During the month of August, we witnessed a flash crash in both the crypto and traditional markets.
On August 5th, many assets experienced a sharp drop in their valuations, with BTC falling to as low as $49,000.
In this episode of the Volatility Overview, we analyze this volatility anomaly that affected all markets.
The commodities sector was also impacted by the early August flash crash, with the reference ETF hitting its lowest levels since the beginning of 2024.
Invesco DB Commodity ETF
This crash was mainly caused by some macroeconomic data suggesting a possible recession in the United States.
Additionally, the relationship between the Japanese Yen and the U.S. Dollar is a major source of concern and is another reason why uncertainty and fear are prevalent in the traditional markets.
It has been a very volatile summer for the commodities sector so far, and it is during these times that MetalSwap's product becomes very important for all those operating within the commodities sector.
In the first week of August, due to the volatility we will now analyze, millions of dollars in leveraged positions were liquidated.
Bitcoin price action
After nearing its previous all-time high of $73,000, Bitcoin lost the $70k level and then quickly plunged to $50,000. In the first days of August, we saw one of the largest daily candles in BTC's history, emphasizing the exceptional event that occurred.
As we can see from the chart, just as the drop was swift, the rise and the return to around $60,000 was equally quick.
This nervous price action is a symptom of an unstable and unpredictable market. It is in these conditions that services like the hedging contracts offered by MetalSwap can make a difference and safeguard the value of investment portfolios.
Ether price action
In the last episode, we left off with a strong ETH around $3,300 and with ETFs ready to start trading.
Today, the situation has changed, with ETFs having actually started trading, but they seemingly haven't led to a positive impact on the price.
ETH is currently trading at $2,650, which is far (-45%) from its historical highs reached in 2021.
The reasons for this depreciation can be directly linked to the ETF factor, as the one proposed by Grayscale is steadily decreasing its AUM, leading to constant selling pressure in the market.
In general, the price action is very similar to that of Bitcoin, but if possible, slightly weaker.
Gold price action
As we know, in times of economic instability and medium-high inflation, the price of gold continues to rise, which is what we're seeing during this period.
On a 4-hour chart, we can observe a triple top forming in the price range between $2,450 and $2,490 per ounce.
As long as geopolitical tensions do not ease and concerns about a possible recession are not eliminated, we are likely to continue seeing strong gold prices.
OP price action
The OP token, available within MetalSwap's dApp, is showing rather negative price action, indicating a general weakness in the altcoin sector.
If we analyze BTC dominance, we can see how it has increased recently, reaching the current level of 56.1%.
As long as BTC dominance remains high, all other cryptos, generally speaking, will continue to suffer and post rather negative performances.
We are in a period of great uncertainty, primarily stemming from tensions in traditional markets.
Compared to the previous episode, as we had anticipated, volatility has returned and changed the playing field for many assets. In the next episode, we will be in September, and the markets will change again, with institutional players returning to operate at full capacity after this pause period.
For any eventuality, MetalSwap is the tool suited to either neutralize this volatility or leverage it to secure extra profits.
-The DeFi Foundation
✎ What is MetalSwap?
MetalSwap is a decentralized platform that allows Hedging Contract on financial markets with the aim of providing coverage to those who work with Digital Asset and an investment opportunity for those who contribute to increase the shared liquidity of the project. Allowing the protection for an increasing number of operators.
With Hedging Contract we enable hedge swap transactions through the use of Smart Contracts, AMM style.
It's great to Hedge the Risk of Price volatility with MetalSwap dApp !