After its YTD peak of $48,000 on March 28th, 2022, BTC and the broader crypto markets have lost some of last month’s gains in the span of a few short weeks. The broader equity markets have also followed this trend, with the S&P 500 losing close to 14% this year alone, while the NASDAQ has been flat following increased volatility among technology stocks.
Looking ahead, there will be a lot of focus on the altcoin market as the battle between Ethereum and its rivals continues to play out. Despite a dominant position as the leading altcoin, Ethereum has seen tremendous competition among a growing list of infrastructure protocols that offer cheaper and faster transactions without impacting network security. On the other hand, given the recent hacks and exploitations we have seen in the crypto space in the past weeks, it will be reasonable to expect investors to continue to place Ethereum at the top of the list of altcoins while also paying closer attention to newer protocols.
Given this trend, the ETHVI, which tracks the 30-day implied volatility of Ethereum using the Black-Scholes option pricing model, will be an important tool for investors and Ethereum ecosystem participants alike. With a forward view of expected volatility, investors will be able to hedge and explore profitable opportunities for their portfolios.
This week’s takeaways:
- Following a 1-week peak of 69.9 on April 12th 2022, the CVI dropped points and has been around the 66 bound all week.
- The broader crypto markets have seen lots of increased price movements with BTC and ETH returning to their 2-month lows
- Despite the current regulatory and geopolitical risks, analysts are predicting a much more positive spring/summer for the crypto markets
Market Movements
It was another week filled with lots of activity and price actions in the crypto markets as Bitcoin and most of the major altcoins saw price fluctuations. If the past few weeks are any indication of what lies ahead, then the road to $45,000+ for BTC is much farther away than investors anticipated and probably filled with lots of volatility.
BTC prices peaked at around $41,000 early in the week before falling to a new low of $38,000 in the closing hours of the week. There has been some significant volume uptick over the past few days, so it will be helpful to watch this price movement in the coming weeks.
Ethereum has seen some price action as well but compared to BTC, has been a lot much stronger on a month-to-month basis. Despite a 1.9% drop in its 1-week price, ETH has posted gains of over 5% compared to BTC.
Regulatory frameworks around crypto markets remain a pending issue that could see some volatility sentiment as geopolitical tensions continue to linger in the background. Despite these daily price fluctuations, there is still a substantial amount of optimism that has enabled the crypto markets to withstand some of the pending uncertainties that could have derailed its trajectory.
Volatility Index
The CVI started the week with a value of 67.12 but dropped some points over the past few days and is currently at the 64 range. We saw some increased run-up in the future volatility sentiment a few times during the week, but overall its been a tempered week on the CVI.
Analyzing the chart from a 1-month prospective, we observe a decreasing trend in the CVI despite the price actions seen in the markets.
The ETHVI index has also seen a decrease in value over the past month, with its current value hovering around 64. As we mentioned above, this index should be very helpful to DeFi investors and participants, given Ethereum’s position as the leading infrastructure.
Overall, despite the fluctuations we saw in the crypto markets, there has been more of an optimistic tone from average market participants and users on crypto’s future. Let’s see what the next few weeks will look like in the markets.
A few things that have happened this week
- Learn more about COTI’s recent Explorer update here
- TVL in DeFi is currently at $76 Billion
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