Crypto Market Sentiment Keeps Rising

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Source: iStock/da-kuk

Crypto market sentiment has now increased for the third week in a row - making strides back towards the positive zone. The average 7-day moving crypto market sentiment score (sentscore) for ten major coins was 5.71 last week, now standing at 5.85, according to the market sentiment analysis service Omenics. Additionally, nearly half this list is already in the positive zone.

Seven out of these ten coins' sentscores have gone up over the past seven days. The leader here, and hence the week’s winner, is uniswap (UNI), which went up 11%. The relatively distant second place is taken by usd coin (USDC)’s 7%, followed by cardano (ADA)’s almost 7%. While binance coin (BNB)’s score is up 5%, chainlink (LINK) and polkadot (DOT) are up more than 3%. XRP’s score increased the least, 2%.

On the other side are the three red coins, and these are the largest three coins per market capitalization: bitcoin (BTC), ethereum (ETH), and tether (USDT) - from the least to drop to the most (0.3%-3%), in this order.

That said, four of the above-named coins are now in the positive zone: bitcoin is unchanged from last week’s 7, ethereum went down from 6.7 to 6.6, and these two are joined by uniswap’s 6.1 and chainlink’s 6. Cardano and polkadot are both on the verge of the positive zone as well. In total, five coins have scores between 5.2 and 5.9, while USDC remains below 5, though climbing close to it this time around.

Sentiment change among the top 10 coins*:

Interpreting the sentscore’s scale:

Source: Omenics, 10:54 UTC

Meanwhile, the 24-hour sentscore for these top ten coins has entered the positive zone, currently standing at 6.03, compared to last Monday’s 5.94. Six coins' scores are up at the moment, though with relatively smaller percentages. The highest among these is USDT’s 6%, and the lowest BTC’s 1%. As for the drops, they’re small as well, ranging between BNB’s almost 1% and UNI’s almost 2%. Notably, six coins are in the positive zone: BTC, ETH, UNI, USDT, DOT, and BNB, in that order, from the highest to the lowest score in this category (7.2-6). While XRP, ADA, and LINK stand in the 5.5-5.9 zone, USDC is still below 5, at 4.6.

Daily Bitcoin sentscore change in the past month:

Source: Omenics

When we take a look at the 25 coins outside the top 10 list, which are also rated by Omenics, we see nearly all of them going up over the past week. Only two are down: litecoin (LTC) with 0.1% and monero (XMR) with 6%. As for the green coins, the highest rise in score has been recorded by OMG (13%), closely followed by compound (COMP) (12.5%). The smallest increase in sentscore is nem (XEM)’s 0.5%. Compared to the last week’s one, there are now three coins in the positive zone - AAVE has been joined by crypto.com coin (CRO) and cosmos (ATOM). And while the majority of the coins on this list reside within the 5.1-5.9 territory, five are just below the score of 5.

Omenics measures the market sentiment by calculating the sentscore, which aggregates the sentiment from news, social media, technical analysis, viral trends, and coin fundamentals-based upon their proprietary algorithms.

As their website explains, “Omenics aggregates trending news articles and viral social media posts into an all-in-one data platform, where you can also analyze content sentiment,” later adding, “Omenics combines the 2 sentiment indicators from news and social media with 3 additional verticals for technical analysis, coin fundamentals, and buzz, resulting in the sentscore which reports a general outlook for each coin.” For now, they are rating 35 cryptoassets.

Crypto Market Sentiment Jumps, Led by Bitcoin and Binance Coin

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Source: iStock/honglouwawa

Following the last week’s shift upwards, market sentiment has continued rising. The average 7-day moving crypto market sentiment score (sentscore) for ten major coins is 5.71, showing a rise from 4.88 recorded a week ago, according to the data provided by the market sentiment analysis service Omenics. Furthermore, this brings the overall sentscore close to the positive zone yet again, with two out of the top 10 coins already there.

The market sentiment has made a notable recovery over the past week, with two of its most popular coins now in the positive zone: bitcoin (BTC) leading the list with the score of 7, and ethereum (ETH) standing close with 6.7. And that’s not all: only USD coin (USDC) has a score below 5, while the remaining seven all have scores within the 5.1-5.9 range - which is, again, a significant change compared to last week.

All on this list - except for USDC, which dropped 3% - have seen an increase in their respective scores in the past week, and nearly all have had double-digit increases. The highest of these is binance coin (BNB)’s 27%, while XRP follows closely with 26%. Also seeing rises just above 20% are BTC and ETH.

In the next category are those with increases to their sentscores over 10%, these being cardano (ADA), polkadot (DOT), chainlink (LINK), and uniswap (UNI). The only one with an increase below 10% is tether (USDT) with almost 4%.

Sentiment change among the top 10 coins*:

Interpreting the sentscore’s scale:

Source: Omenics, 10:58 UTC

Zooming into the past 24 hours alone, we find an even better situation, with five coins in the positive zone. Besides BTC and ETH, we now see LINK, ADA, and UNI there too. USDC is still the only coin below the score of 5, but it too is now very close, standing at 4.9. That said, three coins' scores have dropped today, lead by BTC’s -2.2%. The other two are USDT (-2%) and ETH (-0.7%). The highest increase on the list is ADA’s 6%, and the smallest XRP’s 0.5%. The overall 24h sentscore for the top 10 coins is currently 5.94, just below the positive zone, compared to the last Monday’s 5.39.

Daily Bitcoin sentscore change in the past month:

Source: Omenics

There’s more good news coming from the rest of the list tracked by Omenics - the 25 coins besides the top 10 list. All of these have turned green over the past seven days. The highest increase is 32% by litecoin (LTC) which was on the top 10 list for several weeks, now sitting in the 11th place. Notably, 19 more coins saw double-digit increases to their scores, while the smallest of the remaining five - hence of the entire list - is compound (COMP)’s 1%. Furthermore, there are no more coins in the negative zone, there is one in the positive zone again (AAVE), and five coins have scores below 5, meaning that the majority sits in the 5-5.9 range.

Omenics measures the market sentiment by calculating the sentscore, which aggregates the sentiment from news, social media, technical analysis, viral trends, and coin fundamentals-based upon their proprietary algorithms.

As their website explains, “Omenics aggregates trending news articles and viral social media posts into an all-in-one data platform, where you can also analyze content sentiment,” later adding, “Omenics combines the 2 sentiment indicators from news and social media with 3 additional verticals for technical analysis, coin fundamentals, and buzz, resulting in the sentscore which reports a general outlook for each coin.” For now, they are rating 35 cryptoassets.

Market Wrap: Risk-Off Sentiment Sends Bitcoin Towards $30K

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Bitcoin traded lower on Monday, mirroring declines in traditional markets as investors pull away from risky assets because of concerns about weaker monetary and fiscal stimulus and rising COVID-19 cases, including those caused by the Delta variant.

Bitcoin was trading at around $30,600 at press time and is down about 3% over the past 24 hours. The world’s largest cryptocurrency is up about 4% year to date, compared with a roughly 12% return for the S&P 500 Index.

Latest prices

Cryptocurrencies:

Traditional markets:

S&P 500: 4258.7, -1.58%

Gold: $1811, -0.05%

10-year Treasury yield closed at 1.2%, compared with 1.294% on Friday

Macro and regulatory headwinds

Regulatory scrutiny regarding stablecoins is also weighing on cryptocurrencies. The People’s Bank of China (PBOC) issued a white paper on Friday outlining initial research for the nation’s digital currency project, which appears to challenge existing cryptocurrencies and stablecoins.

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“Cryptocurrencies are mostly speculative instruments, and therefore pose potential risks to financial security and social stability,” the PBOC’s white paper stated.

“Some commercial institutions even plan to launch global stablecoins, which will bring three risks and challenges to the international monetary system, payment and clearing system, monetary policies, cross-border capital flow management, etc.,” the report said.

Another source of selling pressure across risk assets could be the reduction of government stimulus. “Too much stimulus breeds complacency,” MRB Partners wrote in a research note published on Friday.

MRB also noted widespread asset price inflation, which can lead to market imbalances similar to an episode in Japan in the 1980s that preceded a decade of low investment returns.

Bitcoin market parallels

The chart below shows bitcoin’s current range, which is similar to the sideways pattern of between $5,900 and $7,400 in 2018. The previous range, although more volatile than the current pattern, preceded a nearly 45% sell-off, which extended the bear market until prices recovered in mid-2019.

Charts show bitcoin’s price range in 2018 and 2021. Source: TradingView

A decline was also seen in ether (ETH) below the $400 price level in 2018, similar to the drop to below $2,000 last week.

Bitcoin volatility trap

Bitcoin’s near-term volatility is starting to rise after declining from peak levels in June. Some analysts expect selling pressure could increase, causing bitcoin to break below $30,000 support.

“Front-end vols have been hit the hardest, creating a very steep volatility term structure,” QCP Capital wrote in a Telegram chat. “It makes sense to roll short July positions to September given the significant dip in front-end vols.”

“Front-end vols” refers to “short-term volatility.”

“Bitcoin volatility has started to spike up and is trading close to 80% for July expiry,” Pankaj Balani, CEO of Delta Exchange, wrote in an email to CoinDesk. “We can see sharp moves on the downside if BTC breaks below $30,000 convincingly.”

Balani also noted that options sellers have become more aggressive as bitcoin trades in a tight range. There has been more put writing at $30,000 and $32,000 strikes on the downside, he said.

Chart shows the recent uptick in BTC one-month implied volatility. Source: Skew

Ethereum funds capture inflows

Digital-asset funds have attracted capital over the past two weeks, albeit at a slower pace as investors remain cautious after the crypto crash in May. It appears that investors are warming up to ether, which saw a third consecutive week of inflows, totaling $11.7 million, according to a report by CoinShares.

Chart shows weekly digital asset fund flows. Source: CoinShares

Stablecoin regulations

As the President’s Working Group on Financial Markets discusses stablecoins at a meeting today, debates about how stablecoins should be regulated heated up. CoinDesk Columnist JP Koning wrote that regulators may have contributed to the fast growth of stablecoin supply because of their failure to close the “pseudonymity loophole” in such financial products earlier.

In an academic paper titled “Taming Wildcat Stablecoins” released Saturday, Yale economist Gary Gorton and U.S. Federal Reserve attorney Jeffery Zhang said that without proper regulation, the world of stablecoins could evolve into one reminiscent of the 19th century’s free banking period in the U.S.

It is not the first time for the analogy to be used, and Nic Carter, another CoinDesk columnist explained why.

Altcoin roundup

Polygon Launches New Unit: Polygon has launched Polygon Studios, a unit that aims to advance blockchain gaming and non-fungible tokens (NFTs). The unit will help “bridge the gap between Web 2 and Web 3 gaming,” according to Polygon. The division will look to attract big brands and franchises looking to launch games and NFTs.

Polygon has launched Polygon Studios, a unit that aims to advance blockchain gaming and non-fungible tokens (NFTs). The unit will help “bridge the gap between Web 2 and Web 3 gaming,” according to Polygon. The division will look to attract big brands and franchises looking to launch games and NFTs. Grayscale Unveils DeFi Fund: Grayscale, the largest cryptocurrency investment manager, said Monday it has started a fund focused on decentralized finance (DeFi) tokens, based on a new DeFi-specific index produced by CoinDesk’s TradeBlock division. The companies, both subsidiaries of CoinDesk parent Digital Currency Group (DCG), wrote in a joint press release the Grayscale DeFi Fund provides “exposure to a selection of industry-leading DeFi protocols through a market-capitalization weighted portfolio.”

Grayscale, the largest cryptocurrency investment manager, said Monday it has started a fund focused on decentralized finance (DeFi) tokens, based on a new DeFi-specific index produced by CoinDesk’s TradeBlock division. The companies, both subsidiaries of CoinDesk parent Digital Currency Group (DCG), wrote in a joint press release the Grayscale DeFi Fund provides “exposure to a selection of industry-leading DeFi protocols through a market-capitalization weighted portfolio.” ARK Investment Increases Square Holdings: ARK Investment Management increased its holdings of payments services firm Square after Jack Dorsey, Square’s founder, announced Friday the company is creating an “open developer platform.” Following the announcement, Cathie Wood’s New York-based ARK Investment purchased a total of 225,937 shares of Square, according to its daily holding files.

Relevant news

Other markets

All digital assets on CoinDesk 20 ended up lower on Monday.