The Assets Volatility Overview is a monthly series of articles summarizing everything that has happened within the markets of interest for MetalSwap. In the previous episode, we saw how the commodities market continued its downtrend that began in September 2022, we analysed the transactional situation of Bitcoin, we spoke about the Ethereum post-shapella situation and we introduced the analysis of the OP token for the first time. If you haven't read the previous episode, we recommend you catch up with it now so you don't miss out on this and other valuable information.
Commodities - Market Overview
Invesco Bloomberg Commodity ETF Chart
After nine months of decline, the reference ETF, Invesco Bloomberg Commodity, is showing a positive monthly candle. Despite this positive signal, we remain in a very strong bearish trend. The global economy is slowing down, which is causing commodity markets to also decline. Although inflation, the rising prices of goods and services, is starting to decrease slightly, prices are still higher than usual. This means that people and businesses are facing difficulties due to high prices and expensive borrowing costs, resulting in less demand for energy, metals, and food. As a result, the prices of these commodities are not expected to increase significantly this year.
In the last 30 days, we have seen a lot of volatility in various commodities. While we identified natural gas as the best performer in the previous episode, this month it has become the worst performer, losing 8.7%. This asset is going through a period of extreme volatility, making economic planning challenging for those working with it. A platform like MetalSwap may offer a solution in the future for operators working with natural gas who cannot expose themselves to such price changes.
Natural Gas price action
Analysis of assets on MetalSwap's dApp
Bitcoin price action
Bitcoin continues its relatively calm phase, remaining within the range of $25,300 and $28,500. Currently, the entire crypto market is facing difficulties after the SEC accused Binance and Coinbase of trading unregulated securities. This news has instilled fear within the sector, resulting in downward volatility, especially in the past week. What is even more interesting is to see how this situation will evolve. At this moment, the SEC, through its communications, has the power to further scare or reassure the market. In any case, it is possible to protect oneself from any eventuality by paying a small premium, which will become even smaller when MetalSwap launches on Optimism.
Lido, the leading dApp for Ethereum liquid staking, has made available from the 15th of May the withdrawal of ETH. However, the number of ETH staked for block validation has reached a new all-time high in the past week, reaching 22,845,762 ETH.
ETH Deposits Balance
In terms of price, Ether has made several attempts to surpass the $1,900 resistance during the past weeks, without success. At the time of writing this article, it is still within the relatively same range of the past 30 days, at $1,730.
Gold price action
As we noted in the previous episode, gold reached its highs and surpassed them on May 4th when it reached a price of $2,080. Now, after this euphoric period, a bearish sentiment seems to be returning, bringing the current price down to $1,954, already down more than 6% from the highs.
The average volatility of this asset, as measured by the Gold Volatility Index, is also decreasing and returning to average levels, indicating a more chill market phase and relief after the results of the past weeks.
As in all episodes, it is necessary to analyse the COT (Commitments of Traders) report to gain a clearer idea of the sentiment among various actors using this asset for different purposes. There are three types of investors: commercial traders who work with this asset without speculative intentions, non-commercial traders who are large funds opening significant positions with the goal of making profits, and small traders who have smaller capital. This time, we specifically analyse the number of open contracts for each component of the COT. It is interesting to note that the positions with the highest number of open contracts are short positions opened by commercial traders, who, as always, seek to protect their activities from price declines.
OP price action
MetalSwap will release its smart contracts on Optimism in the coming weeks, and new use cases can be applied to the OP token.
As you can see, the OP token is going through a complicated period, with its value more than halved in the past two months. On May 31st, a huge quantity of OP tokens (386 million tokens) were released into the market, further driving down the price. With MetalSwap, it will be possible to protect the countervalue in these types of events where volatility is likely to impact the asset.
What happened in the derivatives DeFi ecosystem?
In general, market capitalization has declined in recent weeks due to investor concerns arising from the SEC and CEX situations. This has also affected DeFi, which has decreased from $46 billion TVL (Total Value Locked) to the current $42 billion in the past month.
However, this distrust in centralized exchanges has led to a boom in trading volumes. In just the past week, we have seen a more than 400% increase in the average trading volume within DEXs, reaching $817 million on June 7th.
Uniswap v3 (Ethereum), Uniswap v3 (Arbitrum), and PancakeSwap v3 (BSC) – which account for 53% of the total DEX trading volume in the last 24 hours – have increased by more than $792 million between June 5th and June 7th.
DeFi is growing, partly due to the problems gradually being uncovered in the centralized world. In this Volatility Asset Overview, we have seen how all markets are facing difficulties at this specific historical moment and how a solution like MetalSwap could protect us from these downturns.
For those unfamiliar with Optimism, two articles have been released by the team providing both theoretical and practical introductions to this blockchain, which will soon host MetalSwap's Hedging Swaps!
What a time to be in DeFi!
To the MetalSwap
… and beyond!
-The DeFi Foundation
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