Filter by Categories
Watch Series
The Great Game
Daily Post
Steno Signals
Free Content
Emerging Markets
Video

Crypto Crisp: A Waiting Game

The overall trend in the crypto market remains upward. However, for the time being, it seems largely driven by speculative activity in the derivatives market. This level of speculation is not sustainable, so we continue to look for a reduction in the open interest of futures.
2024-10-28

In last week’s edition of Crypto Crisp, we noted that:

At that time, the market also experienced high levels of open interest, followed by a short-term dip triggered by Iran’s missile attack on Israel. Now, nearly three weeks later, following a recent drone attack on Israeli Prime Minister Benjamin Netanyahu’s residence by Hezbollah this past Saturday, we believe Israel is poised to retaliate against Iran. Just like three weeks ago, we think this geopolitical event could act as a catalyst for a short-term pullback, allowing the market to shed some of its speculative excess. Afterward, we expect Bitcoin to resume its upward momentum.

Israeli retaliation on Iran is precisely what unfolded over the weekend, as Israeli forces launched an attack on Iran between Friday night and Saturday. However, the scale of the attack was lighter than anticipated. This prompted a swift reaction in the crypto market, with prices initially falling as the attack took place, but rebounding within a matter of hours. Bitcoin and Ethereum experienced declines of around 2% and 4%, respectively, at the onset of the event.

The limited impact on prices and quick recovery mean that the market did not undergo a significant correction in speculative excess. In fact, we now find ourselves at higher levels than last week, both in terms of price and in metrics like open interest and funding rates on crypto-native exchanges.

While the market displayed strength on Friday following the initial Tether investigation news and, later, the attack on Iran, we maintain that the crypto market still requires a reduction in speculative positioning within the derivatives market. That said, given this current momentum, Bitcoin could potentially breach the $70,000 mark before we see a pullback to correct the elevated open interest levels. After this— in our view, necessary— correction, we anticipate renewed price increases, affirming our view from last week that the overall trend in the crypto market remains upward.

The overall trend in the crypto market remains upward. However, for the time being, it seems largely driven by speculative activity in the derivatives market. This level of speculation is not sustainable, so we continue to look for a reduction in the open interest of futures.

To read the full article, sign up for a 14-day FREE trial of the Crypto or Professional plan.

0 Comments