Crypto markets surrendered gains this week as financial markets began to cool around the globe on persistent macroeconomic fears.
Dog-themed memecoins were outperforming the market earlier in the week, although most surrendered the gains as Shiba Inu carried the momentum through to the weekend. Shib is up roughly 4.6% over the past seven days, trading at $0.00001322 at the time of writing, according to CoinGecko.
$210 million of bitcoin long positions were liquidated on Friday and as a result crypto markets fell sharply. Bitcoin and ether shed roughly 12% and 18% respectively, as bitcoin hit a three-week low. Bitcoin was trading at $21,414 at the time of writing, while ether was trading hands for $1,617, per CoinGecko data.
Here’s what key players had to say about this week's price action and what to watch for next week:
Market cools on The Merge as macro leads the way
QCP Capital noted the bearish turn in crypto prices this week in Sunday’s market update. The market maker went on to say that while there hasn’t been a specific trigger for the sell-off, the following events contributed to a negative turn in risk sentiment:
First, Fed officials have been actively pushing back against the idea that the better-than-expected CPI print on August 10 might lead to less aggressive policy and rate hikes. “This has led to equities stalling and trading lower, yields drifting higher and USD rallying across the board,” according to QCP.
The Singapore-based firm also alluded to rumors that Jump Crypto might dump a large amount of its ether holdings ahead of The Merge as having “contributed to the rush to take profit on ETH longs.”
The firm concluded by saying that “significant profit taking led to liquidations of levered long positions built up over a strong month-long rally.” This was most notable in ether, which has rallied more than 130% on the back of The Merge narrative, the firm said.
Chicago-based crypto trading firm Cumberland shared some thoughts on the more positive aspects of the crypto market on Thursday:
“Unlike the apathy which was a defining characteristic of crypto winters past, the current market (despite its many challenges) boasts a spectacular amount of trading activity,” the firm’s head of trading, Jonah Van Bourg, wrote on Twitter.
Van Bourg wrote that bitcoin and ether are slightly exceeding the daily volume of S&P 500 derivatives on major exchanges, which is notable for several reasons.
“Primarily the notion that the digital asset space has matured to a point of adoption where volumes and open interest rival (or exceed) those of the most important products in the financial world,” he wrote.
NFT floor prices show signs of changing
The floor price of Bored Ape Yacht Club (BAYC) NFT rose above that of Larva Labs' CryptoPunks for the first time in December 2021, but over the weekend CryptoPunks again had a higher floor price – briefly on Saturday, then again at the time of writing on Sunday.
The floor price is the lowest price at which a type of NFT is currently available for sale; at the time of writing this was 65.99 ETH for BAYC, down 0.3% in the last day and 66.45 ETH for CryptoPunks, up 0.6% in the same period, according to CoinGecko. Whether CryptoPunks can maintain this position is uncertain, having already briefly gone above BAYC on Saturday before surrendering the top spot again.
NFT prices have suffered over the last few months as crypto markets went through a tumultuous period in May and June. As Ethereum-based NFTs are valued in ETH, the fall in its price has affected the value of NFTs when measured in dollar terms.
Furthermore, the changing market dynamics over the summer months affected not just the floor price but also the volume of sales for BAYC and CryptoPunks. In fact, CryptoPunks outperformed BAYC between August 8 and August 15 in terms of trade volume, clocking up $9.46 million in volume versus BAYC $9.38 million.
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