Chart of the Day
The price of BTC plummeted $10,000 in a matter of hours on the day of El Salvador’s official adoption of Bitcoin as legal tender. The launch of the state-run Bitcoin wallet Chivo proved to be a bumpy ride, with several technical snags still being resolved at the moment. The grand narrative of making history often invites wild speculations and extreme bullish sentiment that may jump-start a massive negative feedback loop and turn a dip into cascading liquidations. The flash crash, not unlike many other corrections, has wiped out excessive leverage and reset funding rates across the board. Its impact rippled to the broader market, bringing down ETH and leading altcoins. As of the time of writing, the price of BTC has recovered to the $46.5k range, while ETH is back above $3,400.
In retrospect, there are a few red flags along Bitcoin’s ascension above the $50k psychological barrier. For instance, the ratio of perpetual swaps open interest to Bitcoin’s market cap reflects growing anticipation of new highs and trend-following behaviors. In fact, instances of the ratio surpassing 1.55% coincided with several reversions in prices this year alone. Another indicator to watch is stablecoin outflow — large amounts of stablecoin leaving exchanges may point to a flip in trading direction.
Talk of the Town
Banking giant Standard Chartered released its first crypto report, titled “Ethereum Investor Guide” on Tuesday, detailing various factors including “structural considerations” that make the “economic case for Ethereum”. The report reveals that Standard Chartered adopts a more optimistic stance on ETH than BTC. The bank also sees the potential of Ether going up to 10x to reach the price range of $26,000 to $35,000 in the longer term.