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Crypto Market Bounces Off New Lows; Immutable Launches $500 Million Venture Fund

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Chart of the Day

The turbulent weekend sunk the broader crypto market to new lows, before a Sunday rally buoying BTC back above the $20k threshold. As of the time of writing, the largest cryptocurrency by market cap is trading near the $20k key psychological support, after surging by 8.2% in the last 24 hours. The recovery wave from a local low near $17.6k fueled a break above the key bearish trend line with resistance near $19.2k level on BTC's hourly chart. The next upside resistance level sits near the $20.2 to $20.5k region. A major breakthrough above that region would likely usher in a stronger recovery wave. Meanwhile, on-chain metrics show that approximately 555k BTC has changed hands between the $18k to $23k price zone in the past three days, hinting that the price discovery within this region will most likely be a choppy one. BTC's MVRV ratio has dipped below 1, while this is a rare occurrence during some of the most devastating bear runs in history, it also presents great opportunities to those who are still holding on to their convictions.

In a similar vein, ETH has reclaimed the $1,000 handle after posting a 13% gain during the same period. Most major altcoins are largely in the green, with LTC and UNI leading the pack on double-digit percentage gains.

Back to (the) Futures

Much has happened in the past week, with unraveling events such as the Celsius and 3AC liquidity crises as well as the subsequent treasury blowups. However, these events, while being massively deleveraging, are in no way reflective of the fundamentals of the crypto industry. The estimated leverage ratio, derived from open interest across major exchanges divided by their coin reserves, shows that the current market is still heavily leveraged despite its weakened spot prices and dampened sentiments. With contagion risks, a feedback loop is created where cryptocurrency holders are forced to sell to meet margin requirements, leading to a greater liquidation cascade. In the derivatives market, perpetual contract funding rates across major exchanges have nosedived to the negative territory, while options skew became extreme. 

Talk of the Town

The bleak outlook of the current bear market hasn't stopped venture capitals from pouring into the space. Immutable, the firm behind Ethereum's Layer 2 scaling solution Immutable X, has recently launched a $500 million venture fund to boost the adoption of the platform and accelerate the growth of its gaming and NFT-focused ecosystem. The fund, a mix of cash and the protocol's native token IMX, will be directed to support and incentivize the development of NFT projects and blockchain-based games in collaboration with notable crypto and gaming investors. The new venture fund will also be channeled to the Immutable X protocol through token grants and investments. 

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