit losses.

The value of popular cryptocurrencies remained weak on June 22 after the crypto market witnessed a massive crash a day earlier, following China’s intensified crackdown on Bitcoin.

Over the bigger picture, Dogecoin looks weak that needs upside catalysts to rebound from current levels.

For instance, if Dogecoin declines below the support at $0.25, it will head towards the next support level at $0.2250. A successful test of the support at $0.2250 will push the cryptocurrency towards the next support at $0.2150.

Dogecoin-Branded NASCAR Crashes Like DOGE

Stefan Parsons’ car emblazoned with the Dogecoin logo crashed into the wall during Stage 2 at Nashville Superspeedway on June 19th. Fans of meme-based cryptocurrency fans pushed the hashtag #dogecar trend on Twitter.

READ  Vitalik Buterin Reveals Making $4.3M from $25,000 Investment in Dogecoin

The car was sponsored by Springates, a manufacturer of auto parts whose CEO is a DOGE enthusiast. Parson escaped unhurt but the value of the cryptocurrency did not.

DOGE has a long history on the NASCAR tracks. In April 2014, for instance, Dogecoin fans raised 68 million DOGE worth about $42,000 at the time, via a Reddit campaign to sponsor Josh Wise’s Ford Fusion car. Interestingly, Wise raced in the same team as Stefan Parsons’ father Phil.

#DOGE #Dogecoin

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Source: https://www.cryptoknowmics.com/news/dogecoin-gets-hit-the-hardest-among-top-10-coins-plunges-over-20

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VanEck to Launch a Mutual Fund that Invests in BTC Futures

Global investment manager VanEck has recently filed an introductory prospectus to launch a mutual fund that put its money into BTC Futures.

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Global investment manager VanEck has recently filed an introductory prospectus to launch a mutual fund that put its money into BTC Futures through its Cayman Islands-based subordinate. Rest, it has been revealed that the fund may also put some of its unsettled assets into the United States treasuries. 

VanEck to Initiate a Mutual Fund That Invests in BTC Futures

The Bitcoin Strategy Fund is not going to have any exposure to the spot price of the top crypto asset and it said:

“The Fund seeks to achieve its investment objective by investing, under normal circumstances, in bitcoin futures contracts (“Bitcoin Futures”), as well as pooled investment vehicles and exchange-traded products that provide exposure to bitcoin (together with Bitcoin Futures, “Bitcoin Investments”). The Fund does not invest in bitcoin or other digital assets directly.”

In addition to this, it has already been reported that the global investment manager VanEck has filed requisitions for both Bitcoin and Ethereum ETFs earlier this year.

However, the United States Securities and Exchange have not approved any of them as of yet. 

Moreover, the SEC has initiated the process of looking for additional comments to affirm whether or not it should checklist the Bitcoin ETF proposal of VanEck.

Mike Novogratz Comments on China Crypto Crackdown

The CEO of Galaxy Digital, Michael Novogratz has recently released a statement sharing his opinion on the effect of the ongoing China crackdown on crypto.

Novogratz took it to Twitter and said:

“China news isn’t good. Xi is an authoritarian leader who wants control over things. $BTC is the opposite of authoritarianism. Chinese citizens will always find a way to move assets outside the system but they are making it harder. Will take some time to play out. Keep the faith.”

Novogratz is sure that the Chinese Crypto owners will be able to shift their assets outside China, but it will take some time.

READ  Block.One Social Media Platform Voice Announces its Launch

#BTC futures #Mutual Fund #VanEck

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Source: https://www.cryptoknowmics.com/news/vaneck-to-launch-a-mutual-fund-that-invests-in-btc-futures

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Yearn Finance (YFI) and Synthetix (SNX) Technical Analysis: What to Expect?

Synthetix and Yearn Finance are sinking. If $7 falls, SNX/USDT may halve to $4—or worse. Meanwhile, YFI/USDT is on the cusp of falling further to $26k.

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Synthetix and Yearn Finance are sinking. If $7 falls, SNX/USDT may halve to $4—or worse. Meanwhile, YFI/USDT is on the cusp of falling further to $26k.

Yearn Finance (YFI)

The automated aggregator allows DeFi investors to draw maximum yields from various protocols. YFI is central to the platform.

Past Performance of YFI

The YFI/USDT is still under the shadow of sellers who dominated in the second half of May 2021.

Bears are in control, and liquidation across the board may flatten out attempts to revive bulls.

Presently, YFI is down nine percent against the USD and ETH on the last trading day.

READ  BaFin Eases Licensing Process For Foreign Crypto Custodians 

Day-Ahead and what to Expect

The path of least resistance is southwards.

Although Ethereum’s fundamentals might rejuvenate YFI/USDT price action, candlestick arrangement, and BTC weakness combine to deflate optimistic bulls.

YFI bear bars are banding along with the lower BB, signaling selling pressure below $40k and the middle BB.

YFI/USDT Technical Analysis

YFI Price Daily Chart for June 22

Losses of June 21 were perpendicular, pointing to sellers’ convictions.

Accordingly, every high may present a selling opportunity for YFI/USDT bears, targeting $26k or May 2021 lows.

Unexpected gains from spot levels, preferably with high trading volumes, reversing June 21 losses may trigger a revival with targets at $40k for YFI.

Conversely, further dumps firmly place YFI/USDT price action to sellers.

Synthetix (SNX)

The decentralized derivatives trading DeFi protocol uses SNX as its token. In addition, the platform plans to adopt Optimism as its Layer-2 scaling option.

READ  COTI and Avalanche (AVAX) Technical Analysis: What to Expect?

Past Performance of SNX

SNX sellers have reversed over 80 percent of gains made during the steep increase from November 2020 to 2021 peaks of February 2021.

Losses may continue considering the state of price action, favoring sellers.

SNX is down double-digits as of writing, falling 11 percent against the USD on the last trading day.

Meanwhile, trading volumes rose to $78 million, suggesting possible offloading.

Day-Ahead and what to Expect

SNX sellers, based on price action in the daily chart, are motoring ahead.

At spot rates, dips below $7 confirming June 21 draw-down may see another dump down towards $4—visible reaction points of November and December 2021.

SNX/USDT Technical Analysis

SNX Price Daily Chart for June 22

Confirmation of SNX/USDT bear bar of June 21 below $7 could cement sellers’ conviction.

READ  4 Reasons to Scrutinize BuyCrypto.today Before Using the Service

In that case, SNX prices may halve to $4.

Conversely, suppose prices find support at spot rates, reversing June 21 losses despite the intense selling pressure. In that case, SNX could lift off above $8 to $14 in the medium term.

#DeFi #SNX #SNX/USDT #Synthetix #Yearn.finance #YFI #YFI/USDT

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Source: https://www.cryptoknowmics.com/news/yearn-finance-yfi-and-synthetix-snx-technical-analysis-what-to-expect

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Dollar Remains Steady as Cryptocurrencies Continue to Decline

The dollar recorded a slight dip, while cryptocurrencies continued their downward slide as traders anticipated more hints from Fed chair Jerome Powell.

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The dollar recorded a slight dip and remained largely stable, while cryptocurrencies continued their downward slide as traders anticipated more hints from Fed chair Jerome Powell. Last week, investors across the world were left scrambling after a change in the central bank’s outlook for interest rate hikes.

Dollar Continues Its Steady Run As Cryptocurrencies Stumble After Fed Announcement

The greenback rose sharply in value after the Federal Reserve announced sooner-than-expected twin rate hikes in 2023. However, on Monday, it returned some of those gains when it lost 0.4% against Euro and 0.5% against Yen. 

On Friday, the index which tracks the dollar against six major currencies also fell by 0.2% to reach 92.074 from a peak of 92.405, a level that was last observed on April 13.

According to Imre Speizer, a currency analyst at Westpac, the drop in the greenback could be a temporary repositioning, before the currency is once again headed to the top. He said, “We’ve had a bit of a positioning cleanout – the whole world was mega short the U.S. dollar, and that’s in good part probably been cleaned out already – and now we take a wee breath before the next move up.”

Bitcoin and Ether Record Double-Digit Losses

Meanwhile, cryptocurrencies continued their downward trajectory as Fed expressed concerns over inflation. This development coupled with ominous reports from China relating to crypto mining caused the flagship digital asset to drop by 11%. 

Bitcoin’s rival Ether also fell by 15% and recorded its highest sell-off in a month. While both the digital currencies maintained prices above their May lows, the overall sentiment around them was sluggish.

Many experts were upbeat about a Bitcoin comeback earlier this month when the currency briefly soared above $40,000 — a level considered vital for the asset to stabilize. But BTC prices soon found themselves in the red and the currency has been on a downward trend since June 15.

The Fed announcement had taken both stock and crypto markets by surprise and triggered a wide sell-off that impacted even traditional assets like gold.

READ  Retail Use OF Bitcoin By Merchants Is On Rise: BitPay and Coinbase Data

#Bitcoin falls #Dollar #Federal Reserve Interest Rate #Rate Hike

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Source: https://www.cryptoknowmics.com/news/dollar-remains-steady-as-cryptocurrencies-continue-to-decline

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