Table of Contents
- Mainstream Cryptos Plummeted, Causing Market Volatility to Soar
- European Regulatory Attitude Us Favorable to the Market, and the High Volatility May Continue in September
Market Volatility Stronger, Recent Expectations Lower: Market Review From TokenInsight
- Following the steep decline in mainstream crypto prices on Sept. 7, market volatility surged but has since steadied. Volatility differences have notably decreased, with Ethereum now showing positive volatility as of Sept. 10, suggesting a continued downward trend.
- Public chain tokens like SOL, independent of Ethereum, demonstrate lower susceptibility to market fluctuations, contributing to distinct market differentiations.
- Regulatory measures by Southeast Asian authorities have impeded the international expansion of select exchanges, contrasting with the swift advancement of cryptocurrency legalization in Ukraine, El Salvador, Switzerland, and other jurisdictions. Meanwhile, countries like Sweden, Mexico, and others have adopted a more cautious stance towards cryptocurrencies.
- The expected delay in liquidity tightening continues. Despite diverse regulatory positions worldwide, confidence in the cryptocurrency market remains relatively resilient.
- Anticipate ongoing high market volatility as the quarterly delivery season approaches.
Mainstream Cryptos Plummeted, Causing Market Volatility to Soar
On September 7, the crypto market concluded nearly three weeks of low volatility. The rapid drop in mainstream crypto prices prompted a significant surge in market volatility, returning to medium-high levels. Bitcoin’s volatility exceeded 80, while Ethereum’s surpassed 110, stabilizing at elevated levels thereafter. Bitcoin experienced a 6.3% decline this week, with Ethereum slightly outpacing with a 9.79% decrease.
Market trading volume surged to its highest level in three months, coinciding with increased volatility. On September 8, spot market trading volume reached $146.47 billion, with Huobi Exchange accounting for $19.7 billion and Binance Exchange hitting $69.7 billion, leading to temporary exchange outages. In perpetual contract trading, Huobi recorded $30.7 billion in volume, while Binance exceeded $110 billion, resulting in a total market volume surpassing $251.1 billion. Exchange tokens like HT, BNB, experienced over a 20% price drop due to the market crash.
The prevailing sentiment attributes the Sept. 7 crash to multiple factors, suggesting it was “accidental.” Factors include the strengthening US dollar, reducing investor risk appetite and prompting profit-taking. Large investors initiated sell orders on Coinbase before the crash, triggering a cascade of liquidations, stop-losses, and market panic due to high leverage and long-term low volatility. This mirrors a similar event in January attributed to miners selling for profit.
Some investors also cite diversions of funds from high-speed public chain tokens like Solana or increased market risk aversion following the SEC’s warning regarding Coinbase’s lending business. However, the primary belief is that the former factor was the main contributor.
Investors are exercising caution regarding the near future based on the futures premium term structure and skewness structure. Near futures premiums are low for the week, with some exchanges like CME even displaying negative premiums. However, confidence in the medium and long term remains relatively steady, maintaining a neutral stance.
European Regulatory Attitude Us Favorable to the Market, and the High Volatility May Continue in September
This week witnessed a significant shift in regulatory attitudes across major capital markets, particularly in Europe, where an unprecedentedly positive stance towards the crypto market emerged.
Both the UK Financial Conduct Authority (FCA) and the European Securities and Markets Authority (ESMA) expressed concerns about the excessive risks present in the crypto market this week. While ESMA acknowledged the innovative achievements of cryptocurrencies and distributed ledger technology, it echoed the FCA’s concerns about potential risks from unregulated investment activities, the inherent high volatility of the crypto market, and the possibility of these risks affecting the broader economy. Despite these concerns, the overall sentiment in Europe remains relatively positive, as major exchanges work to comply with regulations and reduce leverage, indicating official recognition of the crypto market’s development.
In response to these developments, the Swiss Financial Regulatory Authority (FINMA) has officially granted compliance licenses to six crypto exchanges this week. Additionally, FINMA has authorized SIX Digital Exchange AG to act as the central depository for tokens, with its subsidiary SDX Trading AG authorized to operate as the tokens exchange. This marks Switzerland’s first issuance of licenses for infrastructure designed to facilitate token trading and comprehensive settlement, blending traditional market regulatory frameworks to achieve comprehensive oversight of crypto trading, clearing, and custody. Given Switzerland’s influential position in European and global finance, its regulatory approach undoubtedly establishes a precedent for the future regulatory landscape of European countries.
Moreover, following the lead of El Salvador, Ukraine has ratified a proposal to legalize cryptocurrencies, becoming the second country to formally endorse crypto legalization and the first in Europe to do so.
Central banks and regulatory bodies in Sweden, Mexico, and other nations consider crypto investments akin to commodity investments. While delineating their risk characteristics, they formally recognize cryptocurrencies’ status as investment products.
