As the cryptocurrency market continues to go through extreme waves, we at NewsBTC have decided to ask a few questions OKExThe team worked to get a better understanding of how they see these developments and their impact on their own operations.
Initially, the OKEx team came together to paint a clear picture by providing detailed and in-depth answers to our questions. Representatives who participated in the interview included Robbie Liu – Market Analyst at OKEx, Hanin Naseer – Senior Editor at OKEx Insights, Richard Delaney – Senior Analyst at OKEx, and Jay HoweThe CEO himself.
Read the interview below.
news Bitcoin has performed really well over the past few months, yet it suffered a sudden pullback in a matter of hours. What has changed?
Ruby Liu, Market Analyst: While the big drop occurred in a matter of hours, BTC recently stalled in terms of price action, failing to break out conclusively and stay above $60,000 for about 10 weeks. This continued resistance had already pressured the bulls, and recent developments in the news served as catalysts for the bears to enter. The initial drop was a result of market sentiment turning bearish, but things got even worse as billions of leveraged longs were liquidated in quick succession.
Besides high leverage, the meme-Currency The frenzy has also peaked, pulling capital away from bitcoin and the major cryptocurrencies. This has pushed Bitcoin’s dominance to as low as 40% during this uptrend, while also indicating that the market may soon reverse.
news In a recent OKEx Insights report, the inclusion of Coinbase in the market was mentioned as one of the factors causing the drop in interest in BTC. Can you infer the feelings behind it?
Haneen Naseer, Senior Editor: The Coinbase listing was a highly publicized event that acted as a catalyst for BTC to set a new all-time high. However, as is common in crypto, and in other speculative markets, traders take positions before a major development occurs and take profits both before and after the actual event. The same was demonstrated in this case, where buying was seen before the listing and selling pressure emerged after the fact.
news Tell us more about the relationship that exists between BTC, ETH and other traditional global assets.
Haneen Naseer, Senior Editor: In recent weeks, the correlation between BTC and ETH weakened as the former stalled and the latter continued to make new highs above $4,000. The same was the case with altcoins, albeit to a lesser degree, as they followed ETH but did not completely decouple from BTC either. In terms of correlations with traditional assets, bitcoin and tech stocks have been closely correlated lately, with any major selloff in the sector also affecting the price of bitcoin.
news If my understanding is correct regarding US Treasury yields, the logic dictates that lower yields will encourage investors to look for alternative assets, such as Bitcoin. However, in the past few months, returns appear to have improved every day, with a healthy spread between the short and long term. However, BTC continued to maintain a favorable price level, even recovering for a while before the crash. How do you read this?
Ruby Liu, Market Analyst: Since the pandemic began last year, the Fed has prioritized fiscal stimulus packages and asset purchases, driving Treasury yields to nearly zero. However, the minutes of the FOMC’s April meeting last Wednesday revealed a potential tapering.
As a result, the three major US stock indexes fell about 1% during the course of Wednesday, which also coincided with the collapse of BTC. BTC bottomed at the same time as the S&P 500 around 1:00 PM UTC after dropping below $30,000. Meanwhile, the 10-year US Treasury yield hit a new daily high, rising nearly 4 basis points to 1.6762%.
The market reaction shows that bitcoin is currently a risky asset along with stocks, and both will bear the revaluation that comes with higher interest rates. The market takes time to adjust to possible changes in interest rates. Historically, Bitcoin has gone through cycles of raising and lowering prices, and most importantly Bitcoin performs better when the market volatility index is hovering at low levels.
news With the cryptocurrency market insane in the past few weeks leading up to this week’s events, there is bound to be some confusion among the trading community. What is the impact of these events on OKEx operations?
Jay Howe, CEO: Due to the sideways movement in terms of price during mid-May, we did see a decrease in community participation but saw an increase in trading volumes and campaign engagements as market participants sought to take advantage of lower prices.
news Ethereum has been one of the top performers and its rise has been good for Alt currency environmental system. Can you shed some light on what the imminent implementation of ETH2.0 will mean for the market?
Richard Delaney, Senior Analyst: Among other changes, ETH 2.0 is looking to radically improve the ability of Ethereum transactions. If implemented successfully, the benefits of data-sharing scalability should encourage further growth for both the DeFi and NFT sectors, and may also enable innovative new sub-industries as knowledge of the technology spreads.
Similar to the BTC price action in the weeks before and after the summer 2017 sharp split, we are likely to see increased volatility in ETH prices around the major transition dates. Although the change is widely accepted across the community, any major upgrade introduces many unknowns, which are presumably reflected in the price of ETH.
After the transition, there may be a sudden growth in the number of ETH accumulated on the network as well. Today’s ETH stack cannot be uninstalled yet. Therefore, staking today requires confidence in a successful ETH 2.0 offering. Although around 4.8 million ETH has already been tallied, it seems fair to assume that many users will wait until the upgrade is completed successfully to allocate funds for the revamped network security.
Despite the recent price volatility, there are a number of complementary factors supporting the ETH price rally at least in the medium term. In addition to scaling the network to accommodate more users and removing ETH from the market by staking, it appears that EIP-1559 will significantly reduce the pressure of selling an Ethereum miner by burning a large percentage of transaction fees.
news What is the impact of higher transaction fees on the Ethereum network on ETH/Crypto or Fiat and ERC20/Crypto or Fiat trading pairs? How has it affected activities on OKEx platforms and what does it mean for the future of ETH?
Richard Delaney, Senior Analyst: It is clear that high transaction fees are discouraging people from using the Ethereum network. Complex transactions involving DeFi protocols or NFT coins can quickly become expensive on the underlying blockchain, leading to the impression that Ethereum is a rich playground for just people.
The recent growth in blockchains tied to Ethereum and Layer 2 offering cheaper transaction fees shows that there is a strong appetite for a low-cost version of what Ethereum has to offer. As its scaling technology improves with solutions such as Polygon and ETH 2.0, Ethereum’s super-liquidity and other network effects are likely to attract many new users and re-engage some of the so-called “Ethereum killer”.
news What are your expectations for BTC and ETH in the coming months? Which Warning Signs Should Traders Look Out For?
Ruby Liu, Market Analyst: Looking back at the bull market from 2016 to 2017, Bitcoin hasn’t experienced three straight months of declines. Given this, it wouldn’t be surprising if the market went higher in June rather than posting another red month. But a very rapid rise above $60,000 is probably too ideal. Bitcoin will continue to face a lot of selling pressure due to the previous large buying volume in the $40,000 to $60,000 range.
Looking at Bitcoin’s dominance, it’s down from 40% before Black Wednesday, which is the lowest level in 3 years since May 2018. We expect that dominance will not drop below 40% in the coming weeks, which means investors will return to Bitcoin due to concerns about a reset. other. The big correction last week is likely to be a mid-cycle correction. On-chain data shows that smart money from whales is starting to accumulate coins again.
Since bitcoin has become increasingly associated with macro events. Macro risks, including a rolling Fed calendar and other potential Chinese regulations, may be reasons to put traders in another sell-off.
news Meanwhile, ETH L2 tokens, especially MATIC, have posted impressive gains in the past months. Is it a trend that is here to stay?
Richard Delaney, Senior Analyst: MATIC’s growth – in terms of price and users – after the project was rebranded to Polygon earlier this year demonstrates clear user demand for low-cost Ethereum DApps. With Polygon drastically simplifying the process for qualifying developers to L2s, it seems likely that they will remain relevant for some time to come.
Some question the suitability of Polygon after ETH 2.0 because both address network scalability. However, since it remains unclear when or even if the fragments will be able to handle the more complex computations required for smart contracts, Polygon and other L2s are expected to complete the upgrade rather than compete with it.
news What is OKEx currently working on? Can we expect some big announcements anytime soon?
Jay Howe, CEO: OKEx supports live deposits and withdrawals in the Ethereum Arbitrum scaling solution. We are currently conducting due diligence to assess how quickly the integration can be implemented once the main Arbitrum network is up and running. Apart from this, we have other things in the pipeline in terms of Popular Lists and OKExChain, so stay tuned.