FX & Crypto Insights – Institutional thought leadership
A case of the weekend wobbles
LMAX Digital performance
LMAX Digital is celebrating its third anniversary today. We’re proud to highlight $400 billion of cryptocurrencies traded, 450 institutional investors trading on LMAX Digital globally, record daily volume last week of $6.6 billion on May 19, and average daily trading volumes of $2.5 billion, with 10X growth over the past twelve months.
Weekend volume on the exchange was impressive. Total notional volume on Sunday came in at $2.1 billion, just 12% below 30-day average total volume. Total notional volume at LMAX Digital over the past 30 days comes in at $71.7 billion. The average daily trading range for BTCUSD is $5,091. The average daily trading range for ETHUSD is $488.
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The slide in crypto continued into the weekend, though Bitcoin still managed to hold up above last week’s low. Unfortunately, the same could not be said for the price of Ether. The price of Ether extended the decline all the way down to $1,730 before finally finding some renewed demand in the aftermath of very oversold intraday price action.
As far as the catalyst for the weekend decline goes, there was a lot of talk about China’s crackdown on bitcoin mining and trading activities. But there was also a lot of talk about a scared market coming under pressure in some very thin weekend trade, which caused the setbacks to be much more pronounced than what we would have seen in fuller trading conditions.
Overall, we had been warning of an aggressive pullback in crypto after the rocket ship run in 2021 and as aggressive as the moves have been, these are not moves unfamiliar to the emerging asset class. Quite often, when the going gets tough, worries that were easily shrugged off when everything was great, all of a sudden become worries the market is sensitive to. But ultimately, these dips should only be viewed as opportunities to increase exposure at attractive levels.
Still, we would not rule out risk for deeper setbacks and believe the combination of so much good news already priced in, regulatory headwinds working into the mix, and a US equity market that could be getting closer to rolling over, are all factors that crypto investors need to be mindful of going forward. Dealers have already been talking about option related activity for Bitcoin in the $25,000 – $28,000 area.