Crypto Market Risk Exposure

22 Jul 2022

This layout is used to understand the level of risk exposure in the crypto market.

There are 3 data, in order from top to bottom:

1. USDT+USDC+DAI: Market Cap main stablecoins.
2. USDT.D+USDC.D+DAI.D: Dominance main stablecoins.
3. Bicoin/Dollar.

The data seen together makes us understand whether investors prefer to go risk-off or risk-on based on the divergence/convergence between the values ​​of USDT.D+USDC.D+DAI.D and Bitcoin/Dollar. The more the two data diverge, the more investors take refuge in stablecoins, while the more the two data converge, the more investors buy BTC using stablecoins. As for the USDT+USDC+DAI data seen together with the other two, it serves to weigh the level of confidence in the crypto market during its phases, eg. the combination of flattening/reduction of the stablecoins market cap with the increase of their dominance makes us understand not only that investors are running away from BTC(and Alts) but also that they are making cash-out in FIAT, effectively removing ready liquidity on the market which will find it more difficult to recover in a short time(eg period from 2022-03-07 to 2022-07-12, historical record red candles on the W). Analyzing the last week instead we are seeing a change of direction, from divergence to convergence, the dominance of the stables has reached the peak and is now reversing heading towards the first support at 8.63%, while BTC is start climbing towards the resistance at 31.7k, in the meantime the market cap of the stables is continuing to fall in a first historical retracement, a sign that the market continues to lose ready liquidity to give a greater boost to BTC, also witnessed by the low trading volumes.

18 Nov 2022

Catatan

The events of the last week(FTX collapse + CEXs FUD) deserve an update of the current market situation.
Bitcoin drew another leg down, landing at 16.3k, while the dominance of the major stablecoins spiked by 24%, thus increasing their divergence. In the meantime, the market cap of stablecoins continues its decline, to date by almost 20% from the ATH and by 1.14% in the last week. This continuous depletion of stablecoins shows us how in this bear market, the first after their mass adoption, investors remain unconfident and prefer to lower the risk by exiting in Fiat currency(effectively burning stablecoins). The bankruptcy of FTX sparked the withdrawal rush, and it is likely to continue given the consequences on other CEXs and DEXs. Less liquidity in CEXs and DEXs translates into lower trading volumes and lower trading volumes certainly do not suggest a recovery in this bear market. To return to see some light, first of all I would like to see the end of the depletion of the stablecoins market cap, followed by an increase in trading volumes on BTC and the consequent decrease in the dominance of stablecoins, a sign of a return of investors and a greater confidence.