Welcome to the sixth episode of the Market Volatility Overview, the series that analyzes the markets of interest for MetalSwap, such as commodities or the world of DeFi.
Today we will analyze the commodity market and specifically the crude oil situation, which has been significantly increasing its prices in the last three months, playing a fundamental role in international economical balances.
We will also analyze the crypto market and its stagnant phase in anticipation of the next major developments.
Commodities market overview - Focus on crude oil
Bloomberg Commodity Index
In general, the commodities market is currently going through a period of consolidation and relative calm. Compared to the last episode of the Asset Volatility Overview, the reference ETF, which is the Bloomberg Commodity Index, hasn't changed much in its value, going from 32.57 at the end of August to the current 31.75.
However, the true star in the world of commodities is crude oil, which has seen an increase of 27.69% since July, even reaching a surge of over 40%! This extreme volatility is unusual for a commodity, especially one as heavily capitalized as crude oil.
The rise has been mainly driven by production cuts in this industry implemented by OPEC, the association of the 13 major oil-exporting countries. Additionally, Saudi Arabia has voluntarily reduced its production by 1,000,000 barrels per day. This reduced supply has led to the increase in the price we are witnessing in this asset.
Thanks to financial services like MetalSwap, in the future, it will be possible to hedge positions in a completely trustless and efficient manner.
Crude oil chart
Analysis of assets on MetalSwap's dApp
Bitcoin - Analysis of the recent death cross
Bitcoin price action
At the time of writing this article, bitcoin is trading below the $27,000 resistance level, within a price range ranging from a low of $25,000 to a high of $28,000.
However, the most significant event to analyze today is the occurrence of the death cross on September 12th. For those who may not know, the death cross is when the 50-day and 200-day simple moving averages cross downward on a daily time frame, signalling a period of price weakness for the asset.
Historically for bitcoin, the death cross has always foreshadowed the beginning of a price downturn, so it is possible that this time it may also confirm the start of a new downward trend.
Looking at the chart, the last time the death cross occurred, excluding the recent one, was on January 13, 2022, a period when the bear market actually began, which we are still in.
ETH price action
For Ether, it's always interesting to analyze the staking situation of this asset.
The number of active validators is increasing day by day and as of today, we have reached 857,980 active validators, with a total of approximately 27.4 million Ether staked.
However, despite this, the overall usage of this blockchain is experiencing a period of relatively low interest, which leads Ether to once again become an inflationary asset. In fact, if there is low blockchain usage, the new inflation of the token is greater than what is burned by EIP-1559 through network fees. As a result, the supply of ETH has increased by +0.338% in the last 30 days, resulting in +33,373 ETH in circulation.
The price of ETH at the time of writing is $1,550 and has remained fairly stable throughout the month.
Gold - High volatility
Gold price action
The price action of gold is influenced mainly by three factors. The first is certainly the dollar itself, which has been on an upward trend since the end of the summer, gaining more than 7% in just the last 3 months. A strong dollar naturally leads to a decrease in the price of gold. Contributing to this decline are also bond yields, particularly those of the United States, which offer yields around 5% on maturities ranging from 5 to 10 years.
However, there is also a factor that is helping to keep gold prices high, which is the fear among investors of a possible recession in the American economy. Given this widespread bearish sentiment, gold serves as a safe haven for many investors who consider it a secure place to park their liquidity.
The result of all these factors leads to very active price action, which is strange for the world's most capitalized asset.
OP - Correction after the recent rise
OP price action
In the last episode, we left off with the OP token in full force, trading at a price of around $1.56 per unit. Today, the situation has changed, with OP undergoing a significant correction and trading at around $1.20.
OP remains a highly volatile token, in part due to its low market capitalization. One of the factors that significantly influences OP's price action is the process of unlocking new tokens by the OP foundation. In recent months, there have been significant releases, leading to sell pressure that has pushed down the asset's price.
However, thanks to the transparency of the blockchain, it's possible to be aware of upcoming token unlocks and protect yourself accordingly. If you're an OP token holder and know that new token unlocks are scheduled in the coming weeks, you can hedge your position within MetalSwap using its hedging contracts and not worry about the price movement.
Future OP unlocks
This sixth episode is also over, and it is becoming increasingly clear that there is a need in both the crypto and traditional markets for financial instruments that can reduce volatility. MetalSwap is positioning itself as a leader in this area and in the future many more assets will be implemented, increasing the pool of possible users.
-The DeFi Foundation
✎ What is MetalSwap?
MetalSwap is a decentralized platform that allows hedging swaps on financial markets with the aim of providing a coverage to those who work with commodities 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 MetalSwap we enable hedging swap transactions through the use of Smart Contracts, AMM style.