Market Wrap: Metaverse Tokens Rise; Crypto Analysts Expect More Volatility
On Wednesday, Bitcoin (BTC) traded sideways, signaling a respite in the pessimistic mood among traders. On Wednesday, though, most alternative cryptos traded higher, recouping losses from the previous week. Decentraland’s MANA token, for example, has gained 3% in the last 24 hours and is relatively flat over the last week. On the other hand, The Sandbox’s SAND token increased by 7% on Wednesday.
MANA and SAND are metaverse tokens that may be used to trade value in a virtual game. The US Federal Reserve also released minutes from its committee meeting earlier this month on Wednesday, indicating that further 50-basis-point interest rate hikes might occur over the next few weeks. Overnight, stocks rose marginally, but gold and the 10-year Treasury bond rate fell.
Price movement that is range-bound usually leads to a violent breakthrough or breakdown. In the bitcoin perpetual futures market, open interest, or the number of outstanding contracts, has recently increased. In research released this week, Arcane Research stated, “Rapid jumps in open interest tend to presage big market changes.” In July of last year, when BTC was trading near $30,000, a similar increase in open interest happened just before a short squeeze.
According to Arcane, an increase in open interest coincided with BTC’s price top of roughly $48,000 in March and stayed elevated during subsequent price sell-offs. Still, funding rates haven’t been this low in a long time, which happens around price bottoms. Similarly, significant increases in financing rates have historically coincided with price peaks. This means that the speculative excesses that characterized the 2020-2021 bull market have subsided.