This week, TokenInsight breaks down what has been going on with Bitcoin and Ethereum.
Stimulated by the release of a large number of positive and negative information around May, the market volatility once again rose from around 50 to a high level above 80, ushering in the third peak of volatility this year.
High volatility is accompanied by higher uncertainty. How will the market go in the next few days? A new metric discovered by TokenInsight may be helpful.
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Bitcoin's Market Value Continues to Decline, and Ethereum Goes Out of its Own Market
The monthly option delivery and roll over on April 30 created short-term selling pressure on the price of Bitcoin, but did not have a significant impact on the price. After the option delivery was completed at 4.pm, the upward pressure on Bitcoin decreased, then Bitcoin rose from around USD 53,000 to around USD 58,500.
A large number of good market news has promoted the rise of Bitcoin price: despite the continuous voices of national supervision, traditional market giants such as Goldman Sachs have begun to provide their customers with perpetual contract products for digital asset investment. However, traditional market giants such as Charlie Munger's "frustration" with the development of digital assets such as Bitcoin has stimulated investors' confidence in Bitcoin.
At the same time, a lot of bad news is constantly breaking out. The U.S. Treasury Secretary and the chairman of the SEC have all expressed concerns about Bitcoin, and banks such as CITIC have even announced a direct ban on Bitcoin transactions. The sudden increase in regulatory pressure has exacerbated market volatility: On May 4, among the 16 exchanges tracked by TokenInsight, the total bitcoin spot trading volume rose to more than 10 billion U.S. dollars, and the highest trading volume this week reached 12.86 billion U.S. dollars. The highest volume of the perpetual reached US$87.1 billion. A large number of derivatives liquidation also occurred at this time.
The weekly volume change is another important signal: Bitcoin spot trading volume this week has been lower than Ethereum. Ethereum's weekly trading volume reached 84.19 billion U.S. dollars, while Bitcoin was only 71.84 billion U.S. dollars this week; Ethereum's main trading volume was concentrated after May 3. Investors seem to be changing the direction of investment in mainstream digital assets, whether it is individuals or institutions.
SSI: the Difference Between DOGE and Volatility
Various signs in the market have shown that SSI may have reached a new height.
As an important indicator of SSI, DOGE's value has reached the point of "beyond imagination": a market value of $75.51 billion. From being “worthless” to almost equal to the New Zealand dollar, Australian dollar, Canadian dollar and other Commonwealth currencies, DOGE only took less than half a year. Now, it is the fourth largest digital asset with a daily trading volume of US$28.73 billion, which has surprised global investors. Some companies have even announced support for DOGE payments, including the NBA Mavericks and other big names.
Has the market been overheated? At present, it does not seem to be the case. Based on the first quarter transaction data, TokenInsight discovered an indicator that seems to be a simple measure of whether the market is overheating: Volatility of Difference (VFD).
The volatility difference is the difference between the historical volatility of mainstream digital assets and the implied volatility of options. Considering that historical volatility indicates the actual performance of the market, implied volatility represents the subjective expectations of professional and institutional investors on the market, which can usually be regarded as "rational expectations." Therefore, when the difference between the two is greater than 0, it indicates that the market is overheated, and the price is often in a downward trend to correct the overheating, when the difference between the two is less than 0, it indicates that the price is lower than rational expectations, and then the price will rise with a high probability to conform to rationality. expected.
The volatility difference is usually inversely correlated with the price changes of mainstream digital assets: an increase in the volatility difference often means that the market is in an overheating stage or is going into an overheating stage, and asset prices are falling; while a decline in the volatility difference indicates that the market is undervalued and assets and there is room for price increases.