 February 25, 2021  Everything you need to make sense of the crypto markets and beyond Sponsored By:  By the CoinDesk Markets Team Edited by Lawrence Lewitinn If you were forwarded this newsletter and would like to receive it, sign up here. Bitcoin (BTC) -0.85% $50,605 Ether (ETH) -4.19% $1,626.70 (Price data as of Feb. 25 @12:57 UTC) Good morning. Here's what we're writing about:
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MARKET MOVES In prehistoric times (that is, before October 2020), a $3,200 price range in bitcoin over the course of a day would be considered cataclysmic. However, given recent price action, such a move may seem like a welcomed respite. Nonetheless, it's worth noting that even the past day's trading is far from ordinary in an already extraordinary market.  Bitcoin prices, Feb. 24 to Feb. 25, 2021. (CoinDesk) Over the past 24-hours, bitcoin has stayed in a range between. $48,091.13 and $51,309.91, or 6.5% of current prices. In percentage terms, that's still nothing to sneeze at but relative to the $8,000 that happened Sunday into Monday, the $11,000 fall from Monday's high to Tuesday's low or even the $6,000 range from Tuesday into Wednesday, $3,200 feels like a quiet day at the office.
Spot market volume has also come off from turbulence earlier this week. The eight exchanges tracked in the CoinDesk 20 had a combined volume of just under $5.3 billion Wednesday, compared to $10.5 billion and $12.2 billion for Monday and Tuesday, respectively.  Bitcoin volume, Feb. 1 to Feb. 24, 2021. (CryptoCompare via CoinDesk) Spot volumes have soared since mid-December. Thus a $5 billion day in these eight exchanges was something that rarely happened. Well, at least since late 2017/early 2018.  Bitcoin volume, Jan. 1, 2017 to Feb. 24, 2021. (CryptoCompare via CoinDesk) The bitcoin futures market has also quieted a little bit. Total volume on the major futures exchanges was at $77 billion Wednesday compared to $184 billion Tuesday, according to data site Skew.  Bitcoin futures volume, Feb. 18 to Feb. 24, 2021. (Skew) Yet at $1.7 trillion (with a "t"), February is the second-highest month in volume terms and there's still a few more days to go.  Bitcoin futures volume by month, May 2019 to Feb. 2021. (Skew) The same holds true for the ether market. Spot prices ranged between $1,556.38 to $1,708.62 over the past 24 hours, a 9% range given current prices.  Ether prices, Feb. 24 to Feb. 25, 2021. (CoinDesk) Yet that's just a quarter of the range it faced at the start of the week.  Ether prices, Feb. 18 to Feb. 25, 2021. (CoinDesk) Volume on the eight CoinDesk 20 exchanges was at $2.5 billion in aggregate Wednesday, down from $5.4 billion Tuesday.  Ether volume, Feb. 1 to Feb. 24, 2021. (CryptoCompare via CoinDesk) But one would have to go back three years to see daily ether volumes regularly above $1 billion.  Ether volume, Jan. 1, 2017 to Feb. 24, 2021. (CryptoCompare via CoinDesk) Bitcoin prices, Feb. 23 to Feb. 24, 2021. (CoinDesk) The bottom line: Everything is relative and it's still a relatively active market. --Lawrence Lewitinn
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MUYAO SHEN Bitcoin analysts say this week's quick market rebound might be due to Chinese retail buyers buying the dip, using the stablecoin tether. Bitcoin's rapid recovery from the biggest two-day sell-off in almost a year shows the power of a recently overlooked factor in cryptocurrency markets: demand from Chinese retail traders.
The sudden demand for bitcoin (BTC) from Chinese traders, possibly motivated by the price drop, can be viewed through a hitherto largely ignored metric: the "tether premium" – or the difference between prices quoted in yuan on the dollar-linked stablecoin tether (USDT) by over-the-counter cryptocurrency traders, and the implied yuan-denominated price for tether based on the prevailing rate in global markets.
Under normal market conditions, tether should have depreciated against the yuan because the Chinese currency was appreciating against the dollar in foreign-exchange markets. However, tether denominated in Chinese yuan has traded at a premium since last week, ostensibly due to elevated demand from the country's traders, who routinely use the stablecoin as an on-ramp to crypto markets. The practice of trading directly from government-issued currencies is still banned in China.
Tether has been sold at premium on Huobi OTC since last Friday, according to a spokesperson from the parent crypto exchange Huobi. The premium went as high as 2% on Tuesday. Under normal market conditions, the premium is zero or negligible.  Huobi OTC's USDT-Chinese Yuan rate in the past 45 days shows that tether has become more expensive since last week. (Source: Price Dancing) At OKEx, another Asia-focused cryptocurrency exchange, its over-the-counter desk also saw rising prices for tether, when denominated in Chinese yuan.
The renewed interest in bitcoin and other cryptocurrencies from the retail market in China, which was the main driver of the last crypto bull market in 2017, might stem from mainstream media coverage in China, said Mable Jiang, a principal at crypto investment firm Multicoin Capital. She pointed out that people in China have been buying the market dip in the past few days.
In a rare report on Sunday, CCTV 2, the state-controlled finance television channel, gave an update on the bitcoin market, claiming the cryptocurrency's return since March 2020 has surpassed 1,300%. The stated performance record reflects what is perhaps the most bullish framing of bitcoin's price run because it uses last year's lows as the starting point and goes through the recent all-time high price above $58,000. But it's not wrong.
The TV channel's report continued by elaborating on Bill Gates' changing attitude towards bitcoin (he's neutral now instead of negative) and ARK Investment's Cathie Wood's support of bitcoin.
"As bitcoin continues rising, more and more corporates have announced that they are considering bitcoin as part of their asset allocation," the news anchor said on CCTV 2. --Muyao Shen The full version of this story can be found here: https://www.coindesk.com/short-bitcoin-check-china-tether-premium
BIGGEST MOVERS These are the biggest movers in the CoinDesk 20 over the past 24 hours:
Gainers: Losers:
The CoinDesk 20 filters from the larger universe of thousands of cryptocurrencies and digital assets to define a core group of 20. These assets constitute roughly 99% of the market by volume at eight of the largest and most trustworthy exchanges.
BOLO Be on the lookout for these events today:
15:00 UTC (10:00 a.m. ET): U.S. House Financial Services Committee hearing on domestic terror finance. What to look for: The Subcommittee on National Security, International Development and Monetary Policy will be asking five expert witnesses questions about how "domestic terrorism" is funded by cryptocurrencies. Treasury Secretary Yellen has tied cryptocurrencies to domestic terrorism three times in recent weeks.
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