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CCData's first Market Spotlight blog discusses the digital asset market's recovery from setbacks like Terra LUNA's collapse and the troubles of Celsius and Voyager. Highlights include Celsius Network's DeFi challenges, FTX's growing trading volumes, the upcoming Ethereum merge, and BTC's response to the latest CPI data. The post also explores broader market uncertainties, FTX's leadership under Sam Bankman-Fried, and macroeconomic influences on crypto, especially potential Federal Reserve rate hikes.
A positive start to the week for the digital asset markets has been long overdue, following what has been a murky few months overshadowed by the collapse of Terra LUNA, the fall of Three Arrows Capital, and the insolvency of centralized lenders like Voyager and Celsius.
In the first edition of what will be an ongoing blog series, CCData utilises its enhanced order book and market data to examine:
Join us as we dive into the state of the market, exchange analysis, the macroeconomic climate, Ethereum merge, and much more.
Market participants in the digital asset space are currently navigating extreme uncertainty following the collapse of Terra Luna and the resulting market contagion. Credit risks also remain a significant concern after the fall of Three Arrows Capital (3AC) and the insolvency of centralized lenders like Voyager and Celsius.
This distress, however, appears to have been reduced slightly, with Celsius successfully exiting its DeFi position and narrowly avoiding on-chain liquidation. However, it is highly likely that these positions have been closed to sell the underlying Bitcoin in order to meet liabilities elsewhere.
The graph below illustrates Celsius’ loan on the MakerDAO protocol, which came close to being liquidated on May 12th as its collateral ratio reached 159%, compared to a liquidation ratio of 145%. In other terms, Bitcoin’s price would have needed to fall another 12.4% for the position to be liquidated.
The commanding presence of Sam Bankman-Fried (SBF) and his leading corporations — FTX and Alameda Research- has been an influential factor, with SBF recently stating that he still has the capacity to spend billions of dollars to support the industry. At present these are just words of future action, but it has brought about some degree of tranquillity regarding further credit and liquidity issues in the market.
Although macro sentiment remains negative, the digital asset markets have seen a trend reversal over the week, with Ethereum increasing over 40% in the last six days. Many market participants believe this could be in anticipation of the widely anticipated Ethereum merge, which is expected to conclude in September. We remain skeptical of the recent market movements due to the concerns outlined below.
Currently, the more important issue remains the worsening macroeconomic environment. The most recent CPI print, released this Wednesday, showed inflation accelerating at 9.1% year-on-year, suggesting future rate hikes are still to be expected from the Federal Reserve. Market participants are now discounting a potential 100 basis point (bs) rate hike in July, which would be the largest rate increase in decades.
As Q2 Real GDP figures are to be released on the 28th of July, and the corporate earnings season has all but started, the next few weeks will provide further clarity as to the real state of the economy and business activity. For crypto, this will likely lead to further de-risking and sell-side pressure if we dive into a second-consecutive quarter of negative growth.
On the other hand, if corporate earnings appear to be more positive than expected, and the American economy does not dive into a technical recession, then digital assets may see some rebound in prices over the medium term.
On July 6th, Ethereum came one step closer to executing the long-anticipated ‘Merge’, successfully executing the upgrade on the Sepolia testnet, with the first block of transactions receiving a 94% acceptance rate.
The Merge will involve a transition for the Ethereum blockchain from a Proof-of-Work consensus mechanism to Proof-of-Stake, giving scope for the blockchain to be more decentralized, scalable and sustainable. The Merge on the Ethereum main net is expected to be completed in September, with just one testnet remaining beforehand — the Goerli testnet, which is expected to be launched in the next few weeks.
This move has attracted the attention of investors and catalyst traders, speculating its impact on the price of the Ether token. Powered by CCData’s Order Book Data and smart snapshots, we explored the market depth in Binance, Coinbase, Bitstamp, Bitfinex, and Gemini for ETH-USDT/USD pairs as of July 12, 12:00 AM.
Analysing the 20% market depth for BTC/USDT and USD pairs, we found that the number of orders in this price range rose 12.6% in just 30 minutes following the CPI announcement on July 12, 8:30 AM.
The CPI rose 9.1% in June, hitting a 41-year high. Following the announcement, BTC crashed through its support level at $20,000 to reach a daily low of $18,919 in just 15 minutes. The number of asks increased 17.6% while the number of bids rose 1.72% in 30 mins following the announcement, reflecting the bearish market sentiment.
Over the last couple of months, FTX has seen a significant rise in spot trading volume. In comparison to its competitors (excluding Binance) — Coinbase, OKX, Bitfinex, and Bitstamp, FTX has become the leader in market share for the first time in May and has kept its place in June. Its market share among the five has risen to 36.8% in June from 18.7% at the start of the year.
FTX have very low maker/ taker fees compared to competitors (FTX 0.02% | 0.07%, Coinbase: 0.10% | 0.20%, Binance 0.10% | 0.10%), attracting traders and investors. Moreover, its CEO and founder, Sam Bankman-Fried has become a hugely popular and influential figure among the crypto community.
FTX has played an active role in limiting the contagion effect of the crypto lending products by providing bailouts to BlockFi and Voyager Digital. The trading volume on FTX in June was also helped by Celsius Network unwinding WBTC and ETH position on the exchange to help with their liquidity crunch.
This report features data extracted from CCData’s new and enhanced Order Book product, comprising the most complete and in-depth liquidity data available on the market.
CCData’s order book product captures the full depth of exchange order books, featuring standardised mapping and post-processing, historical L2 order book data stored for all exchanges, and more. This dataset allows for the development of metrics that can be critical for market participants to assess liquidity, back-test strategies, and decide their exchange venue of choice.
Find out more about our order book offering and contact our team here for a product demo: https://data.cryptocompare.com/data/order-book-data.
Disclaimer: Please note that the content of this blog post was created prior to our company's rebranding from CryptoCompare to CCData.
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