Crypto Market Update: Bearish Sentiment, Eager Ether Traders, and Japanese Institutional Interest

Introduction

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Market Update

Bearish sentiment gripped the crypto market early Monday following an announcement by the defunct crypto exchange Mt. Gox regarding the repayment of over 140,000 BTC to victims of a 2014 hack. Bitcoin prices dropped to $60,723, marking a more than 5% decline in a 24-hour period. Ether and the broader market also experienced losses, with the CoinDesk 20 Index (CD20) falling by over 5%. The recent drop in bitcoin’s value from above $70,000 has formed a double top bearish reversal pattern. However, trading volumes in both bitcoin and ether markets on centralized exchanges have been relatively subdued, indicating reduced investor participation and suggesting the possibility of a “bear trap.”

Eager Ether Traders have been actively purchasing bullish options on Deribit amid the market downturn. Notably, there has been a significant increase in buying activity for Ether’s September expiry $4,000 call option, with traders anticipating a potential surge towards new all-time highs. Greg Magadini, director of derivatives at Amberdata, highlighted the growing interest in the September $4,000 calls as a signal that traders are optimistic about a potential breakout above $4,000 and subsequent record highs.

Institutional Interest

Japanese institutional investors are showing a growing interest in digital assets, according to a survey conducted by Nomura among 547 Japanese investment managers. The survey results from April revealed that more than 50% of the managers are considering investing in cryptocurrencies over the next three years, viewing it as a strategic diversification opportunity. Notably, managers are contemplating allocating between 2% and 5% of their assets under management to crypto, with nearly 80% planning to make investments over the course of a year. This shift towards crypto investments comes amidst concerns related to Japan’s increasing debt burden and the volatility of the yen’s exchange rate. Metaplanet, a Tokyo-listed company, recently announced the adoption of BTC as a reserve asset to hedge against Japan’s fiscal challenges and has disclosed plans to acquire an additional $6.2 million worth of BTC using proceeds from a recent debt sale.