Welcome back to the Assets Volatility Overview. As a reminder, this monthly series aims to give you a broad overview of various sectors relevant to MetalSwap. We'll start analyzing the commodity market, then move on to see the assets involved in MetalSwap's platform, with a focus on potential events that could cause volatility. Finally, we'll explore the world of derivatives in DeFi. So be ready for valuable insights!
If you didn’t read the first episode, you can find it here.
Commodities - Market Overview
Invesco Bloomberg Commodity UCITS ETF Acc
We have entered the second quarter of the year, and the commodities market, represented by the benchmark Invesco Bloomberg Commodity UCITS ETF, is attempting to reverse the downturn that began in September 2022 on the monthly time frame. Despite China's opening, commodities have not experienced the rally that many traders had expected, but this month could be the turning point. Over the past 30 days, there have been significant changes in commodity prices. Crude oil saw the largest increase, rising by 23,3%, while Natural Gas continued to be the worst performer, losing 12,02% over the last month.
Analysis of assets on MetalSwap's dApp
Bitcoin Price Action
After 10 months, the price of Bitcoin has risen above the psychological threshold of $30,000 with the next upward resistance that could be at $34,000. Currently, the entire cryptocurrency sector is experiencing a general uptrend and we can verify that by taking a look to the crypto market cap.
Over the last 30 days, the market capitalization of Bitcoin and other cryptocurrencies has increased from a low of 1.12 trillion $ to a high of 1.28 trillion $. However, Bitcoin has exhibited signs of weakness in recent days, with trading volumes declining after the renewed enthusiasm of the past few weeks. Open interest, which measures all open positions on Bitcoin derivatives, currently indicates a relatively quiet situation.
Bitcoin Open Interest
As we indicated in the last episode, the expected volatility has occurred, and it may continue. Shapella's successful update has brought new excitement to the second most important coin in the sector, causing its price to skyrocket above the $2,000 mark. Currently, it stands at $2,094.
This graph depicts the current situation of Ether withdrawals and deposits following last week's update. As shown, the total amount of staked Ether has decreased slightly from 18,162 to 17,545 at the time of writing this article. The orange lines indicate withdrawals, which are partially covered by the green lines representing deposits. On some days, the amount of deposits even exceeds that of withdrawals.
While open interest on Bitcoin may not provide us with much indication, it is much more useful for Ethereum. Over the last 5 days, there has been an increase in open positions for more than 2 billion $, confirming that the current speculation is focused on this asset. As a result, we may see significant price movements on this asset in the coming days. If you wish to protect yourself against volatility, you may consider decentralized solutions like MetalSwap.
Gold's uptrend continues, with prices nearing their all-time highs above $2,000. Investors are turning to this safe asset amidst uncertainty about the health of the banking system, rising interest rates, and inflation that has yet to be brought under control. To analyze this asset, we turn to the COT report, which we introduced in our previous episode. This report provides us with information on the long or short positions of three categories of traders: commercials, who use derivatives for protection rather than speculation; non-commercials, who are large funds that use futures for speculation; and small traders, who are entities with small capital. This week, due to the sharp rise in prices, commercials have taken many short positions as a form of protection in case of a retracement. Meanwhile, more speculative entities such as non-commercials and small traders have positioned themselves long.
What happened in the derivatives DeFi ecosystem?
The total value locked (TVL) of derivatives protocols in DeFi has returned to the highs of last year, reaching 4 billion $ and effectively erasing all bear market declines. This is an important metric, as it indicates that the derivatives DeFi sector is growing and investors are increasingly willing to invest in it.
The options market in DeFi is steadily growing, having risen from 38 million $ in July 2022 to 175 million $ in March 2023. This represents a growth of 460% in the past nine months alone.
Here we are, at the end of the second episode of the Assets Volatility Overview. As you may have read, the market is in constant flux and the purpose of this article series is to summarize all the essential information of the past month. MetalSwap is a decentralized tool that can protect you from all this volatility. If you want to know more about the dApp, we recommend reading this article or watching the videos on the official YouTube channel.
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