Crypto Markets See Worst Drop Since September - Exchange Stress Appears To Be A Factor

Crypto exchange stress is a reliable factor in predicting crypto market weakness
China's recent investigation of crypto is having some impact on Binance
BFX crypto prices trade at some of most significant premia to peer exchanges in months
Crytpo and Bitcoin Market Cap Story of Day

Crytpo and Bitcoin Market Cap Story of Day

CRYPTO MOVERS AND PRICES

 

 

CRYPTO STORY OF THE DAY

Crypto Markets Are Seeing Their Worst Sell-Off Since September - Once Again Exchange Stress Appears To Be A Factor - We Provide Some Additional Factors And Insights

Crypto Takeaway: We have frequently pointed to exchange stress as one of the most reliable factors in predicting crypto market weakness. While there had been a period where some issues with venues were lifting; such as the NYAG lawsuit against Bitfinex (BFX) or noise around the Binance crypto and data hack, it appears that additional issues for some major venues has reignited.

BFX, for example, has begun to see their crypto prices trade at some of the most significant premia to peer exchanges in months. BTC prices on the platform are in the range of 80 bps above other benchmarks. Crypto price premiums are usually a sign of fiat-banking stress for a crypto exchange as traders begin to devalue the denominator of the trading pair (i.e reduction of the perceived value of USD in BTC/USD sends the entire fraction higher). It is not exactly clear what is contributing to the spread as fiat withdrawals appear normal. A more obvious factor may be confusion around the recent civil lawsuit that, while in our opinion is frivolous, may be worrying to traders / customers.

Furthermore, while reports are conflicting, it appears as though China's recent reinvestigation of crypto is having some impact on Binance. Last week, Chinese media sources published that Government officials had asked domestic financial services businesses to review operations to ensure they were not allowing the facilitation of crypto trading. On the weekend, Binance's Weibo account was disabled and this week there are numerous media reports of Government interference with onshore employees (see headlines). All that said, in spite of the issues and today's weakness, technically bitcoin continues to appear to be tracing a mid-term consolidation (chart).

 

Crypto Chart of Day


BTC Technicals - In spite of today's sell-off, the uptrend in the mid-term consolidation shows up in the range of USD 6,500...

About the Author

FRNT Financial is an Institutional Brokerage which offers clients a variety of products along with research & analytics in the crypto-space.