The last thirty days have been very eventful from both traditional and cryptocurrency market perspectives. The inflation data released on November 14 led to a crash in the US dollar, which subsequently affected the valuation of all commodities, including Bitcoin, which is currently facing speculation around the launch of the first spot ETF. Much more will be analyzed in this seventh episode of Volatility Overview by MetalSwap.
Commodities market overview - The crash of the dollar
The main event of the past weeks that brought extreme volatility, especially in traditional markets, was undoubtedly the release of the American inflation data for October. This was a positive outcome, as inflation decreased to 3.2%, lower than investors' expectations. Following this event, there was renewed enthusiasm in the markets, with investors "selling" dollars in exchange for more aggressive financial instruments. This caused the dollar to crash, losing 1.6% in a single day.
We had to analyze this event before moving on to the commodities market to help provide an overall view of the macroeconomic situation. Similarly to how investors are shifting from dollar positions to more aggressive positions, there is a general disinterest in the commodities market, which, as we know, thrives in periods of fear, resulting in a negative November.
Currently, the quotation of the reference ETF, Invesco Bloomberg Commodity Index, stands at 21.08, and the ongoing retracement does not seem likely to stop in the short term.
In times of strong uncertainty, such as the current situation in the commodity market, solutions like MetalSwap can offer to thousands of commodity merchants and traders the opportunity to protect themselves against market volatility.
Analysis of assets on MetalSwap's dApp
Now, let's move on to the specific analysis of assets within the MetalSwap dApp where decentralized and trustless hedging strategies can be implemented 24/7.
Bitcoin - Golden cross and ETF spot speculation
In the previous episode, we discussed the death cross on Bitcoin's price chart. The volatility has been extreme in the last month, and it's incredible that today we must analyze a golden cross in Bitcoin's moving averages, a symbol of renewed strength in the price, at least in the short term. In contrast to the explanation of the death cross in the last episode, the golden cross occurs when the 50-day and 200-day simple moving averages cross to the upside on a daily time frame. At the time of writing this article, Bitcoin is trading at $36.200, an incredible increase of 34% in the last 30 days. This certainly complicates the plans for those who had planned to buy Bitcoin in November. Opening a long position on MetalSwap would have solved the problem, securing the price at the time of position opening.
ETH - Gas prices are high again
Renewed enthusiasm in the world of cryptocurrencies also means more on-chain activity, particularly in the Ethereum ecosystem, a leader in decentralized finance. As you probably know, to use the blockchain, a fee must be paid to the network, and this fee is paid in Ethereum gas. With the recent price increase, Ethereum has broken the $2,000 resistance, reaching over a recent all-time high of $2,090 per unit in the last week. This means that the cost of operating within the blockchain has increased as the underlying raw material, gas to pay fees, has also increased in price.
This situation complicates the lives of those who need to operate regularly on the blockchain and solutions like MetalSwap resolve this issue, eliminating volatility in this type of asset that one must possess to operate on the blockchain.
Gold - Lateralization
It has been a fairly positive month for gold, which was traded around $1,810 at the beginning of October and is now over $1,960. The weakness of the dollar has probably helped this asset, the most capitalized in the world, increase its value in dollars and close positively. With low inflation and renewed enthusiasm in financial markets, further price rallies for gold are not likely to be expected, considering it performs best in times dominated by feelings of fear and uncertainty in the markets.
OP - 60% gain
If possible, the volatility of these less crypto capitalized assets is even more aggressive than currencies like BTC and ETH. In the previous episode, we discussed an OP token trading at $1.20 per unit, and it seems absurd to report that in the last week, OP has reached quotes of $1.90 per unit, an increase of over 60% in less than 30 days. Despite the current unlocking of significant positions by teams and private investors, market enthusiasm and speculation have dominated in the last month, and we will see if the same happens in the coming weeks.
The beginning of November has brought about a true change in sentiment from crypto investors and beyond. Analyzing the Crypto Fear and Greed Index, we note that we are currently in a phase of greed, and the tool suggests that a price retracement is more likely in these phases. Of course, no one can predict future price movements unless you want to open a position through MetalSwap's hedging contracts and eliminate the volatility of the underlying asset!
-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 !