Periodic observations and market musings from Todd Groth, Head of Research, CoinDesk Indices.

It looks like we’ve hit a decent level of support for ether (ETH) as we hug the $2,200 level and, coincidentally, the 38 Fibonacci retracement level – one of the indicators traders use to gauge potential price stall or reversal.

As we wait for more constructive price trends to re-emerge within the market, it’s a good time to check in on the macro environment. While we’ve recently seen an uptick in interest rates (10-year currently at 4.12%), the longer-term trend lower, for real rates, is still supportive for digital assets, especially the smaller-cap altcoins contained within the CoinDesk 20 Index- a benchmark that tracks top cryptocurrencies.

So how did the crypto options market price in the bitcoin (BTC) spot exchange-traded fund (ETF) launch? From a quick ex-post analysis of option implied vs subsequent realized volatility (see below), expectations in the markets have subsided after the event, and it looks like the bitcoin options market gang correctly priced in the market reaction while team ether options were asleep behind the wheel w.r.t. the rally in ETH post bitcoin spot ETF launch.

Bitcoin options have been more efficiently priced over the period, too. Perhaps team ether got too fat and happy off of collecting that implied vs. realized premium spread?

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Digital assets have seen strong gains in the last month due to excitement about the potential approval of bitcoin spot ETFs, but this bullish sentiment may be misplaced, the report said.

Excitement about the potential approval of spot bitcoin exchange-traded-funds (ETF) has fueled a strong rally in digital assets over the past month, but the move higher seems overdone, JPMorgan (JPM) said in a research report last week.

Bullish sentiment has been buoyed by two main arguments, the bank said.

“A spot bitcoin ETF approval would help crypto markets to attract fresh/new capital as the newly-approved ETFs see inflows,” and the “approval would cement a win for the crypto industry and a setback for the Securities and Exchange Commission (SEC) thus making it more likely that going forward the SEC approach towards the crypto industry will soften,” analysts led by Nikolaos Panigirtzoglou wrote.

The bank says it is skeptical of both arguments. Instead of new capital entering the crypto sector, it is more likely that existing capital will move from current bitcoin products such as the Grayscale Bitcoin Trust (GBTC), bitcoin futures ETFs and listed mining companies, into the newly approved spot ETFS.

JPMorgan notes that such ETFs already exist in Canada and Europe and have gained “little interest from investors since their inception.”

While the Ripple and Grayscale court rulings represent legal defeats for the SEC, “it is far from clear that the regulatory tightening of the crypto industry will lessen significantly going forward given how unregulated this industry is,” the report said.

“U.S. crypto industry regulations are still pending and we do not believe U.S. lawmakers would shift their stance because of the above two legal cases especially with the memories from the FTX fraud still fresh,” the analysts wrote.

The bitcoin halving, likely in April or May next year, is also cited as another bullish tailwind for crypto markets, the bank said, but this argument is “unconvincing” as the effect of the halving is unpredictable and is already priced in.

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The rising gas fees suggest increased network usage.

A market-wide recovery led by bitcoin (BTC) briefly crossing $35,000 on Tuesday may have reinvigorated a risk-on sentiment among meme coin traders – who typically bet on tokens with a strong social draw rather than their inherent technology.

Ethereum gas fees spiked from 9 gwei to over 45 gwei in the same period, indicating strong block demand. Gwei is a small unit of ether (ETH) equal to one-billionth of an ETH.

Gas refers to the fees Ethereum users pay to ensure their transactions are included in the earliest block by network validators. These validators are incentivized to include transactions that pay the highest fees instead of a first-come-first-serve basis – meaning fees on popular tokens can often run to thousands of dollars.

Some of this year’s most popular meme coins, such as pepecoin (PEPE), zoomed as much as 40% in the past 24 hours, showing signs of an on-chain trading frenzy. Elsewhere, HarryPotterObamaSonic10Inu (which trades with a BITCOIN ticker) rose 39%, while SPX6900 (SPX) jumped as much as 25%.

The tickers of these tokens mimic bitcoin and the U.S. stock index S&P500 but have a combined market capitalization of over $120 million – showing the strong draw that jokes have in some parts of the crypto market.

Historically, speculative mania in non-serious cryptocurrencies has presaged major market tops or bearish reversals in bitcoin, which sits over $34,000 in European morning hours on the back of favorable developments in the proposed spot bitcoin ETF filing in the U.S.

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The new system will be called Datanomy, and seeks to give crypto participants a standardized way to view and analyze the digital assets ecosystem.

Investment bank Goldman Sachs (GS) has partnered with MSCI and Coin Metrics to launch a new digital asset classification system to better track coins and tokens to help investors and industry participants monitor the space.

Dubbed datanomy, crypto market participants will be able to track trends in different segments of crypto including Smart Contract Platforms and DeFi, and also screen various assets.

“The collaboration brings together MSCI’s expertise in critical decision support tools and services, Coin Metrics’ intelligence in the digital assets space, and Goldman Sachs’ innovative platforms paired with over 150 years of experience in financial markets to help solve this problem for clients,” Anne Marie Darling, Goldman Sach’s head of marquee client strategy and distribution, said in a statement.

MSCI is the owner and sole administrator of the new classification system, according to the statement.

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The exchange previously planned to hire as many as 2,000 employees earlier this year.

Crypto exchange Coinbase (COIN) will slow down hiring and reassess headcount needs as the broader crypto market sees a downturn, the firm said in a note to employees.

“We’re slowing hiring so we can reprioritize our hiring needs against our highest-priority business goals,” said Emilie Choi, president and chief operating officer at Coinbase, in the note.

Choi added the move was to ensure the business was “best positioned to succeed during and after” the current market downturn. “Market downturns can feel scary…we plan for all market scenarios, and now we are starting to put some of those plans into practice,” Choi said.

The move is a departure from Coinbase’s plan to triple its headcount earlier this year, as reported. The exchange planned to hire up to 2,000 people to expand its product, engineering and design teams as recently as February.

Choi stated the crypto exchange remained in a strong position and had a “solid balance sheet” to make it through a market downturn.

The note comes days after a weak earnings report last week. Coinbase reported $1.17 billion in revenue for the first quarter this year, compared with analysts’ average estimate of $1.5 billion, according to FactSet.

The exchange also reported a quarterly net loss of $430 million, compared with a profit of $840 million in Q4 2021. Shares tumbled 26% following the report, adding to a nearly 70% decline in the past year.

Premarket futures rose 7.3% as per MarketWatch data. A lower headcount could mean slightly lower costs to the business and help increase profits.

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