Part of the LMAX Group
Regulated by the Gibraltar Financial Services Commission

KPIs for January 2022

  • Total notional volumes: $23bn
  • Total trades: 4,965,558
  • Total BTC equivalent traded: 575,188 coins

Total monthly Volumes
by Client Segment ($M)

Daily Traded Volumes ($M)

Monthly Volumes
by Instrument ($M)

Average Trade Size
by Instrument ($)

BTCUSD - Average Trade Size
by Client Segment ($)

ETHUSD - Average Trade Size
by Client Segment ($)

Macro crypto currency market outlook

Bitcoin has come under intense pressure since posting a record high just ahead of $70,000 back in November 2021. At this stage, while most of the pullback appears to have played out, there is still risk for one more drop down towards critical support in the form of the June 2021 low at $28,800. Any setbacks below $28,800 should be limited and very well supported ahead of the next big push to the topside.

    • BTC technical levels:
    • R2 52,100 – 27 December high – Strong
    • R1 44,455 – 13 January/2022 high – Medium
    • S1 32,935 – 24 January/2022 low – Medium
    • S2 28,800 – 22 June low – Strong

January was another hard month for crypto assets. Bitcoin put in a third consecutive bearish monthly close, while ether put in a second consecutive bearish monthly close. But ether weakness in January was more pronounced, with the cryptocurrency down +30% as compared to bitcoin, down around 20%.

The primary driver of the weakness was not crypto specific, rather a reaction to a very clear shift in Federal Reserve policy. Rising inflationary pressures have made it impossible for the Fed to ignore, which has resulted in a move towards more restrictive, less investor friendly policy.

For now, the correlation of risk off in traditional markets and downward pressure in crypto assets is very much alive, with many market participants perceiving crypto to be a risk correlated play given the fact that the asset class is still a young, maturing, emerging asset class.

At the same time, we think this correlation is one that won’t be holding up much longer and we see this breakdown playing out over the coming months. Our core view is that there will be a surge in demand from medium and longer-term players into this dip, on the understanding of the highly compelling longer-term value proposition of the crypto asset class.

Bitcoin will be highly attractive as a store of value play given its decentralised, deflationary, limited supply economics. Ether will be highly attractive on its deflationary economics as well, along with all of the wonderful promises that it is expected to deliver on when it comes to web 3 technology.

As far as how much lower we should expect to go before these markets bottom out goes, we think it would be wise to consider the possibility of another drop that takes bitcoin down into the $25,000 area and ether into the $1800 area before these markets finally look to turn back up, eventually retesting and breaking the 2021 record highs.

Daily volumes Daily
volumes
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