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BTC’s largest options expiry kept crypto market enthusiasm in check

2021.03.29 Robbie Liu

Bitcoin and the crypto market remained under pressure due to the largest-ever options expiry — Market Watch Weekly 

While Tesla’s mid-week announcement to support Bitcoin as a payment method briefly caused prices to rise, the market leader ultimately closed last week down 2%. Market sentiment to go long was dampened ahead of Friday’s massive options expiry, worth nearly $6.3 billion in BTC options and $1.1 billion in ETH options. After the largest-ever options expiry, Bitcoin rallied from 51,000 USDT levels to as high as 56,700 USDT, as per the OKEx spot price. On the daily chart, after consecutive gains on Friday and Saturday, a Doji was formed on Sunday, indicating the market’s uncertainty about the next price move. 

OKEx’s BTC spot 1d chart — 3/29. Source: OKEx, TradingView

Institutions went long without fear of short-term correction

On the institution side, the Grayscale Bitcoin Trust’s (GBTC) total market value discount to trust-held BTC slipped to a record 14% last week. But institutions trading on CME remained positive attitudes toward the next quarter. 

CME updated the latest (as of March 23) Bitcoin futures position data on March 27. Under this reporting period, BTC had seen a pullback of over $2,000, and open interest rebounded from 9,335 to 9,897 contracts (with a standard contract being 5 BTC). This marked the third consecutive week of OI rising, which shows that the price pullback did not lead to a significant reduction in the market’s interest, and optimism prevails.

Meanwhile, asset-manager accounts saw their long positions rise slightly from 357 to 358 contracts, a new high of nearly nine weeks, while their short position fell from 516 to 463 contracts, a new low of nearly five weeks, expressing a bullish attitude. 

Leveraged funds also saw long positions rise from 2,099 to 2,606, while short positions increased from 6,756 to 7,198. The percentage change in long positions is more substantial, however. 

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

Major altcoins were mediocre

On the altcoin front, the major ones were mediocre over the week. The only highlight was XRP, up 9%. Polkadot (DOT) suffered a huge price correction, plunging from near 40 USDT to below 30 USDT at one point, eventually closing negative 11% for the week. Ether (ETH), Bitcoin Cash (BCH) and Litecoin (LTC) all saw corrections of around 4%. 

Weekly returns of major altcoins, 3/22 to 3/28. Source: TradingView

DeFi in decline

In the DeFi space, the biggest news last week was when Uniswap, the most popular decentralized exchange, announced details of its v3 upgrade. However, judging by the price performance, it is clear that the market was not happy with the latest announcement, as UNI prices fell 13% in the past week. 

SushiSwap (SUSHI) also plunged 17% because of a risk aversion sell-off near the token unlocking threshold at the end of March. Synthetic (SNX), Bancor (BNT) and 1INCH all saw 10% to 15% corrections. On the other hand, Curve (CRV) surged 25% over the week, and the native token of OKExChain, OKT, bucked the trend by adding a 9% weekly return. Overall, the DeFi sector did not attract much capital attention last week. 

However, the NFT sector regained its upward momentum, with Decentraland (MANA) and MEME surging more than 15% over the week. 

Weekly returns of major DeFi tokens, 3/22 to 3/28. Source: TradingView

The total value locked in DeFi protocols in the past seven days also saw a decline, dropping from $43.6 billion to $40.7 billion, as per data from DeFi Pulse. The largest projects in terms of TVL are three lending giants: Maker (MKR), with $6.6 billion in TVL, followed by Compound’s (COMP) $5.41 billion and Aave’s (AAVE) $5.16 billion. 

Total value locked in DeFi. Source: DeFi Pulse

Looking ahead this week 

In three days, this month and the first quarter of the year will wrap up. The three major U.S. stock indexes continued to diverge last week, with the tech-heavy Nasdaq lagging behind the S&P as well as the Dow, while the latter two hit new highs after surging 1% on Friday. Moreover, the 10-year Treasury yield remained below 1.7% all week. This week’s non-farm payroll report and the unemployment rate will be the focus of market attention.

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Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involve significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.



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