There are three events could potentially drive volatility this month. These are Futures expitations (February 13 and 22): CBOE BTC futures expire on 2/13, and CME Bitcoin futures have a last-trade date on 2/22. Ethereum Constantinople hard fork (February 27): Forking networks breeds uncertainty, and volatility often follows (see the Bitcoin Cash hard fork last November). The SEC (February 27): Time and again, actions from the SEC unsettle crypto markets. This time, the SEC is reviewing Bitcoin ETF proposals submitted by VanEck and SolidX.
The SFOX Multi-Factor Market Index is set to mildly bullish entering February 2019. BTC, ETH, BCH, and LTC all experienced steady declines in their 30-day historical volatility over the course of last month. BTC, ETH, BCH, and LTC maintain strong, positive correlations with each other. BTC and ETH both showed strong negative correlations to the S&P 500 at the end of the month. BTC, ETH, BCH, and LTC were all more volatile than the S&P 500 and gold throughout January. Volatility and correlation data from January suggest that the effects of the BCH/BSV relationship may be getting more stable and the crypto market is more focused on building than on hype. Look to Bitcoin futures expirations and the Ethereum hard fork to impact crypto volatility in February.
The SFOX research team has collected price, volume, and volatility data from eight major exchanges and liquidity providers to analyze the global performance of 4 leading cryptoassets : BTC, ETH, BCH, and LTC. The SFOX Multi-Factor Market Index, which was set at moderately bearish going into 2019, is now set at mildly bullish as we enter February 2019.
Three market factors are being analysed. These are volatility, market sentiment, and continued advancement of the sector. The index ranges from highly bearish to highly bullish. At the end of last year, January saw prices stabilize somewhat — BTC, for instance, ranged between $3,500 and $3,700 for over half the month.
BCH’s decrease in volatility may signal that the conflict between BCH and BSV is subsiding. The overall decrease in crypto volatility may reflect the industry’s current “building phase.” W
The SFOX Multi-Factor Market Index is calculated using a proprietary formula that combines quantified data on search traffic, blockchain transactions, and crypto volatility. The cryptoasset data sources aggregated for the volatility indices presented and analyzed in this report are the following eight exchanges, the order-book data of which we collect and store in real time: bitFlyer, Binance, Bitstamp, Bittrex, Coinbase, Gemini, itBit and Kraken.
Our indices’ integration of data from multiple top liquidity providers provides a more holistic view of the crypto market’s minute-to-minute movement. There are two problems with looking to any single liquidity provider for marketwide data:
Building volatility indices that collect real-time data from many distinct liquidity providers mitigates both of these problems: collecting and averaging data from different sources prevents any single source from having an outsized impact on our view of the market, and it also allows us to still have data for analysis even if one or two of those sources experience interruptions. We use five redundant data collection mechanisms for each exchange in order to ensure that our data collection will remain uninterrupted even in the event of multiple failures.