Digital Currency September Macro Review

OrderBit数字资管

特邀专栏作者

2019-10-21 05:23

This article is about 4856 words, reading the full article takes about 7 minutes

In September, the prices of the top ten digital currencies were weak, but BTC still dominated.

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In September, the prices of the top ten digital currencies were weak, but BTC still dominated.

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Point of view refinement:
In September, Bitcoin has fallen for three consecutive months, falling 14.4% in the month and closing in negative value. In Q3, the best performing global asset class was gold, up 4.5%, while Bitcoin fell 23.8% in Q3.
Bitcoin had its worst third quarter since 2012, falling 23.8%. Historically, the fourth quarter has provided the most upside for cryptocurrencies, so a year-end rally is likely.
Trading volumes on the Chicago Mercantile Exchange (CME) fell in the second and third quarters, but the number of open contracts remained unchanged. For the planned rollout of options in the first quarter of 2020 at . This is a positive sign.
The institutionalization of the asset class is changing, albeit at a slower pace than expected. The long-awaited listing on Bakkt has been slow, with 754 contracts traded between September 23-30.
The institutionalization of the asset class is happening, albeit more slowly than most would like. The listing on Bakkt has been slow, with 754 contracts traded between September 23 and 30.
In September, bitcoin fell to its lowest point since April 1, down 36%. The next day, Bitcoin continued to fall by 11%. At the end of September, Bitcoin began to recover.
Bitcoin is generally the least volatile of the top 10 digital assets by market capitalization. But at the start of the quarter, bitcoin was more volatile than its peers. It was not until the last few days at the end of September that the volatility in the third quarter gradually weakened.
In the third quarter, the top ten digital currencies lost an average of 44%. Ethereum was the only top-ten currency to post positive growth in September, up 4%.
Bitcoin remains the second-best performing asset (+124%), trailing only Binance’s BNB (160% annual return). But BNB has underperformed recently, falling 51% this quarter. Due to BNB's excellent performance at the beginning of the year, it is still leading the way.
Although the bitcoin spot market transaction volume in the first three quarters of 2019 increased by 27% compared with the same period in 2018, the monthly transaction volume of Coinbase and Binance decreased by 58% and 48% respectively compared with the peak at the beginning of the year. Trading volumes have been weak for three consecutive months since the first half of 2018, the longest stretch in six months.
Binance’s launch on the US exchange is similar to Bakkt. In the first seven days after launch, 610 bitcoins, or about $4.5 million, were traded, while Bakkt traded 754 bitcoins.
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market Overview

In September, Bitcoin fell 14.4% to close in negative territory, its third consecutive month of negative value. Bitcoin was the biggest depreciator in the third quarter after performing significantly better than other major asset classes in the second quarter.

Many Bitcoin supporters point out that Bitcoin is a store of value and a substitute for gold. But our impression is that most people currently view cryptocurrencies as a highly speculative investment, although that may be true from a decadal perspective.

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Bitcoin Quarterly Performance

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Institutionalization: Derivatives and Futures

Bitcoin proponents are spending, and the September 23 launch of Bakkt futures is arguably the most hyped event in Bitcoin's recent history as it opens the floodgates for institutions. Even though it was delayed by about a year, the launch was hailed by the cryptocurrency news outlet as “the most bullish institutional event in Bitcoin’s history” and a “historic moment.” Unfortunately, however, this seems more like a rumor, a news event. A total of 754 contracts (or 754 bitcoins) occurred during the last five working days of September.

The launch of Bakkt futures on Sept. 23 was arguably the most hyped event in Bitcoin’s recent history, as Bitcoin proponents noted that it opened the institutional floodgates. Despite being delayed by about a year, the launch was hailed by the crypto news outlet as "the most optimistic institutional event in Bitcoin's history" and a "historic moment." Unfortunately, this appears to be more of a rumor to buy, news event to sell. A total of 754 contracts (representing 754 BTC) were traded during the last five working days of the month.

We appreciate Bakkt's efforts to institutionalize assets, especially in terms of enterprise value and commercial applications. While the institutional floodgates have opened, interest has not yet been generated. Amazingly, as of the end of the month, Bakkt contracts were not yet tradable, not even listed on Bloomberg, with a similar result for a second institutional product launched in September. Launched on Sept. 4, the VanEck Solidx Bitcoin Trust had only attracted $530,000 from qualified institutional investors (QIBs) by the end of the month. The lack of institutional participation may be related to Bitcoin’s recent price pullback, or it may be that global economic macro events have put institutional investors in risk-off mode.

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fluctuation

Bitcoin, typically the least volatile of the top 10 digital assets by market capitalization, was more volatile than its peers at the start of the quarter, and only gradually became more volatile in the final days of September. Weakened and fell to the lower end of the range. Since Bitcoin started seeing wild swings a few weeks ago, other digital currencies have also experienced a surge in volatility. In fact, the volatility range of the top ten currencies at the end of September was the largest in the third quarter, and Bitcoin returned to normal at the low end of the range. In September, the average volatility of the top ten digital currencies closed at 92, much higher than Bitcoin’s 54%.

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Previously, we highlighted a clear short-term correlation trend in high-frequency data for Bitcoin and the Volatility Index (VIX). While the jury is still out on longer time frames, when the VIX is in the mid-$20s, we lock in a rising relationship. The VIX fell from a high in late August, and it remained above its long-term average throughout September. At the same time, the correlation with Bitcoin is also declining.

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Top 10 Digital Currencies Are Weak in Prices

September brought an end to an altcoin that had endured a huge challenge. This quarter, Bitcoin has fallen more than bitcoin, down an average of 44% since June 30. 9 Ethereum performed well in late September, and it was the only digital currency among the top ten digital currencies that achieved positive returns that month. Overall, seven of the top assets outperformed Bitcoin in September, the first month since May that Bitcoin failed to be the performance leader.

At the end of the quarter, four of the top 10 digital currencies are currently posting negative yearly results, with Stellar (SLM) nearly halving its price. Bitcoin has outperformed since it started rising in April and has been more resilient on the way down. Altcoins had a meteoric rise in early 2019, but failed to keep up in the second quarter and were hit even harder in the third quarter.

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Ethereum recovery?

In September, the price action of Ethereum relative to Bitcoin was a clear mean reversion event. The rolling standard deviation of the average residual spread continued to widen from late June to August to levels not seen since 2015. They began to recover in early September, with ethereum outperforming bitcoin by 18% by the end of the month.

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Spot market trading volumes continue to decline

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Blockchain Network Health

Transaction volume on the bitcoin network has fallen for four straight months and is down 15 percent from a May high, but is up 20 percent since the start of the year. Ethereum’s network transactions followed a similar trajectory, down 20% from its June high, but up 20% for the year. Months of declines in the third quarter are not a bullish sign, but these indicators follow the price trend, and the general upward trend since mid-2018, can positively stimulate popular interest in the digital currency market.