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21 June 2021

Ben Lilly Discusses Bitcoin's Market Dynamics | Crypto Briefing

Ben Lilly Discusses Bitcoin's Market Dynamics | Crypto Briefing


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There are other categories of metaphorical fish in any market ecosystem.The most important among them are whales: the large investors with deep pockets.Then there are market movers, otherwise known as sharks. Market movers are active traders and investors who feed on the weaknesses of the market. Finally, there is the market itself: the ocean, which consists of all other investors in the ecosystem. When Crypto Briefing spoke to Jarvis Labs analyst Ben Lilly, he started the conversation by explaining how market movers have impacted the rest of the ecosystem.

According to Lilly, the recent drop is the result of sharks “attacking the softness in the market that was building up from whales and miners selling.” The weakness in the market can be traced back to late February when the demand for Bitcoin started to slow.

Lilly added that the early stage of the bull cycle through late 2020 and early 2021 was heavily focused on the spot market.

Lilly explained that the high spreads in the futures market were a factor in the market’s slowdown because so much capital was allocated to derivatives rather than spot buys for Bitcoin or any other asset.

Lilly added that the peak in open interest on futures matched the peak in the spread.

As whales began to distribute their capital, the spot market lost some of its strength.

On the same day, it was revealed that Inner Mongolia had set up a hotline for reporting Bitcoin miners (the region had banned mining in April). Bitcoin’s price dropped 30% to lows of $30,000 from $42,800. This was when the market movers struck to initiate the downtrend, Lilly says. .

Lilly added that Binance is generally the dominant exchange market movers and miners use for selling, adding that “the most recent selloff was no exception.” Although there was some activity in other China-friendly exchanges following the miner ban, the selloffs paled in comparison to Binance.

Since the selloffs, many crypto enthusiasts have begun to ask “Is the bull market over?” Lilly pointed out that as spreads have returned to near neutral, the spot market could be due for an uplift.

Lilly also pointed out that Ethereum has EIP-1559, its highly anticipated “ETH buyback” fee burning proposal, on the horizon

Lilly said that he expects Ethereum’s investment narrative to grow “in the coming months” as EIP-1559 approaches

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