Market Overview
- •Bitcoin and Ethereum have experienced sharp price swings over the weekend due to thinning liquidity and reduced retail participation.
- •Institutional investors continue to accumulate, withdrawing BTC and ETH from exchanges, which tightens the available supply.
- •The Federal Reserve's upcoming rate decision and guidance on its balance sheet are anticipated to be significant catalysts for market movements.
Crypto markets saw notable volatility during the weekend, indicating potential turbulence as the year-end holiday period approaches and liquidity diminishes, according to Asia Colour. Bitcoin’s price fluctuated significantly, trading between $88,000 and $92,000, while Ethereum moved from approximately $2,910 to $3,150 within a few hours. These rapid movements led to the liquidation of leveraged long and short positions. Despite the price swings, total liquidations remained relatively modest at $440 million, a figure attributed to lower retail investor positioning and declining market participation. Google search interest for terms like “crypto” and “BTC” has receded to levels typically seen during bear markets, and the open interest on perpetual futures contracts has decreased substantially, with Bitcoin’s open interest down by over 44% and Ethereum’s by more than 50% from their October peaks.
Retail Activity Declines While Institutions Accumulate
While retail trading activity has cooled, institutional investors and large holders, often referred to as whales, appear to be actively accumulating assets. In the last two weeks, approximately 25,000 BTC have been withdrawn from centralized exchanges. This action suggests a move towards long-term custody and contributes to a tightening of the available supply in the market. Ethereum is exhibiting a similar trend, with its balances on exchanges falling to their lowest levels in a decade. These patterns indicate that the market depth is limited, meaning that even relatively modest trading volumes can lead to disproportionately large price movements. Institutional buyers are noted to be purchasing cryptocurrencies during price dips rather than chasing rallies. This strategy is particularly relevant as a sustained break above $100,000 for Bitcoin could potentially stimulate renewed demand from treasuries.
Markets Await Fed Guidance Amid Liquidity Challenges
Market participants are closely watching the upcoming Federal Reserve FOMC meeting, where a 25-basis-point rate cut is widely anticipated. Investors will be particularly focused on any signals or guidance provided by the Fed regarding its balance sheet strategy. Such guidance could have a significant influence on both equity markets and risk assets, including cryptocurrencies. Bitcoin has been trading within a defined range, with key price levels at $84,000 and $100,000 expected to dictate the direction of its next major trend. The options market indicates positioning for substantial price volatility once liquidity returns to the market, with investors anticipating a potentially sharp directional shift in the coming weeks.
In parallel, QCP Trading, the over-the-counter (OTC) trading arm of the firm, has confirmed its receipt of a Major Payments Institution (MPI) license from the Monetary Authority of Singapore (MAS). This license grants full authorization to offer digital payment token services to institutional clients.