About: Investoom Weekly is the newsletter by the market intelligence company Investoom that provides AI-powered investment insights through social sentiment data, onchain data and financial data. Investoom democratizes the access to hedge fund insights.

Overview of the topics

• Crypto Highlights: This year ETH has surpassed BTC in the option market, registering $5,6 billion of open contracts versus the $4,6 billion of Bitcoin.
• Onchain Data: From January, DeFi applications and NFT trading have increased the number of Ethereum wallets of +7 million.
• Social Data: Expectation of rate hikes by the FED has lead to further divesting of Bitcoin, which have dropped over 50% since January.
• Financial Data: Bitcoin is displaying high NASDAQ betas, behaving as a semi leveraged technology investment.
• Deep Dive: In the future, BTC will continue to track the NASDAQ with a high beta and FED’S decision on further rate hikes will determine its price.

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Crypto Highlights

A look into the option market

This year, for the first time in history, Ether has overcome Bitcoin in the optionmarket. But how? The open interest (OI) of the Derebit options on Ether has exceeded 32% the OI of the options in Bitcoin. According to the first exchange of crypto options in the world, Derebit, in August ETH had a value of $5,6 billion, against the $4,6 billion of BTC. The OI, which is calculated by summing all the open contracts, determines however the interest in the asset. Furthermore, the options in Ether are mainly call options.

Why? Traders expect higher prices after the merge and would acquire ETH at lower market levels. The blockchain based on the Proof-of-Work has indeed merged with the Beacon Chain based on the Proof-of-Stake. With the transition miners will consume less electricity and won't need to immediately sell their ETH to return from the costs. Since the offer should be lower, prices could return to grow and overtake the uncertainty of the current macroeconomic situation.

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Onchain Data

Ethereum network is waking up

The rise in the price of Ether could be enforced also by the increase in the number of active addresses on Ethereum. From July to October the number grew from 200 million to 207 million.

They strongly increased because of the adoption of ETH instead of Bitcoin, the applications of decentralized finance (DeFi) that the network offers and the spreading of the NFTs trend.

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Social Data

New spike in negative sentiment

Ethereum is not the only cryptocurrency that has lost ground. From January Bitcoin has plummeted more than 50%, with nearly $2 trillion wiped off the value of the crypto market. Its price went from $47,827 to $19,451 because of the current macroeconomic situation.

The soaring inflation that pushed the FED to increase interest rates has worsened the stock market and since it has a strong correlation with Bitcoin, it bumped. Does it apply to all cryptos? In truth, there are many exceptions, such as Chiliz (CHZ), eCash (XEC) and Shiba Inu (SHIB). Chiliz, the crypto founded back in 2018 with the ultimate goal of helping major sports brands to get closer to their fans, has grown +127% the past 3 months, becoming one of the cryptos with the highest positive sentiment.

Fan Tokens have indeed a market cap of $447 million, +33% in respect to 2021. It happened because since the pandemics brought down the football industry, fans saw in the blockchain an opportunity to stay closer to their favorite teams.

Even without analyzing BTC prices, the rising concern of worldwide investorscan be seen through the tweets published last month. Among the 25 most popular words, inflation was cited 440 times per day. It was second only to earnings, which were mentioned 584 times because of the fear that the deteriorating macroeconomic picture will erode stock market and crypto gains.

The latest boom and bust cycle had however extreme consequences on lending platforms like Celsius. As Celsius promised retailers high yields for depositing Bitcoin and other crypto, but their prices crashed, they faced severe liquidity issues. Indeed, their profits come from lending out crypto from the depositors to others willing to pay a high yield.

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Financial Data

Bitcoin and stocks are highly correlated

From 2021, BTC prices have been highly correlated with the NASDAQ and the S&P 500. The correlation among them is above 0.50, which suggests that BTC has been moving in the same direction as the assets included in the indexes.

Back in May, the indicator even reached a peak of 0.80. After the Terra/USD collapse, however, the crypto market crashed down separately from stocks, thus the correlation weakened. They returned to show similar movements only when BTC investors pulled out their assets to manage the increasing risk on the market and there was the collapse of multiple lending firms.

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Community

Interested in what the other readers think about it? Join our community on Discord and discuss our insights with other investors! [Join Discord]

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News of the week

• Bitcoin: India’s central bank is working toward a phased introduction of a digital currency. [Read more]
• Ethereum: After Ethereum merge, GPU prices may stabilize with dipping demand. [Read more]
• Twitter: How will Elon Musk pay for the acquisition of Twitter? [Read more]
• Celsius: Dapper Labs suspends Russian accounts after new EU sanctions. [Read more]

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About

Investoom is a Munich-based Fintech Startup democratizing the access to quantitative investment insights that are used by big hedge funds, but are inaccessible to retail investors. We are a market intelligence company that provides AI-powered investment insights through social sentiment data, onchain data and financial data.

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