The TIE Weekly Insights (May 24, 2021)

The total cryptocurrency market cap decreased by -18.9% this week, falling from $2.15T to $1.74T. Most altcoins were down by -40% or more over the past 7 days, their worst correction in months.

Highlights from last week:

  • MicroStrategy Announces Yet Another Major Bitcoin Purchase
  • BitGo Onboards Former NYDFS and BitLicense Regulator as COO
  • Asset Manager One River Files for Carbon-Neutral Bitcoin ETF in US
  • Treasury Calls for $10k Bitcoin Transfers to be Disclosed to IRS
  • Ray Dalio Reveals Bitcoin Holdings but Warns of Regulation Rocking Crypto Markets
  • Fed’s Brainard Says Central Bank is Stepping Up Exploration of Digital Dollar
  • Cathie Wood Buys Another $59M in Coinbase
  • Coinbase Hires Goldman Sachs Exec to Ramp Up Policy Push in Washington

Crypto Topics Trending in the Media This Week

Market Overview

The total cryptocurrency market cap decreased by -18.9% this week, falling from $2.15T to $1.74T. Most altcoins were down by -40% or more over the past 7 days, their worst correction in months. This is quite a dramatic hit as most assets have now retraced nearly -70% from their recent highs to this week’s lows. Long term sentiment has decreased from last week, despite still being positive/high. Trading volume was up +10.9%, with USDC (+43%) seeing the most activity. Tweet volume was down -0.8%, despite USDT, BTC, and USDC seeing social conversations of 60% or more.

Weekly Performance of the Crypto Market

The market was filled with red this past week. All sectors performed poorly, as each experienced returns of -44.6% to -53.5%. Exchange tokens took the biggest hit.

Bitcoin

Once again, Elon Musk impacts the crypto markets with a vague Tweet. Musk left a reply on a Tweet which left many of his followers to question whether he was implying that Tesla will be selling its Bitcoin holdings. We saw sentiment turn negative almost immediately, The TIE’s Hourly Sentiment Score dropped -75% from 50 to 12.5. Price proceeded to sell off afterwards, initiating the downtrending week.

Bitcoin Tweet Volume

Crypto Twitter was extremely active in the conversations as Elon Musk and Michael Saylor argued back and forth about Bitcoin. In fact, the number of Tweets sent out about BTC surged to a new all time high of 232.7k. This completely smashes the previous all time high of 128k.

Solana Sentiment

Solana has grown tremendously throughout the first half of 2021, returning over 2,300% YTD. This huge surge in price and ecosystem development has sparked a thriving community on Twitter. There are now ~4,488 Tweets sent out about Solana on a daily basis, a new all time high in volume. Not only are there more Tweets being sent out about SOL, but the tone of these Tweets is becoming increasingly more positive. As indicated on the chart below, The TIE’s 30d Avg Daily Sentiment Score has reached record highs. Invest sentiment on Solana has only spent 2 days this year below a neutral sentiment score of 50.

Futures Curve                                                            .

As the market careened toward disaster and market participants feared the worst, the futures curve went haywire with several exchanges trading well below spot prices at a severe discount (up to 20%!). This snapshot of the action shows how dislocated the basis became and highlights some of the opportunities that present themselves when the market is under stress.

The current curve has recovered some of its premium, however Huobi remains at a discount likely due to regulatory fears surrounding the ban on Chinese miners.

Funding                                                                      .

Image courtesy of CryptoQuant

Funding highly favored longs, especially on Huobi and Okex (regulatory fears caused traders to hedge short), as the market crashed on May 19th. Funding remained negative over the weekend as the market continued its plummet, but has since slowly returned to just above 0. 



Coinbase and Korean Premiums

Image courtesy of CryptoQuant.com

Coinbase premiums whipsawed violently from -$1500 to +$3000 as the market struggled to stay in balance. A slight $50 premium has been restored since then and hasn’t dipped into the negative since the 19th.

The Korean BTC premium shot up to almost 20% as bitcoin crashed below $40,000, but since the recovery on Sunday and into Monday, it continues to shrink to about 6%.


Aggregated Open Interest and Liquidations              .

Image courtesy of bybt.com

Aggregated open interest dropped 15% last week, and another 34% this week, ending at $11.55B down from $17.75B to start the week. 

Stablecoin Reserves on All Exchanges           

Over the last week we’ve seen a growth in USDC and BUSD on the back of the Tether disclosure is not actually backed 1:1 with dollars.