Crypto traders see escape from narrow range in 2 years – BusinessMirror

The cryptocurrency market seems poised by some measures to break out of its tight trading range in a couple of years.

Based on one measure, the consumption ratios for the two largest tokens in terms of market value, “Bitcoin and Ether”, are at their highest level this year, despite a price decrease of more than 50 percent. This is calculated by taking the open interest rate for perpetual swap contracts and dividing it by the amount of coins held according to the blockchain data-site cryptocurrency.

“People think the market is stable and are willing to take large speculative positions,” said Darius Sitt, co-founder of Singapore-based crypto investment fund QCP Capital. ”

Crypto traders like perpetual contracts—which, unlike traditional calendar futures, never expire—in part because they allow them to hold high-leverage positions.

Bitcoin, which accounts for 40 percent of all cryptocurrencies’ market value, traded around 5.4 percent lower last week, the narrowest since October 2020, according to data compiled by Bloomberg. The stability of two years ago was followed by months of price increases that pushed Bitcoin to its April 2021 high.

Cryptocurrencies have been stagnant since June, when prices tumbled following the collapse of the Terra stablecoin ecosystem, the loss of hedge fund Three Arrows’ capital, and the bankruptcy of Voyager Digital and Celsius Network.

Bitcoin rose 1.3 percent to $19,993 at 10:09 a.m. in London on Tuesday, while Ether was up 3.9 percent at $1,660.

While recent dovish comments from the Federal Reserve about inflation and an economic slowdown continue to weigh on risky assets, including crypto, many traders are increasing their bullish bets.

Overall, the biggest boost to the growth rate could be the highly anticipated upgrade to the Ethereum blockchain later this month. The most commercially important network is about to transition from the current system of using miners to using more energy-efficient coins. Perpetual swap contracts in Ether hit an all-time high at the end of August, according to data collected by blockchain research firm Kaiko.

“ETH capacity will continue to build as we approach integration,” said Shiliang Tang, chief investment officer at crypto asset investment firm Lidger Prime.

At the same time, perpetuities for both Bitcoin and Ether have turned negative over the past few weeks, according to data site Skew. Exchanges use what’s called funding, or the cost of trading, to link the contracts to their underlying value. When the price is positive, those holding long positions are paying interest to short investors and vice versa.

Kaiko traders tend to be biased to the downside because they are betting on a failed or delayed transition of Ethereum to proof of stock or shorting Ether positions long before the merger.

Andrew Tu, head of growth at crypto algorithmic-trading firm Efficient Frontier, which holds neutral positions in the trade, said: “The bullish growth with a lot of bears will result in a short squeeze. . Bloomberg News

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