ecb

Bitcoin is up 170% since the ECB called its ‘last gasp’ at $16.4K

Bitcoin completely contradicts what the European Central Bank warned about in late 2022.

Bitcoin (BTC) has gained almost 170% since the European Central Bank (ECB) warned of its impending “irrelevance.”

As noted by crypto proponent Eric Wall and others on Dec. 4, BTC price action has done the complete opposite of economists’ predictions.

Bitcoin traded at just $16,400 when, on Nov. 30, 2022, the ECB published a blog post dedicated to its death.

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Crypto firms need to be ‘supervisable,’ says ECB board member

“We need to put more thought into imagining what international coordination will look like and how it can be effective in regulating the crypto world,” said Elizabeth McCaul.

Elizabeth McCaul, a supervisory board member of the European Central Bank (ECB), has called for additional oversight of crypto firms operating in a borderless state outside typical attempts at supervision.

In an April 5 blog post, McCaul said there was currently no adequate regulatory or supervisory framework for crypto firms but that the collapse of the FTX exchange helped shed light on the problem. She called on policymakers to address potential gaps in existing frameworks that could lead to bank failures, citing the collapses of Silicon Valley Bank and Signature Bank in the United States.

“In the crypto world, […] the very concept of borders and jurisdictions is being challenged,” said McCaul. “How can we supervise firms that have no physical borders? We need to put more thought into imagining what international coordination will look like and how it can be effective in regulating the crypto world.”

According to McCaul, a framework governing crypto proposed by the Financial Stability Board and the Basel Committee on Banking Supervision was “very much in its infancy” and expected to go into effect in 2025. Pending laws, including the Markets in Crypto-Assets framework, could effectively complement those from the BCBS in Europe but likely wouldn’t completely address supervision of crypto firms claiming no headquarters.

“Exchanges like FTX conduct their operations by leveraging a group structure, while MiCA applies only at the individual entity level. In my view, large players like FTX or Binance need a consolidated approach, even if this requires adjustments to existing legislation.”

Related: ECB official urges CBDC development for the good of cryptocurrency and consumers

The ECB is currently investigating the potential impact of a digital euro on the European Union’s financial system, including policy issues and how the token could provide payment solutions for retail users. In January, ​​ECB executive board member Fabio Panetta addressed the European Parliament, outlining a plan for a digital euro to be used alongside cash in retail payments.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Bullish crypto traders maintain the upper hand despite the total market cap rejecting at $1T

Former BitMEX CEO Arthur Hayes says catastrophe is coming for the crypto sector, but derivatives data shows bulls slowly taking control of the market.

The total crypto market capitalization soared by 29.4% in two weeks, although Bitcoin’s (BTC) price stabilized near $21,000 on Jan. 19.

As a result, it became increasingly difficult to justify that the five-month-long bearish trend still prevails after the $930 billion total crypto channel top has been breached. Still, the psychological $1 trillion resistance remains strong.

Total crypto market cap in USD, 2-day. Source: TradingView

The move possibly reflects investors becoming more optimistic about risk assets after weaker-than-expected inflation metrics signaled that U.S. Federal Reserve’s interest rate hiking strategy should ease throughout 2023.

However, Klaas Knot, who serves as the governor of the Dutch central bank, stated on Jan. 19 that the European Central Bank (ECB) “will not stop after a single 50 basis point hike, that’s for sure.”

At the Davos forum, Knot added: “Core inflation has not yet turned the corner in the Euro area.”

In essence, investors fear that another round of interest rate increases could further pressure corporate earnings, triggering unemployment and a deep recession. In this case, a sell-off on the stock market becomes the base scenario and the crypto markets would likely follow the bear trend.

To further prove the strong correlation between cryptocurrencies and the stock markets, the Russell 2000 index declined 3.4% between Jan. 18 and Jan. 19. The movement coincides with the total crypto market capitalization correcting by 4% after flirting with the $1 trillion mark on Jan. 18.

The 10.4% gain in total market capitalization between Jan. 12 and Jan. 19 was impacted mainly by Bitcoin’s 10.4% gains and Ether (ETH), which traded up by 8.7%. The bullish sentiment was more eventful for altcoins, with eight of the top 80 coins gaining 20% or more in the period.

Weekly winners and losers among the top 80 coins. Source: Nomics

Metaverse-related tokens rallied after tech giant Apple announced the upcoming release of its VR headset. Top movers included Decentraland (MANA), up 55%; Enjin (ENJ) rising 37%; and The Sandbox (SAND) climbing 30%.

Frax Share (FXS) rallied 40% as it reached 65,000 Ether deposited on its liquid staking protocol, which currently has over U$100 million in total value locked.

Privacy coins like Monero (XMR) and ZCash (ZEC) both declined after increased regulatory risks and the U.S. Department of Justice announced the arrest of the founder of Bitzlato, a now-shutteredpeer-to-peer crypto exchange.

Demand for leveraged bullish bets rises

Perpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.

A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.

Perpetual futures accumulated 7-day funding rate on Jan. 19. Source: Coinglass

The seven-day funding rate was positive in every instance, meaning the data points to a higher demand for leverage longs (buyers) in the period. Still, being charged 0.25% per week to maintain their bullish trades opened should not be a significant concern for most investors.

Thus, traders should analyze the options markets to understand whether whales and arbitrage desks have placed higher bets on bullish or bearish strategies.

Investors are not afraid of dips, according to BTC options

Traders can gauge the market’s overall sentiment by measuring whether more activity is going through call (buy) options or put (sell) options. Generally speaking, call options are used for bullish strategies, whereas put options are for bearish ones.

A 0.70 put-to-call ratio indicates that put options open interest lag the more bullish calls by 30% and is therefore bullish. In contrast, a 1.40 indicator favors put options by 40%, which can be deemed bearish.

BTC options volume put-to-call ratio. Source: Laevitas

Even though Bitcoin failed to break the $21,500 resistance on Jan. 18, there were no signs of increased demand for downside protection. This becomes evident as the put-to-call volume remained below 0.80 the entire time, even after the negative 5.5% move on Jan. 18.

The neutral-to-bearish strategies remain strongly in demand in the BTC option markets, favoring call (buy) options by 23%.

Related: Compass Mining sued for losing Bitcoin mining machines bought by customers

Derivatives markets suggest support at the $930 billion level is strong

After solid gains over the past seven days, the cryptocurrency market continues to show resilience despite warnings of a “global financial meltdown” by BitMEX founder Arthur Hayes. This year “could be just as bad as 2022 until the Fed pivots,” Hayes wrote, calling that scenario his “base case.”

According to crypto derivatives metrics, there is hardly any sense of fear or absence of leverage buying demand after the total market capitalization first missed the opportunity to breach the $1 trillion mark. Those are encouraging signs, especially when combined with the technical analysis of the descending channel breakout.

Consequently, the odds favor the previous channel top at $930 billion becoming a strong support level. So, for now, even a downturn in traditional markets should not be a huge concern for crypto bulls, but investors should continue monitoring derivatives metrics.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

EU finance ministers’ group releases statement on political aspects of digital euro

The Eurogroup confirmed its support for digital euro research and noted that some of the design and use elements under consideration would require political decision making.

The finance ministers from the eurozone countries have released a statement on the introduction of the digital euro after a meeting in Brussels. The Eurogroup meets regularly to discuss political dimensions of the potential digital currency, it said. The Jan. 16 statement coincides with the release of a European Central Bank (ECB) “stock taking” document detailing the progress of digital euro design.

The Eurogroup statement addressed the need for the European Central Bank and European Commission to inform the Eurogroup and EU member states of developments in the creation of the digital euro, which is in its investigative phase. The statement said:

“The Eurogroup considers that the introduction of a digital euro as well as its main features and design choices requires political decisions that should be discussed and taken at the political level.”

The group listed the issues it was watching, which included the environmental impacts of a digital currency, privacy, financial stability and related issues. It also expressed interest in the plans of non-eurozone European Union member states with regard to central bank digital currencies.

The members of the group “stand ready to contribute to these discussions,” they assured, adding:

“We also welcome the [European] Commission’s intention to table in the first half of 2023 a legislative proposal that would establish the digital euro and regulate its main features, subject to the decision of the co-legislators.”

That proposal is intended to come before the ECB Governing Council reviews the results of the digital currency investigative phase in the third quarter of the year.

Related: Queen Máxima of the Netherlands comes out in support of digital euro

The Eurogroup statement comes a day after a former Bank of England adviser published an editorial in the Financial Times saying that creating CBDCs is not worth the cost and risk.

Crypto can get weird: The 5 strangest stories of the industry in 2022

Filmmakers are interested in documenting one of this year’s weirdest stories in crypto, but what else made the list?

From Terra to FTX, 2022 has given us many weird crypto stories. While investors have been enduring a bear market that saw the crypto industry sink below the $1 trillion market capitalization mark, adoption in the space has been growing, and old mysteries were finally solved.

From the incredible short squeeze of a bankrupt company’s token to old anti-crypto arguments used by a major central bank, we’re getting weird with five stories the best fiction writers couldn’t dream up.

“Comedic rapper” charged over Bitfinex hack

Back in 2016, popular cryptocurrency exchange Bitfinex suffered a major security breach that saw attackers steal 119,756 Bitcoin (BTC), worth approximately $72 million at the time. It was one of the largest crypto hacks in history, and although Bitfinex continued operating, its reputation was damaged for years to come.

This year, Heather Morgan, known by her rap name “Razzlekhan,” and her husband Ilya Lichtenstein were arrested by the Federal Bureau of Investigation for allegedly conspiring to launder crypto connected to the Bitfinex hack.

During a court appearance in New York, the pair proclaimed their innocence and were released on multimillion-dollar bonds. The weird part of this story is the details surrounding Morgan’s work as a “comedic rapper” and social media influencer. One of her songs even says it is dedicated to “the entrepreneurs and hackers, all the misfits and smart slackers.”

Morgan, who calls herself the “crocodile of Wall Street,” was labeled a master of “deceit and deception” by federal authorities. While her home was being searched, Morgan allegedly asked federal agents for permission to retrieve her cat from under the bed and, while doing so, tried to lock her phone.

Morgan and Lichtenstein reportedly traveled to Ukraine in 2019 to attain false identities and create fake passports, and have “established financial accounts” in Ukraine and Russia.

She was a regular contributor to Forbes. The day before the Bitfinex hack, she posted a picture next to Lichtenstein with a caption saying she will “always love getting into trouble w/ this crazy guy.”

Commenting on Morgan and Lichtenstein’s arrest, Dymtro Volkov, head of global innovations at crypto exchange CEX.io, told Cointelegraph that with the proper technical resources, “it is possible to track the flow of most funds moving on a blockchain network” and that “hiding a huge amount of stolen funds is actually quite a complex task.”

Notably, the pair isn’t being charged with the hack but laundering the stolen funds. The sordid details of the story have even caught the interest of filmmakers. Hulu is producing a true-crime limited series about Morgan’s life, and Netflix has ordered a docuseries on the story.

Bankrupt Celsius Network’s CEL token surges 4,000%

Shortly after cryptocurrency lending platform Celsius Network filed for bankruptcy, the price of its native utility token, CEL (CEL), jumped by more than 4,100%. In only two months, the price climbed from a bottom of $0.093 to a near $4 high.

The surge came amid rumors that Ripple, a company engaged in a legal battle with the United States Securities and Exchange Commission, could take over Celsius’ assets. Other rumors suggested Goldman Sachs planned to acquire Celsius for $2 billion.

Traders organized a massive short squeeze. Short squeezes occur when an asset’s price rises suddenly, forcing short sellers to buy back the asset at a higher price to close their positions.

The short squeeze was possible because a freeze on Celsius token transfers significantly reduced the circulating supply of CEL.

https://cointelegraph.com/historical/?utm_source=CT&utm_medium=link&utm_campaign=navigation
Click “Collect” below the illustration at the top of the page or follow this link.

At the time of the short squeeze, Cointelegraph reported that FTX had about 5.1 million CEL tokens, amounting to 90% of the total circulating supply on exchanges.

It’s currently believed traders on FTX pulled off the short squeeze, but deleted tweets suggest that the origins of the movement may not be fully understood, and some believe Alameda Research was directly involved. We do know that at least some traders are still trying to get a CEL short squeeze going again, even after the token dropped to $0.50.

Binance’s letter of intent

Binance’s surprising letter of intent to acquire the collapsing FTX exchange is another weird story of 2022. At the time, many in crypto believed FTX was a solvent, well-run company. When Binance announced its intent to liquidate its holdings of FTX Token (FTT) following speculation regarding the solvency of FTX, what was seen as a rivalry between Binance and FTX soon turned into a potential buyout no one was expecting.

As FTX’s solvency was hardly being questioned, CEO Sam Bankman-Fried announced an “agreement on a strategic transaction” with Binance. It was a weird and unexpected revelation because, until that point, Bankman-Fried had dismissed concerns about the solvency of FTX.

Binance CEO Changpeng Zhao added to those concerns when he tweeted, “This afternoon, FTX asked for our help. There is a significant liquidity crunch. To protect users, we signed a non-binding LOI, intending to fully acquire FTX.com and help cover the liquidity crunch. We will be conducting a full DD in the coming days”.

The deal fell through the next day after Binance conducted its due diligence, with the reasons becoming clear soon after.

European Central Bank spreads FUD

In late November, the European Central Bank (ECB) published a blog post in which it argued that Bitcoin’s recovery from $17,000 to $20,000 was likely an “artificially induced last gasp before the road to irrelevance.”

The ECB said that Bitcoin is “rarely used for legal transactions” and that “real Bitcoin transactions are cumbersome, slow and expensive.” The central bank daringly wrote that Bitcoin has never been used “to any significant extent for real-world legal transactions.”

Related: The most eco-friendly blockchain networks in 2022

According to the ECB, Bitcoin has benefited from “waves of new investors” while not being suitable as an investment. It doesn’t generate cash flow or dividends, nor can it be productively used or “provide social benefits.”

The statement argues that blockchain technology has “created limited value for society” and that the “Bitcoin system is an unprecedented polluter.” It also suggested that cryptocurrency promotion bears a “reputational risk for banks.”

Every point the ECB brought up has been used to attack the cryptocurrency community, and every single point has been rebuffed.

The ECB has recycled several crypto myths that have been used to hold the industry back. The post comes as the ECB accelerates progress on developing a digital euro. One of the post’s authors, Ulrich Bindseil, has authored numerous posts on central bank digital currencies.

Besides the recycled myths, what’s weird is the ECB’s unclear angle, as many don’t consider CBDCs to be competing with cryptocurrencies, which are often seen as a way to exit the shortcomings of fiat currency systems.

Speaking to Cointelegraph, Anton Bukov, co-founder of 1inch Network, said the ECB’s post was good for the cryptocurrency community, as it means the “government came to the second or even third stage of Gandhi’s thought: First they ignore you, then they laugh at you, then they fight you, then you win.”

Central African Republic’s crypto plan

The Central African Republic (CAR) became the second country to adopt Bitcoin as a legal tender earlier this year, allowing around 5 million residents to use the flagship cryptocurrency alongside the country’s fiat currency, the Central African CFA franc.

The move came after Central African Republic President Faustin-Archange Touadéra signed a bill into law establishing a regulatory framework for Bitcoin as legal tender. While the crypto community initially celebrated the move, the weird side of this soon became apparent.

Although the CAR is a mineral-rich nation, its people are among the poorest in the world. It has been devastated by a decade-long civil war, and it is estimated that nine out of 10 residents don’t even have access to the internet. CAR’s decision was accompanied by little to no explanation, with President Touadéra tweeting a simple “more to follow.”

The tweet was referring to an anouncement about the country’s “visionary” plan to create a “fantastic opportunity for anyone who believes in crypto investing.” That opportunity is the Sango project, which appears to now be an initial coin offering for the country’s CBDC.

The project claims that the country’s treasury will have a dedicated Bitcoin reserve and allow citizens to have a “voice and chance to shape the future” through a governance system. Citizenship can be acquired by locking fixed collateral in Sango. Other benefits include e-residency, land ownership and 0% income tax for digital assets.

While attracting foreign investment is an intelligent move from CAR, a Bitcoin-based initial coin offering from a war-torn country is a weird development. CEX.io’s Volkov told Cointelegraph that cryptocurrencies are “well positioned to help emerging economies fill gaps in the services their domestic financial systems are lacking” and could help connect domestic financial systems to global markets. Volkov added that the move may help the country’s economy:

“Making crypto legal tender, or at least creating a legal framework that defines its usage, allows financial companies to introduce cheap and fast financial services that customers can access even with unreliable access to the internet.”

He also said cryptocurrencies can have a “hugely positive effect on countries with developing financial systems looking to participate in the global economy.”

The stories covered in this article make it clear how unpredictable the cryptocurrency space can be during bear and bull markets. If anything, anyone following what’s going on is enjoying a rollercoaster ride they will never forget.

Digital euro settlement, distribution options detailed in latest progress report

The ECB is continuing its digital euro investigation with more pieces of the potential system filled in, but no commitment to blockchain technology or even its issuance has been made.

Progress continues on the creation of a digital euro, and the European Central Bank (ECB) has documented it in a second progress report that describes design and distribution options recently approved by its governing council. The report considers four crucial issues, roughly in keeping with the timeline the ECB set for itself that tentatively culminates in a decision on whether to transition from the investigation to the realization phase of work in Q3 2023.

The report outlines the roles of the Eurosystem and intermediaries and establishes that supervised intermediaries would be responsible for all management and user-facing roles in the system. The central banks that make up the Eurosystem would verify and record transactions, correct errors in that process and bear responsibility for their accuracy. Nonetheless, “the digital euro would be designed so that it minimised Eurosystem involvement in the processing of user data,” the report states.

Offline peer-to-peer transactions with validated digital euros could be settled in a digital storage device and later “verified and recorded through secure elements in hardware devices.”

The ECB is not committed to blockchain technology, the report notes:

“The Eurosystem could rely on either traditional technology, distributed ledger technology or a combination of both for settlement activities. The Eurosystem has not yet taken a decision on the technology that would be best suited for a digital euro.”

Funding and defunding (converting money to and from digital form) should include mechanisms to handle transactions that exceed limits set on digital currency accounts with automatic access to holders’ bank accounts.

Related: European Central Bank chooses Amazon and 4 other firms to prototype digital euro app

A set of pan-euro rules, standards and procedures forming a “scheme” would be necessary for the equitable distribution of the digital euro, the report states. The goal of the scheme will be that:

“Paying in digital euro should always be an option, irrespective of the entity with which end users open digital euro accounts or wallets and of their country of origin.”

The ECB published its first digital euro progress report in September, after a year of work.

ECB official proposes ban on tokens with an ‘excessive ecological footprint’

EU officials previously rejected an outright ban on crypto mining, but the Markets in Crypto Assets bill could require firms to report any potential environmental impact.

Fabio Panetta, an executive board member of the European Central Bank (ECB), proposed banning crypto assets with a significant environmental impact as part of efforts to address risks.

In written remarks for the Insight Summit at the London Business School on Dec. 7, Panetta said harmonizing taxation around crypto between global jurisdictions could address some of the energy and environment costs around mining and validation. He added that tokens “deemed to have an excessive ecological footprint should also be banned,” referring to proof-of-work assets in a citation.

Panetta added crypto markets were often at risk due to their “incredibly high leverage and interconnections,” citing the collapse of the FTX exchange:

“The inadequate governance of crypto firms has magnified these structural flaws. Insufficient transparency and disclosure, the lack of investor protection, and weak accounting systems and risk management were blatantly exposed by the implosion of FTX. Following this event, crypto-assets may move away from centralised to decentralised exchanges, creating new risks owing to the absence of a central governance body.”

The ECB official’s calls for additional regulatory oversight in a ‘Wild West’ crypto market followed the European Parliament Committee on Economic and Monetary Affairs approving the Markets in Crypto Assets bill, or MiCA, in October after extensive discussions. The crypto framework awaits final approval following legal and linguistic checks by EU lawmakers, with many expecting the policy to go into effect starting in 2024.

Related: How blockchain technology is used to save the environment

Associating cryptocurrency transactions and mining operations with environmental concerns has often been a rallying point for global policymakers. In the United States, the New York state legislature voted in favor of a two-year moratorium on crypto miners that use energy generated by fossil-fuel power plants. EU officials previously rejected an outright ban on crypto mining, but MiCA could require firms to report any potential environmental impact.

Total crypto market-cap hits $850M as Bitcoin and altcoins recover from FTX’s collapse

The total crypto market recovers some lost ground as the contagion risks associated with FTX’s collapse begin to look resolvable.

The total cryptocurrency market capitalization gained 2% in the past seven days, reaching $850 billion. Even with the positive movement and the ascending channel that was initiated on Nov. 20, the overall sentiment remains bearish and year-to-date losses amount to 63.5%.

Total crypto market cap in USD, 4-hour. Source: TradingView

Bitcoin (BTC) price also gained a mere 2% on the week, but investors have little to celebrate as the current $16,800 level represents a 64% drop year-to-date.

Bankrupt exchange FTX remained at the centerpiece of the newsflow after the exchange hacker continued to move portions of the stolen $477 million in stolen assets as an attempt to launder the money. On Nov. 29, analysts alleged that a portion of the stolen funds were transferred to OKX.

The FTX saga has made politicians shout louder in their calls for regulation. On Nov. 28, the European Central Bank (ECB) president Christine Lagarde called regulation and supervision of crypto an “absolute necessity.” The United States House Financial Services Committee Chair Maxine Waters announced that lawmakers would explore the collapse of FTX in a Dec. 13 inquiry.

On Nov. 28, Kraken, a U.S.-based cryptocurrency exchange, agreed to pay more than $362,000 as part of a deal “to settle its potential civil liability” related to violating sanctions against Iran. According to the United States Treasury Department’s Office of Foreign Assets Control, Kraken exported services to users who appeared to be in Iran when they engaged in virtual currency transactions.

The 2% weekly gain in total market capitalization was impacted mainly by Ether’s (ETH) 7% positive price move. The bullish sentiment also significantly impacted altcoins, with 6 of the top 80 coins rallying 10% or more in the period.

Weekly winners and losers among the top 80 coins. Source: Nomics

Fantom (FTM) gained 29.3% amid reports that the Fantom Foundation generates consistent profits and has 30 years of runway without selling any FTM tokens.

Dogecoin (DOGE) rallied 26.8% as investors increased expectations that Elon Musk’s vision for Twitter 2.0 will include some form of DOGE integration.

ApeCoin (APE) gained 15.6% after the community-led DAO made up of ApeCoin holders launched its own marketplace to buy and sell NFTs from the Yuga Labs ecosystem.

Chainlink (LINK) rallied 11.1% ahead of its staking services beta-version launch on Dec. 6, boosting holders’ reward-earning opportunities.

Leverage demand is balanced between bulls and bears

Perpetual contracts, also known as inverse swaps, have an embedded rate usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.

A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.

Perpetual futures accumulated 7-day funding rate on Nov. 30. Source: Coinglass

The 7-day funding rate was near zero for Bitcoin, Ether and XRP, so the data points to a balanced demand between leverage longs (buyers) and shorts (sellers).

The only exception was BNB, which presented a 1.3% weekly funding rate for those holding leverage shorts. Although it’s not burdensome to sellers, it reflects investors’ unease about buying BNB at the current price levels.

Traders should also analyze the options markets to understand whether whales and arbitrage desks have placed higher bets on bullish or bearish strategies.

The options put/call ratio shows moderate bullishness

Traders can gauge the market’s overall sentiment by measuring whether more activity is going through call (buy) options or put (sell) options. Generally speaking, call options are used for bullish strategies, whereas put options are for bearish ones.

A 0.70 put-to-call ratio indicates that put options open interest lag the more bullish calls by 30% and is therefore bullish. In contrast, a 1.20 indicator favors put options by 20%, which can be deemed bearish.

BTC options open interest put-to-call ratio. Source: Laevitas.ch

Even though Bitcoin’s price failed to break the $17,000 resistance on Nov. 30, there was no excessive demand for downside protection using options. As a result, the put-to-call ratio remained steady near 0.53. The Bitcoin options market remains more strongly populated by neutral-to-bearish strategies, as the current level favoring buy options (calls) indicates.

Despite the weekly price rally on select altcoins and even the 7.1% gain in Ether price, there have been no signs of sentiment improvement according to derivatives metrics.

There’s balanced demand for leverage using futures contracts, and the BTC options risk assessment metric did not improve even as Bitcoin’s price tested the $17,000 level.

Currently, the odds favor those betting that the $870 billion market capitalization resistance will display strength but a 5% negative move toward the $810 billion support is not enough to invalidate the ascending channel, which could give bulls the much-needed room to eradicate the contagion risks caused by FTX’s insolvency.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Total crypto market-cap hits $850B as Bitcoin and altcoins recover from FTX’s collapse

The total crypto market recovers some lost ground as the contagion risks associated with FTX’s collapse begin to look resolvable.

The total cryptocurrency market capitalization gained 2% in the past seven days, reaching $850 billion. Even with the positive movement and the ascending channel that was initiated on Nov. 20, the overall sentiment remains bearish and year-to-date losses amount to 63.5%.

Total crypto market cap in USD, 4-hour. Source: TradingView

Bitcoin (BTC) price also gained a mere 2% on the week, but investors have little to celebrate as the current $16,800 level represents a 64% drop year-to-date.

Bankrupt exchange FTX remained at the centerpiece of the newsflow after the exchange hacker continued to move portions of the stolen $477 million in stolen assets as an attempt to launder the money. On Nov. 29, analysts alleged that a portion of the stolen funds was transferred to OKX.

The FTX saga has made politicians shout louder in their calls for regulation. On Nov. 28, the European Central Bank (ECB) president Christine Lagarde called regulation and supervision of crypto an “absolute necessity.” The United States House Financial Services Committee Chair Maxine Waters announced that lawmakers would explore the collapse of FTX in a Dec. 13 inquiry.

On Nov. 28, Kraken, a U.S.-based cryptocurrency exchange, agreed to pay more than $362,000 as part of a deal “to settle its potential civil liability” related to violating sanctions against Iran. According to the United States Treasury Department’s Office of Foreign Assets Control, Kraken exported services to users who appeared to be in Iran when they engaged in digita currency transactions.

The 2% weekly gain in total market capitalization was impacted mainly by Ether’s (ETH) 7% positive price move. The bullish sentiment also significantly impacted altcoins, with 6 of the top 80 coins rallying 10% or more in the period.

Weekly winners and losers among the top 80 coins. Source: Nomics

Fantom (FTM) gained 29.3% amid reports that the Fantom Foundation generates consistent profits and has 30 years of runway without selling any FTM tokens.

Dogecoin (DOGE) rallied 26.8% as investors increased expectations that Elon Musk’s vision for Twitter 2.0 will include some form of DOGE integration.

ApeCoin (APE) gained 15.6% after the community-led DAO made up of ApeCoin holders launched its own marketplace to buy and sell nonfungible tokens (NFTs) from the Yuga Labs ecosystem.

Chainlink (LINK) rallied 11.1% ahead of its staking services beta-version launch on Dec. 6, boosting holders’ reward-earning opportunities.

Leverage demand is balanced between bulls and bears

Perpetual contracts, also known as inverse swaps, have an embedded rate usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.

A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.

Perpetual futures accumulated 7-day funding rate on Nov. 30. Source: Coinglass

The 7-day funding rate was near zero for Bitcoin, Ether and XRP (XRP), so the data points to a balanced demand between leverage longs (buyers) and shorts (sellers).

The only exception was BNB (BNB), which presented a 1.3% weekly funding rate for those holding leverage shorts. Although it’s not burdensome to sellers, it reflects investors’ unease about buying BNB at the current price levels.

Traders should also analyze the options markets to understand whether whales and arbitrage desks have placed higher bets on bullish or bearish strategies.

The options put/call ratio shows moderate bullishness

Traders can gauge the market’s overall sentiment by measuring whether more activity is going through call (buy) options or put (sell) options. Generally speaking, call options are used for bullish strategies, whereas put options are for bearish ones.

A 0.70 put-to-call ratio indicates that put options open interest lag the more bullish calls by 30% and is therefore bullish. In contrast, a 1.20 indicator favors put options by 20%, which can be deemed bearish.

BTC options open interest put-to-call ratio. Source: Laevitas.ch

Even though Bitcoin’s price failed to break the $17,000 resistance on Nov. 30, there was no excessive demand for downside protection using options. As a result, the put-to-call ratio remained steady near 0.53. The Bitcoin options market remains more strongly populated by neutral-to-bearish strategies, as the current level favoring buy options (calls) indicates.

Despite the weekly price rally on select altcoins and even the 7.1% gain in Ether price, there have been no signs of sentiment improvement according to derivatives metrics.

There’s balanced demand for leverage using futures contracts, and the BTC options risk assessment metric did not improve even as Bitcoin’s price tested the $17,000 level.

Currently, the odds favor those betting that the $870 billion market capitalization resistance will display strength, but a 5% negative move toward the $810 billion support is not enough to invalidate the ascending channel, which could give bulls the much-needed room to eradicate the contagion risks caused by FTX’s insolvency.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

ECB president reiterates calls for ‘MiCA II’ in response to FTX collapse

In June, Christine Lagarde said a potential MiCA II framework “should regulate the activities of crypto-asset staking and lending, which are definitely increasing.”

Christine Lagarde, president of the European Central Bank, or ECB, has once again called regulation and supervision of crypto an “absolute necessity” for the EU in the wake of the collapse of crypto exchange FTX.

At a Nov. 28 hearing of the Committee on Economic and Monetary Affairs of the European Parliament, Lagarde cited Facebook’s Libra as an example of the ECB’s involvement which was “helpful to stop some of the players” from engaging with crypto firms. However, she said the situation with FTX — involved with crypto assets as opposed to stablecoins — was more about the “stability and reliability” of the exchange and the ECB needed to step up as a global regulator to address people’s increasing interest in digital assets.

“At least Europe [on the road to crypto regulation] is ahead of the pack,” said the ECB president. “But as I said previously, it’s one step in the right direction. This is not it — there will have to be a MiCA II, which embraces broader what it aims to regulate and to supervise, and that is very much needed.”

The Markets in Crypto Assets bill, or MiCA, is awaiting final approval following legal and linguistic checks by EU lawmakers. The European Parliament economics committee accepted the MiCA framework in October following trialogue negotiations between the EU Council, the European Commission and the European Parliament. Many expect the policy to go into effect starting in 2024.

Lagarde referred to MiCA II — presumably additional legislation building on the work lawmakers did for the original bill — in June. At the time, the ECB president said the framework “should regulate the activities of crypto-asset staking and lending, which are definitely increasing.”

Related: European Central Bank addresses guidance on licensing of digital assets

European Parliament economics committee member Stefan Berger, one of the proponents of the MiCA framework, also cited the downfall of FTX in advocating for crypto regulation on Nov. 9:

“The FTX case makes it clear what dangers a completely unregulated crypto market and crypto exchanges without licenses entail. We still have a large number of crypto asset service providers whose concept is not understandable. MiCA addresses exactly this problem. With a global MiCA, the FTX crash would not have happened.”

The ECB is currently conducting the two-year investigative phase of its digital euro project, exploring the use of online payments validated by third parties. Some officials within the EU expect to see legislation related to a digital euro in 2023.