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Bitcoin Institutional investment Market Watch Weekly OKEx Insights

BTC price shows positivity post options expiry, but ETH and alts take the cake

2021.05.03 Hunain Naseer

After reclaiming $50,000, BTC has continued its uptrend and $60,000 could be next — Market Watch Weekly 

Market Watch Weekly

After spending nearly half of April under pressure, Bitcoin finally managed to reclaim the 50,000 USDT level near the end of the month and has continued to move upward leading into May. The market leader is currently trading around 58,350 USDT, as per OKEx spot price, but ended the last week on 56,597 USDT, up 12.63% from the week's open of 50,250 USDT.

Since April 14, BTC's price remained under pressure due to the large options expiry (worth over 68,000 BTC) scheduled for April 30, with a max pain price of $54,000. Since the max pain — the price at which the maximum number of BTC options are rendered worthless — acts as a magnet for the spot price, we saw BTC fall from almost 65,000 USDT to 47,000 USDT between April 14 and April 26.

The market leader then posted a quick recovery, not only reclaiming the 50,000 USDT level but going on to test the support at 56,000 USDT and continuing upward. Interestingly, the support at 56,000 USDT has twice previously pushed the price up toward the 60,000 USDT resistance, as shown in the chart below. A repeat of that price movement would not be surprising in the current market scenario.

BTC/USDT 4h chart
BTC bounced from 56,000 USDT and could try for 60,000 USDT next. Source: TradingView

Institutions have been big on shorts

On the institutional front, CME's latest (as of April 27) Bitcoin futures position data shows a drop in the total open interest from 8,817 contracts (each contract representing 5 BTC) to 8,429 contracts, a move that makes sense given BTC's volatility in the period.

Asset manager accounts, however, remained aggressive in their short positions, which continued to increase in the last week, going from 554 contracts to 868 contracts. In contrast, the number of long contracts actually decreased from 372 to 369.

CME BTC futures data
CME Bitcoin futures data — Number of asset-manager accounts' longs vs. shorts. Source: Quandl

Leveraged funds, on the other hand, decreased both long and short positions, but the decrease in longs was much more pronounced at 1,245 contracts compared to only 625 short contracts being closed in the period.

In general, institutional investors have had a bearish attitude toward BTC in the last two weeks of April, but have also practiced risk management amidst the volatile price action.

ETH and major altcoins post big gains

While the BTC price fought to maintain key support levels last week, ETH and several top altcoins went on to rally and outperform the market leader. The second-largest cryptocurrency in terms of market cap managed to test the 3,000 USDT level, but could not breach it before the week ended. ETH broke the 3,000 USDT level for the first just last night, May 2-3.

Meanwhile, we saw major altcoins like BCH, LTC, LINK, DOT, XLM and XRP post decent gains between 15% and 30%. However, both DOGE and OKB were massive outperformers, with the former gaining around 40% and the latter, OKEx's ecosystem token, more than doubling in price over the week.

OKEx top traded coins
Weekly returns of major altcoins, 4/26 to 5/2. Source: TradingView

With these large-cap coins outperforming BTC, the Altcoin Season Index gained last week, moving up from 84 to 96, while BTC dominance — a metric representing BTC's market cap as a percentage of the entire cryptocurrency market cap — fell under 48%.

Altcoin Season index
The Altcoin Season Index bounced back last week. Source: Blockchain Center

ETH continues to drive DeFi

The total value locked in DeFi protocols also saw appreciation as ETH continued to rally last week. The TVL figure stood around $60 billion in the week prior and went as high as $70 billion last week before retracing around $65 billion by the weekend.

The largest TVL was, yet again, commanded by Maker, locking $10.65 billion, followed by Aave at $10.44 billion and Uniswap at $9.46 billion.

TLV in DeFi
Total value locked in DeFi. Source: DappRadar

With ETH on a roll and TVL on DeFi picking up, all major DeFi-related assets also saw price appreciation last week, ranging from 18% to 40%. The top performer, however, was Compound's governance token, COMP, up nearly 38%.

DeFi crypto weekly returns
Weekly returns of major DeFi assets, 4/26 to 5/2. Source: TradingView

Looking ahead this week 

With major U.S. stock indexes closing in the red last week, today's open will be interesting to watch and could set the tone for BTC and other risky assets. Meanwhile, all eyes will be on ETH as it continues to create new all-time highs and single-handedly keeps the crypto market afloat. If the current trend continues, we are likely to see BTC taking a shot at 60,000 USDT this week.

From a technical analysis perspective, however, we could be reaching a short to mid-term top for ETH around 3,300 USDT, after which a retracement and consolidation can be expected. Any sharp corrections here could see altcoin prices unravel rather quickly.

ETH/USDT 1d chart
ETH/USDT could be reaching mid-term resistance. Source: TradingView

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