Stocks Are Soaring, Time to Short Bitcoin?

Tyler Hromadka

Source: Adobe/Kevin McGovern.
Jay Hao. Source:Twitter

Jay Hao is the CEO of crypto exchange OKEx

When I awakened today, I got lots of messages from my good friends, who informed me, “Stocks have skyrocketed. Can we short bitcoin (BTC)?” Then I opened my Bloomberg and saw the following chart. The Shanghai Shenzhen CSI 300 Index has actually reached its highest level in almost a year. And the financial recovery in mainland China has actually driven Hong Kong stocks to rise, with the Hong Kong Hang Seng Index reaching a brand-new high given that April. Even Nasdaq has actually reached a record high. This is actually insane?

Source: Bloomberg.


Source: Bloomberg.


Source: Bloomberg.

So back to our concern, should we short bitcoin now? I believe we can discover responses from the information. Let’s look at the trading volume on exchanges. The information from Cryptocompare shows that area trading volume has actually reached a brand-new low for half a year. Specifically given that the start of May, it can be plainly seen that the trading volume has actually continued to decline.

Area Exchange Overall Volume

Source: Cryptocompare.
When it comes to area trading volume,

This is not just the case. Taking a look at information from Skew shows that BTC futures trading volume is continuing to decline too, this decline likewise started in May.

BTC Futures– Aggregated Daily Volumes

Source: Alter.

The worth of bitcoin derivatives is primarily shown in hedging market threats. Whether it is bitcoin futures or bitcoin choices, there is a strong trading need throughout durations of high volatility. The decline in BTC futures trading volume is primarily due to the continued decline in BTC volatility. Information from Coin Metrics shows that bitcoin’s 30- day volatility reached its most affordable level in a year.

Bitcoin 30 D Volatility vs Bitcoin Rate

Source: Coinmetrics.

The recession in BTC area and futures trading volumes appears to recommend that we might shortbitcoin Not so fast. Let’s continue to take a look at more information.

In addition to trading volume on exchanges, over the counter (OTC) trading is likewise a really crucial sign in the cryptomarket This is since the trading volume on exchanges can be deceptive, making OTC trading volume more trustworthy. Information from shows that volume on the 2 significant OTC trading platforms, Paxful and Localbitcoins, has actually not reduced considerably. Even on Paxful, due to the effect of the epidemic and the change of the fiat currency Exrates, the OTC trading volume has actually increased considerably.

Weekly LocalBitcoins Volume (Global)

Source: Coindance.

Weekly Paxful Volume( Global)

Source: Coindance.

After discussing exchanges and OTC trading information, let’s have a look at the on-chain trading information. Unlike the previous 2, on-chain information frequently represents the requirements of more logical groups. To a specific level, the on-chain information represents the hidden assistance of bitcoin costs. The information from Glassnode plainly shows that the variety of bitcoin on-chain deals has actually stayed at a typical level for almost a year.

Bitcoin: Deal Count

Source: Glassnode.

This would recommend that the status quo of bitcoin is not as bad as you believe. There is likewise one more sign that might offer you more self-confidence, which is the Stablecoin Supply Ratio (SSR). The Stablecoin Supply Ratio (SSR) is the ratio in between bitcoin supply and stablecoins supply, or: Bitcoin Marketcap/Stablecoin Marketcap. When the SSR is low, the existing stablecoin supply has more “buying power” to purchase BTC. Information from Glassnode shows that the SSR sign has actually revitalized its minimum given that in 2015.

Bitcoin: Stablecoin Supply Ratio (SSR)

Source: Glassnode.

In general, the rise in the stock exchange might undoubtedly lead to the loss of funds in the crypto market and lag the decline in trading activity. From the OTC and on-chain trading viewpoint, bitcoin’s appeal has actually not reduced. And from the SSR, BTC even has its greatest upward momentum in a year. The shift of attention brought on by the rise of other financial investment items is just momentary and, as a private financier, I am still extremely positive about the return of bitcoin as a healthy financial investment.

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