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First Mover Americas: Ether Outperforms Bitcoin; CME BTC Futures Hit a Huge Discount to Spot Prices

  • Price Point: Ether is up 2% on the day, continuing to outperform bitcoin. Data from Arcane Research shows that the current crypto bear market looks very similar to the 2018 bear market.

  • Market Moves: After a big market plunge, CME bitcoin futures just traded at the largest discount to spot prices in at least 2 1/2 years, with August contracts set to expire this week. Comments by Fed Chair Jerome Powell at the U.S. central bank symposium in Wyoming on Friday could move markets.

  • Chart of the Day: Bitcoin holds trendline support.

This article originally appeared in First Mover, CoinDesk’s daily newsletter putting the latest moves in crypto markets in context. Subscribe to get it in your inbox every day.

Price point

Bitcoin (BTC) was trading down on the day while U.S. index futures and European stocks struggled for direction as the global economy is increasingly at risk of sliding into recession.

Ether (ETH), the world’s second-largest cryptocurrency by market value, was trading up 2% over the last 24 hours alongside other altcoins. Ether has significantly outperformed bitcoin over the past couple of months, with its market share of the total cryptocurrency market rising above 20% seven days ago.

Among altcoin movers this morning, Cosmo’s ATOM was up 3.7%, unes sed eo (LEO) was ahead 3.5% and quant network (QNT) was higher by 3%.

Data from Arcane Research shows the current bear market is tracking the 2018 bear market.

Bitcoin's historical drawdowns (Arcane Research)
Bitcoin's historical drawdowns (Arcane Research)

Bitcoin’s drawdown this time around has lasted for 286 days (nine to 10 months) so far, according to the team at Arcane, and the crypto’s market cap is now down 70% from its all-time high hit in November 2021.

In the 2018 bear market (and in 2014 as well), bottoms occurred 12-13 months after the bear markets began, with maximum drawdowns of 84%-85%, said Arcane, noting that similar timing this time around would mean a bottom forming near the end of this year.

Another similarity to 2018, said Arcane, is a prolonged duration of compressed volatility.

Back then, bitcoin saw a 140-day period with prices in the $6,000-$7,000 range before a final selling climax down towards $3,000, with prices residing in that area for another 120 days. “Similar tendencies are evident today,” noted Arcane, “with prices having ranged in the lower $20,000 area for 70 days.”

“Still, the market is a different beast this time around,” concluded Arcane, likely referring to the far more developed and important cryptocurrency markets today versus past cycles.

In the news, the liquidators of Three Arrows Capital (3AC) secured a crucial court decision in Singapore, which will give them the ability to probe the local assets of the defunct crypto hedge fund, Bloomberg reported, citing people familiar with the matter.

Michelle Bond – one of the most prominent cryptocurrency advocates in this year’s U.S. congressional races – lost her bid to be the Republican candidate for her New York district.

And finally, Latin American crypto company Ripio has started rolling out a prepaid debit card in Brazil that allows payments to be made in cryptocurrency and earns cashback rewards in bitcoin.

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Terra

LUNA

+4.5%

Smart Contract Platform

Gala

GALA

+3.5%

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Cosmos

ATOM

+3.2%

Smart Contract Platform

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Returns

DACS Sector

Dogecoin

DOGE

−0.1%

Currency

Market Moves

Exchange Giant CME’s Bitcoin Futures Just Hit a Huge Discount to Spot Prices

CME BTC futures, annualized rolling one-month basis (Arcane Research)
CME BTC futures, annualized rolling one-month basis (Arcane Research)

Bitcoin (BTC) futures at the Chicago Mercantile Exchange, one of the world’s biggest derivatives markets, just traded at the largest discount to spot prices in at least 2 1/2 years after a big market plunge and right before August contracts expire.

Arcane Research keeps tabs on the average difference between CME’s front-month bitcoin futures – those expiring soonest – and the current market price for bitcoin itself for rolling one-month periods. On Monday, that showed front-month futures at a 3.36% discount. That’s a record low in the firm’s dataset that goes back to Jan. 1, 2020 – though CME bitcoin futures have been trading since December 2017.

That surpassed the previous low of minus 2.39% set on July 21, 2021, which was followed by a hefty short squeeze, according to Arcane.

CME futures have traded at a discount over the last two months but witnessed a short-lived recovery at the start of the month when there was some momentum in the market. Early in August, bitcoin briefly reached $25,000. But it sank below $21,000 on Aug. 19.

“The growing discounts in the front-month contracts might be explained in part by structural effects,” Vetle Lunde, an analyst at Arcane Research, said in a report.

The report said the ProShares Bitcoin Strategy ETF (BITO) has begun rolling its August contracts into contracts that expire later, possibly causing downward pressure on the front-month contracts. Monday, BITO rolled over 1,000 August contracts and will roll over a further 3,000 August contracts by Friday. Previous times when the exchange-traded fund rolled over exposures, front-month contracts have tended to move toward discounts to spot, according to Arcane.

“Still, such extreme discounts have not appeared during previous rolling periods,” Lunde said. “They might be a symptom of worsening liquidity or general de-risking as S&P 500 and Nasdaq see a tumultuous start to the week while the dollar strength index pushes towards new highs.”

Chart of the Day

Bitcoin Holds Trendline Support

By Omkar Godbole

Bitcoin/U.S. dollar daily chart (Omkar Godbole/TradingView)
Bitcoin/U.S. dollar daily chart (Omkar Godbole/TradingView)
  • The trendline rising from July 18 and July 13 lows is offering support to bitcoin.

  • A breakdown would expose the July low of $17,567 (Coinbase prices).

  • Friday's bearish marubozu candle suggests the path of least resistance is to the downside.

  • The bearish marubozu candle comprises big body and little-to-no wicks, indicating seller dominance.

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