Volatility Spreads Signal ETH Leadership Ahead

The latest moves in crypto markets, in context

Edited by Omkar Godbole

October 28, 2021

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Bitcoin (BTC)

+3.7% $60,100

Ether (ETH)

+3.8% $4,160

(Price data as of October 28 @ 11:00 UTC)

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Good morning, Here's what's happening this morning:

Market Moves: Implied Volatility Points To Ether Leadership Ahead

Technician's Take: Bitcoin Bounces to $61K

And check out the CoinDesk TV show "First Mover," hosted by Christine Lee, Emily Parker and Lawrence Lewitinn at 9:00 a.m. U.S. Eastern time. Today's show will feature guests:

– Omkar Godbole

Biggest Movers

These are the biggest movers in the CoinDesk 20 over the past 24 hours:

Top Gainers:

Ethereum Classic (ETC): 6%

Top Losers:

The CoinDesk 20 are 20 digital assets filtered from the larger universe of thousands of cryptocurrencies and constitute roughly 99% of the market by volume at eight of the largest and most trustworthy exchanges.

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Event ends Nov. 18, 2021, 10AM UTC.

Market Moves

by Omkar Godbole

Bitcoin climbed back above $60,000 early Thursday, as ether, the native cryptocurrency of Ethereum's blockchain, jumped over 6% to $4,170, erasing Wednesday's price drop.

The market focus seems to be shifting to ETH 2.0 – Ethereum's impending transition from proof-of-work to proof-of-stake mechanism – and the possibility of an ether exchange-traded fund debut (ETF) in the wake of the recent launch of bitcoin futures ETFs in the U.S.

That's evident from the spike in the spread between the six-month implied volatility (IV) for ether (ETH) and bitcoin (BTC). It's a measure of expected price turbulence in ether relative to bitcoin, and it has risen to 25%, the highest since June 13.

Historically, the spread has proven to be a reliable indicator of upcoming shifts in market leadership. A rising spread indicates ether may lead the broader market in the coming weeks.

Bond Traders Price In Aggressive Rate Hikes

U.S. two-year yield (Source: TradingView)

Ether's options market is biased bullish, with traders piling into deep out-of-the-money calls or bullish bets, specifically the one at $15,000 strike expiring in March 2020.

According to Raoul Pal, CEO and co-founder of financial media group Real Vision, ether looks to be mimicking bitcoin's 2017 price trajectory and could see a meteoric rise in coming weeks. Bitcoin rose from $1,000 to nearly $20,000 in 2017, with the majority of the rally happening in the final quarter.

However, it may not be a smooth ride if traditional markets become risk-averse in response to the rising probability of faster interest rate hikes by the Federal Reserve (Fed).

While major European equity indices were nursing losses at press time, the futures tied to the S&P 500 pointed a positive open with a 0.2% gain. Stocks may face selling pressure if the European Central Bank signals faster rate hikes when it concludes its meeting later Thursday.

Also read:

Dogecoin Hits Two-Month High as Shiba Inu Lags in Crypto Rankings

Technician's Take

by Omkar Godbole

Bitcoin's Head & Shoulders (H&S) Breakdown

While bitcoin's bounce to $61,000 has invalidated the bearish head-and-shoulders (H&S) breakdown witnessed Wednesday, the cryptocurrency is not out of the woods yet.

A break above the falling trendline is needed to restore the immediate bullish bias. A renewed drop below the H&S support, if any, would raise the risk of a deeper decline.

Bitcoin's 4-hour price chart (Source: TradingView)

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BOLO

Be on the lookout for the following events today:

ICYMI

In case you missed it, here are the most recent episodes of "First Mover" on CoinDesk TV:

Third Quarter Sees the Largest Venture Capital Investment in Crypto, FTX Founder and CEO Sam Bankman-Fried on Latest Funding Round and LedgerX Acquisition

"First Mover" hosts dive into the biggest news moving the crypto markets today. FTX Crypto Exchange finalizes LedgerX acquisition. This comes after FTX raised over $420 million, which brings the firm's valuation to $25 billion. FTX Founder and CEO Sam Bankman-Fried shares insights into the latest funding round and acquisition. Investment firm Republic Head of Crypto and Tokenization Andrew Durgee shares his markets analysis. Plus, CoinList CEO Graham Jenkin discusses a plan for expansion after raising $100 million in the latest funding round.

A Message from CoinDesk

What will 2022 bring? Crypto 2022 is CoinDesk’s ambitious effort to scope out what’s next. This week it's Policy Week, a week devoted to exploring the complex ways governments are interacting with the cryptocurrency ecosystem, and how policy decisions or lack thereof will affect the year ahead. Read more here.

Latest Headlines

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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.

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