SFOX, a “prime dealer of cryptoassets for sophisticated traders and institutional investors,” has published its crypto volatility report for April 2019.
Established in 2014, SFOX, a Los Angeles, California-based fintech firm, revealed in its monthly market report that its proprietary Multi-Factor Market Index “remains at mildly bullish entering May 2019.”
As noted in SFOX’s blog post, the firm’s Multi-Factor Market Index is “calculated using a proprietary formula that combines quantified data on search traffic, blockchain transactions, and moving averages.”
Volatility of Cryptocurrencies May Be Affected By “Bitcoin ETF Decisions”
SFOX’s report mentioned that Ether (ETH), Bitcoin Cash (BCH), and Litecoin’s (LTC) “movements were highly correlated” with Bitcoin (BTC). The monthly report from the digital assets dealer revealed that the month of April “highlighted the sustained influence of BTC and individual exchanges on cryptoasset performance.”
According to SFOX’s management, the volatility of cryptocurrencies may be affected by “Bitcoin exchange-traded-fund (ETF) decisions,” expiration of crypto futures contracts, and the discussions during “major” crypto and blockchain conferences such as Consensus which is taking place mid-May.
Key Observations: Bitcoin Price Movements In April 2019
Some of the key observations made by SFOX’s researchers regarding the BTC price are as follows:
- “Between April 1st and April 3rd, the price of BTC increased over 20%, from $4122.92 to $5017.13. To the extent that this price surge has an explanation, the prevailing notion is that a 20,000 BTC buy order by an anonymous party on April 2nd threw supply and demand out of equilibrium.”
- The rally in early April caused many large leveraged Bitcoin positions to be liquidated on Bitcoin Mercantile Exchange (BitMEX), a leading Seychelles-registered and Hong Kong-operated crypto derivatives exchange, which may have exacerbated the volatility.
- “[The present] rally [has been] highly publicized in the media, which could have theoretically caused people to experience some FOMO (fear of missing out), which drove it even higher — similar to what we observed in late 2017, albeit on a smaller scale.”
Key Observations: Ethereum Classic Price Movements In April 2019
- “On April 7th, the price of ETC climbed over 50%, from $5.84 to $8.91. Whether or not this short-lived spike was motivated by changes in ETC’s fundamentals is unclear.”
- The spike in ETC price “came two days after a public conference call in which the ETC ecosystem discussed its upcoming Atlantis hard fork; while this hard fork isn’t expected until mid-September 2019, its proposed changes are expected to make ETC less manipulable as a network and more (decentralized application) DApp-friendly.”
- “The data suggest that [the ETC] price spike mostly came from a single source: reportedly, Coinbase Pro facilitated over 37% of ETC trading volume during this time, and ETC’s price on Coinbase Pro reached as high as $14 at peak — well above the marketwide volume-weighted average price.”
Some important events, or developments, to look out for during May 2019, according to SFOX, are as follows:
- “The US Securities and Exchange Commission (SEC) is set to approve or deny two current Bitcoin ETF proposals in the month of May. Historically, the market has been fairly reactive to news about Bitcoin ETF proposals — therefore, the outcomes here could potentially impact crypto volatility.”
- “Crypto volatility typically moves around the time of futures expirations. With Cboe having backed off from BTC futures for the time being, the date of CME’s futures expiration may potentially impact volatility more than usual.”