On Tuesday, Bitcoin broke through the $17,000 mark, near which it has been consolidating for several days. Moreover, the main cryptocurrency even fixed above the level of June lows.
Growth, as expected, was supported by more optimistic than forecast U.S. inflation data. This is not a bad sign, but the Fed's meeting is expected today, which could be another catalyst for volatility for the U.S. dollar and risky assets.
The soft rhetoric of the FOMC and the increase in the rate by the expected 0.5% may provoke continued growth of the main cryptocurrency, after which it will be possible to look for current price targets.
Glassnode: "The Bitcoin market has turned very quiet coming into December"
In the history of cryptocurrencies, 2022 is considered one of the most difficult years so far. It was marked by significant losses, causing several cryptocurrencies to hit record lows.
Bitcoin also suffered as liquidity crisis in the market, exacerbated by the sudden collapse of the cryptocurrency exchange FTX, caused it to briefly trade at a two-year low.
In a new report, leading analytics platform Glassnode has assessed the current state of BTC's on-chain performance. The report also contains information about what might happen in the next trading year.
After a wave of fear, uncertainty and doubt in the market (FUD), which led the price of BTC to fall to a two-year low in November, the price received a respite in early December. Glassnode notes that "the Bitcoin market has turned very quiet coming into December."
Glassnode assessed BTC's annualized realized volatility and found its lowest volatility since October 2020. This was of great importance, since high values of the realized volatility of an asset indicate a high-risk phase in this market.
According to Glassnode, the market is relatively stable as "hort-term realized volatility for BTC is currently at multi-year lows of 22% (1-week), and 28% (2-weeks)."
Reduction in trading volume and leverage
The effects of FTX have had a major impact on the BTC futures market. With investors still wary of further losses, Glassnode found that BTC futures volume is at a multi-year low.
The company notes that the BTC futures market is registering $9.5 billion in daily trading volume and said that this "indicated massive impact of tightening liquidity, widespread deleveraging, and the impairment of many lending and trading desks in the space."
Another impact of the FTX crash on the BTC futures market was a significant drop in the BTC leverage ratio. An estimate of BTC Futures Open Interest Leverage Ratio showed that it was at 2.46% as of December 12. Before the fall of FTX, this figure was 3.46%.
Glassnode also found that futures and perpetual swaps are trading at -0.3% year on year. This, according to the on-chain platform, represents a "state of backwardation."
"Sustained periods of backwardation are uncommon, with the only similar period being the consolidation between May and July 2021. This suggests the market is relatively 'hedged' for further downside risk," Glassnode reports.
Long term holders suffer losses, but not broken
Since the start of the current bear cycle in November 2021, the BTC market has faced a realized loss of $213 billion of the $455 billion in annual gains made by BTC investors due to excess liquidity in the market between 2020 and 2021.
According to Glassnode, BTC long-term holders (LTHs) recorded the most losses. In June, this group of investors accounted for 50% to 80% of all losses incurred. Compounded by the collapse of FTX, LTH losses peaked at -0.10% of BTC's market capitalization per day in November.
Interestingly, these investors remained resilient even in the face of a huge hole in their investments. As per the report, LTH ramped up BTC accumulation after the FTX fiasco to recover an all-time high of 13.90 BTC.
Creep on Binance
The situation in the crypto industry after the collapse of FTX remains tense. Any, even the slightest, rustle causes alertness.
So yesterday, Binance experienced a historic day and a stress test after several rumors surfaced. Most of this really applies to FUD, while Proof of Reserves raises some questions.
In an internal memo to his employees, Binance CEO Changpeng Zhao warned of "tough months ahead," according to Bloomberg.
Referring to the dramatic increase in withdrawals from the exchange, Zhao stated that the company will overcome the current challenges and that Binance is in a strong financial position and will "survive."
What happened to the USDC withdrawal on Binance yesterday?
One of the most critical actions of Binance yesterday was the fact that it suspended the withdrawal of the USDC stablecoin. This prompted parallels with FTX.
Ki Young Ju, Co-Founder and CEO of CryptoQuant, pointed to data on the network to dispel Binance's dissatisfaction. Ju noted that Binance BTC reserves fell by -8% over the past two days, but increased by 24% during the FTX crash last month.
"There might be things to be clarified for regulation, but I don't see any shady on-chain activities for now," Ju said.
CryptoQuant's CEO also pointed to Binance's very strong stablecoin reserves compared to FTX.
Changpeng Zhao tweeted today that "things have stabilized." As the CEO of Binance notes, yesterday's withdrawals were not even the highest:
"Yesterday was not the highest withdrawals we processed, not even top 5. We processed more during LUNA or FTX crashes. Now deposits are coming back in. We saw some withdrawals today (net $1.14b ish). We have seen this before. Some days we have net withdrawals; some days we have net deposits. Business as usual for us."
DefiLlama's latest data shows that Binance's total reserves are currently $60.44B, with net inflows of -$3.92B in the last 24 hours and -$5.03B in the last seven days. At the moment, everything is going as usual for Binance.
Zhao also wrote that there was a "stress test" due to the FUD, which in turn helps boost confidence in exchanges that have passed it.
"I actually think it is a good idea to 'stress test withdrawals' on each CEX on a rotating basis."
