BTC price fell sharply below a key support level, but data shows that the drop on April 6 could be another buying opportunity for bulls.

Bitcoin (BTC) has been struggling to break through the $47,000 resistance and even with the April 6 drop below $44,000, there is still mounting evidence that the market structure is healthy.

On December 3, 2021, Bitcoin started a 25.6% correction that lasted 18 hours and culminated with a low of $42,360. Four months later, the price stood 18% below $56,650, closing on December 2, 2021.

Much has changed during that period, and solid evidence comes from other sections of the industry. Between February 15 and April 2, 2022, the enterprise software development company MicroStrategy announced the acquisition of 4,197 Bitcoin.

Inflows to Canadian Bitcoin exchange-traded funds (ETFs) also hit an all-time high, according to data from Glassnode. These investment vehicles in Canada have increased their holdings by 6,594 BTC since January to an all-time high of 69,052 BTC under management. The Purpose Bitcoin ETF, a spot instrument, currently has assets worth $1.68 billion.

Among the wave of recent buyers is Terra’s Luna Foundation Guard (LFG), which is on a mission to acquire $3 billion worth of BTC as a reserve for the TerraUSD (UST) stablecoin.

Data from CoinMetrics shows that Bitcoin’s active supply for the year reached 36.8% on April 5, its lowest level since September 2010.

Traders Uneasy Near $47,000, Futures Markets Show

To understand how professional traders, including whales and market makers, position themselves, it is worth analyzing data from the Bitcoin futures and options market. The base indicator measures the difference between longer-term futures contracts and current cash market levels.

The annualized premium for Bitcoin futures should range from 5% to 12% to compensate traders for “locking in” money for two to three months until contract expiration. Levels below 5% are extremely bearish, while numbers above 12% indicate a bullish trend.

The metric dipped below 5% on Feb. 11, reflecting a lack of trader demand for (bullish) leverage long positions. Sentiment changed on March 26 after the base rate retraced the “neutral” threshold of 5%. Although this occurred, there are no signs of confidence from professional traders, according to the futures premium.

Options Traders Worry about Downside Risk

Currently, Bitcoin appears to lack the strength to break through the $47,000 resistance, but traders should use derivatives to gauge professional investor sentiment. The 25% delta bias is a telltale sign whenever arbitrage desks and market makers overcharge for upside or downside protection.

If those traders fear a Bitcoin price drop, the bias indicator will move above 10%. On the other hand, widespread enthusiasm reflects a negative bias of 10%.

The data shows that the bias indicator has ranged between 0% and 8% since March 9. While not indicating fear, these options traders are overcharging for downside protection. From the perspective of the BTC options markets, there is a slightly higher risk of unexpected downward price swings.

The neutral to bearish Bitcoin derivatives data offers an interesting opportunity for the bulls. If the $47,000 resistance is somehow broken, this will come as a surprise to most investors. Two positive effects will emerge from that event: a small contraction in derivatives markets and room for buyers to use futures as leverage.

Had the Bitcoin futures premium been above 10%, traders would face a much higher cost to add long (bullish) positions. The bulls seem to be better prepared to deal with the resistance at the price of $47,000 considering the strong structure of the market, characterized by the absence of excessive leverage from the buyers. This provides better odds of success.

In conclusion, the truth is that the fall in the price of BTC is due to a strong shake within the ecosystem in the last 24 hours, which analysts largely associate with regulatory fears and geopolitical pressures associated with the armed conflict promoted by Russia in Ukrainian territory.

By Audy Castaneda

Once known as a crypto-skeptical institution, HSBC originally announced its first major step into the metaverse in mid-March.

HSBC Holdings has launched a fund to capture investment opportunities in the metaverse for its wealthy clients in Hong Kong and Singapore as financial services firms take advantage of Silicon Valley’s new virtual reality.

In a statement on Wednesday, HSBC said its Metaverse Discretionary Strategy portfolio, managed by its asset management division, would focus on investing within the metaverse ecosystem across five segments: infrastructure, compute, virtualization, experience, and discovery, and interface.

The Metaverse Ecosystem

“The metaverse ecosystem, while still in its infancy, is rapidly evolving,” said Lina Lim, regional director of discretionary and investment funds and wealth solutions, Asia Pacific, at HSBC. “We see a lot of exciting opportunities in this space as companies of different backgrounds and sizes are joining the ecosystem.”

Nicholas Dowell, portfolio manager at HSBC Asset Management in London, noted that the metaverse concept is important to HSBC as a major milestone in the evolution of the internet. He stated that, “Many see the metaverse as the next stage in the evolution of the Internet, and the effect it has on our daily lives is expected to be as impactful as what we saw in the early 1990s.”

The metaverse comprises a network of virtual environments accessed through different devices where users can work, socialize and play. It has come into more focus since Facebook changed its name to Meta last year to reflect its commitment to the sector.

HSBC said they designed its discretionary portfolio for its professional high-net-worth and ultra-high-net-worth investors and accredited investor clients in Hong Kong and Singapore.

Last month, HSBC said it was buying a plot of virtual real estate in online gaming space, becoming the second global bank to invest in a popular metaverse platform after JPMorgan established a presence in Blockchain-based Decentraland.

HSBC is investing $3.5 billion in its personal and wealth banking business, in line with its ambition to become Asia’s leading wealth manager by 2025.

HSBC’s Moves Until now and Ahead

On March 16, HSBC officially announced plans to purchase land in the virtual reality world within the Blockchain game The Sandbox for an undisclosed amount. With $2.4 trillion in assets under management, HSBC plans to focus specifically on financial education offerings and work with sports partners, brand ambassadors, and Animoca Brands to co-create educational experiences.

Global wealth managers including UBS and Credit Suisse have increased the number of employees in Asia as countries like China and India minted more billionaires and millionaires.

By entering the industry metaverse, HSBC became one of the first major banks in the world to open its own space in virtual reality. In February, investment bank JPMorgan became the first major bank to join the metaverse by launching a blockchain-based virtual lounge on Decentraland to capitalize on a $1 trillion market opportunity.

While moving forward with metaverse adoption, HSBC has not been a big fan of cryptocurrencies like Bitcoin (BTC). In September 2021, HSBC Group CEO Noel Quinn outlined the company’s commitment to supporting central bank digital currencies and highlighted skepticism about the risks associated with cryptocurrencies and stablecoins. He previously argued that HSBC was not interested in running a cryptocurrency trading desk or offering any cryptocurrency investment services to its clients.

By Audy Castaneda

The cryptocurrency market has performed well over the past week, but two key pieces of information point to a brief cooling-off period.

The total crypto market capitalization reached its highest close in three months on April 3 at $2.23 trillion, but the return between March 28 and April 4 was a 1.9% gain. During this time, Bitcoin (BTC) posted a negative 2.6% return, although that was more than offset by gains from altcoins.

While Ether (ETH) and Binance Coin (BNB) gained less than 3% over the last seven days, a handful of mid-cap altcoins managed to gain 20% or more.

On April 1, the Bitcoin network difficulty reached an all-time high of 28.587 billion. The indicator correlates with the computational power required to mine BTC blocks, currently at an estimated hash rate of 201.8 exhash per second (EH/s).

However, on the same day, the United States Securities and Exchange Commission officially disapproved the ARK 21Shares Bitcoin exchange-traded fund (ETF) application. The regulator argued that Cboe BZX Exchange had not complied with the requirements to list a financial product under its rules of practice and those of the Exchange Act.

Winners and Losers: A Comparison

Zilliqa (ZIL) rallied 56% after reports that it will launch a metaverse platform as a service in April. According to a press release, Metapolis of Zilliqa is being built using Nvidia Omniverse 3D in real-time. Nvidia is a $684 billion Nasdaq-listed producer of graphics processing power (GPUs).

Aave (AAVE) gained 38% after the launch of Aave v3, announced on March 16. The new features intend to provide greater capital efficiency, increased security, and cross-chain functionality. The non-custodial liquidity protocol allows users to lend, borrow or stake their assets to earn a return on their holdings.

Synthetix (SNX) rallied 28% after its Debt Pool Synthesis implementation was scheduled for April 7. Currently, the decentralized finance protocol operates debt pools on two Ethereum chains: the main net and the Optimism layer 2 scaling solution. By moving to an “optimism native protocol”, the app will merge your pools to maximize liquidity.

Apecoin (APE) faced a natural correction after a 60% gain between March 21 and 28, as the company behind it raised $450 million in a funding round led by Andreessen Horowitz. Yuga Labs, the creator of the Bored Ape Yacht Club (BAYC), launched APE as a utility and governance token that allows its holders to monitor and manage the so-called ApeCoin DAO.

Tether Premium Shows Slight Deterioration

Tether (USDT) premium on OKX is a good indicator of crypto demand from China-based retail traders. It measures the difference between peer-to-peer transactions based on China and the US dollar.

Excessive buying demand tends to push the indicator above 100% fair value, and during bear markets, Tether’s market supply is flooded causing a discount of 4% or more.

Tether reached 99.2% on April 2, its lowest level since January 26. While this is far from panicky retail sales, the gauge showed modest deterioration over the past week.

The lack of retail demand is not particularly worrisome, even as the total cryptocurrency market capitalization surpassed $2 trillion and the gauge is down 19% since December 2021.

Futures Markets Show Mixed Sentiment

The total market capitalization increased 26% in three weeks, from $1.67 trillion to $2.1 trillion on April 4. However, derivatives indicators show no signs of improvement, leaving investors wary. Until sentiment improves, the odds of a negative price correction remain high.

By Audy Castaneda