Bitcoin in ‘contango’

Sursa: Pixabay

Bitcoin had a trickier start to February with the price declining somewhat over seven days, but key indicators put the market into ‘contango’ (see below), and other positive signs persist for the world’s largest cryptoasset.

Bitcoin began the week just above $23,500 but swung below $22,500 early in the week before rallying back. But the price then drifted lower to settle into the $22,500 as of this morning, writes Simon Peters, cryptoasset analyst at multi-asset investment platform eToro.

Ether traded flat over seven days although saw some volatility over the week, with the price touching below $1,530 early on before surging above $1,675 – its highest level since November last year. The market pulled back somewhat later in the week with the token now moving around $1,620.

The bitcoin funding rate – which measures the bitcoin future price against the spot price, is at its strongest level since December 2021, despite the price level looking far lower, according to Glassnode.

The current bitcoin market conditions resemble a commodity price ‘contango’ – where the futures price is higher than the spot price for the asset. This typically happens with commodities such as oil or copper when traders are willing to pay more for the asset in the future than take on the carry costs at today’s price.

In bitcoin this situation has come about thanks to a short squeeze and the market breaking above average withdrawal price for many investors. Glassnode notes that there are a number of other positive indicators for bitcoin at the moment, including neutral exchange outflows and the strongest monthly price performance in January for the token since October 2021.

Ethereum developers have moved closer to launching a new test ahead of the Shanghai upgrade, and are launching the Shapella fork on the Zheijang testnet around 7 February.

The Merge was a huge shift in the way the Ethereum network functions but there are still as of yet some key functionalities missing. The Shanghai upgrade will introduce ether staking withdrawals, which will give institutional and retail investors the ability to take their tokens out of staking as and when they are required.

At the moment staking is functionally like a perpetual bond, in which investors receive a yield in return for their staked token. But the introduction of withdrawals will allows users to withdraw and make it functionally much more like an easy-access account. While the best place for tokens might still be staked on the network, it will provide peace-of-mind to stakers that their collateral is at all times returnable.

Visa is looking at ways to integrate crypto transaction settlements into its network, according to comments made by executive Cuy Sheffield at StarkWare Sessions 2023 in Tel Aviv.

Global payments are still largely settled via the SWIFT banking network and fiat currencies that move across borders are obliged to go through this process. The opening up of avenues for crypto payment settlement has major potential implications as it would unleash significant cross-border payment opportunities.

Visa is a major lynchpin of the global financial system. With stablecoins growing and adoption a key opportunity in the sector for expanding crypto uptake, the potential for any growth in the network effects of the technology is positive. Stablecoins are a key point of interchange for crypto users with fiat, and could be a crucial part of any standardisation process for international payments.



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