Bitcoin and Ether showed little movement in today’s Asia trading session. Bitcoin managed a slight 0.32 percent increase, reaching $29,186.24. Meanwhile, Ether saw a minor decline of 0.18 percent, landing at $1,832.
The crypto market has been relatively stable in recent weeks. The initial excitement over new Bitcoin exchange-traded fund (ETF) applications has settled down. However, recent on-chain data from Glassnode indicate potential changes ahead in the market.
Per CoinDesk’s report, the data reveal a decline in long-term Bitcoin holders, specifically those who held the cryptocurrency for 12 to 24 months and five to seven years. This suggests a change in investor sentiment.
On the other hand, the Chicago Mercantile Exchange (CME) has seen a significant surge in crypto options trading volume. Bitcoin options rose by 16.6 percent, while Ether options skyrocketed by 60 percent. This implies that institutional investors consider using options as a hedge during market uncertainty.
“The increase in BTC options volume on the CME suggests that institutions might be hedging their positions with options as uncertainty remains in the market,” CCData told CoinDesk.
CME offers options for buyers to purchase/sell cryptocurrency futures contracts at specific prices in the future. They provide standard contracts for 5 BTC and 50 ETH and micro contracts for one-tenth of 1 BTC and one-tenth of 1 ETH.
In July, both Bitcoin and Ether experienced a four-percent decline due to fading optimism about the potential launch of a bitcoin-spot ETF, concerns over regulatory uncertainty, and DeFi hacks. During this period, Bitcoin showed a correlation with stocks and gold. This makes options a viable strategy to hedge directional exposure in the crypto market.
Altcoins facing sluggish trading activity
Tokens from smart contract platforms — Cardano (ADA), Solana (SOL), and Polygon (MATIC) — experienced declines of over 2.5 percent. Uniswap’s native crypto (UNI) slumped by over 1.3 percent.
Meanwhile, the CoinDesk Market Index showed a 0.52 percent increase. This index measures the overall performance of the crypto markets.
Core contributor to DeFi infrastructure provider Maverick Protocol, Bob Baxley, asserted that the market would trend sideways for an extended period.
“There isn’t enough fresh capital flowing into the space at the moment for a meaningful rally,” Baxley said.
However, he also expressed optimism, saying that changing conditions would result in “an inflow of both users and new capital.”
“I say this because Ethereum is seeing its foundations become sturdier and its applications more sophisticated and increasingly friendly for users,” Baxley told CoinDesk.
Brent Xu, the CEO and co-founder of Web3 bond-market platform Umee, said in an email to CoinDesk that crypto prices are unlikely to see a long-lasting surge “until the macro environment softens more.” This means central banks need to pause their interest rate hikes that have been ongoing for over 16 months.
“We are certainly close to peak rates, though we could have another hike or two ahead of us depending on how sticky inflation actually is,” Xu said.
“I’m not convinced inflation is falling as fast as many hope. In short, we have a long way to go before we enter the optimistic phase of the cycle.”