General Motors Company (NYSE: GM) shares closed Thursday trading at $30.31, down 2.35 percent from the day’s opening price. The company’s stock value has been declining since early last year, with a high chance of revisiting COVID-19 lows if the company does not revert to the situations at hand. Notably, thousands of members of the Union Auto Workers (UAW) union went on strike last month after failing to reach a deal on a new labor contract.

Earlier this week, the company noted that its dealers delivered 674,336 vehicles in the United States during the third quarter, up approximately 21 percent YoY. However, this quarter’s production could significantly be hampered by the ongoing UAW union strike that has taken longer to resolve.

The situation with GM production could be facing much bigger challenges after a report by WSJ highlighted that at least 20 million vehicles delivered to customers could have faulty airbags. The US National Highway Traffic Safety Administration raised an alarm of possible recall to avoid any injury or deaths.

Currently, the company has recalled 1 million vehicles believed to have airbag issues and reiterated that there is no basis for more recalls. Nonetheless, the company indicated that it is closely working with the NHTSA and other manufacturers to ensure a long-term solution to the airbag problem.

“Neither the affected automakers nor NHTSA, despite eight years of study and investigation, have identified a systemic design or manufacturing defect in ARC frontal airbag inflators,” the company noted. “If GM concludes at any time that any unrecalled ARC inflators are unsafe, the company will take appropriate action in cooperation with NHTSA.”

General Motors (GM) and the Market Outlook

In a bid to reinstate its normal operations, General Motors confirmed that it had made a counteroffer to the UAW union. This is after the company indicated that it has lost about $200 million due to the ongoing strike. However, the UAW union has constantly refused to make any deal until its contract is fully fulfilled, hence worsening the impasse.

“We believe we have a compelling offer that would reward our team members and allow GM to succeed and thrive into the future. We continue to stand ready and willing to negotiate in good faith 24/7 to reach an agreement,” the company recently noted.

The $42.71 billion company is facing intense competition from established electric vehicle companies like Tesla Inc (NASDAQ: TSLA) that do not support the UAW union. As a result, the company’s stock market faces more selling pressure in the coming quarters which could significantly reduce its valuation.

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Key Takeaways

• Crypto volatility has been dropping all year, with Bitcoin’s volatility now at three-year lows
• Volume is also dropping, as the calm markets are not welcomed by traders
• Despite downward-trending volatility, crypto remains highly volatile when compared to other asset classes

Crypto markets are known for violent volatility, capable of both spiking and collapsing in the blink of an eye. 

Thus far this year, however, that hasn’t been the case. Volatility has been trickling steadily downward across the space. Assessing the realised volatility of Bitcoin over a rolling one-month window, the metric is currently at a three-year low. 

This comes despite Bitcoin having had a bumper year thus far, the asset currently up 76%, treading water around the $30,000 mark. In the past, Bitcoin has oscillated wildly, but this run-up from the low of $15,500 late last year has been distinguished by a steady climb rather than the turbulent ups and downs we have come to expect. 

The pattern is not unique to the world’s biggest crypto, either – volatility is falling across the board. The easy way to illustrate this is by looking at Ether. Historically, the price of ETH has been more volatile than BTC, but the divergence has narrowed this year, and Ether is now trading with similar volatility to its big brother. 

This relative calm in crypto markets is good on one level, given one of Bitcoin’s most-cited criticisms is its extreme volatility, which most agree it will need to overcome should it ever take the status of a reputable store of value. 

Not everyone is a winner, though. Traders rely on volatility and hence these serene times are not exactly a boon. If we look at spot trading volume, the drawdown has been steep. Granted, there are myriad factors at play here, including regulation, a drawdown in prices, lockdowns ending, scandals (FTX and the SEC lawsuits) and so on, but the lack of volatility is not helping. 

The below chart from The Block shows quite how far spot volume has fallen. 

Even derivatives trading volume, which had been more stout, has fallen off since April – likely a better gauge for traders than assessing spot volume. Liquidity is not as much of a concern in derivatives markets as it has become in spot markets, but the last few months have begun to see some thinning out there, too. 

While the falling volatility is notable, it should be noted that crypto remains a league above trad-fi markets with regard to this metric. Even this three-year low still translates to an annualised volatility of 25% for Bitcoin, which would not be deemed low-risk by any stretch of the imagination. 

To put this up in lights, comparing Bitcoin to gold is always illustrative. Gold is the store of value which has been around for thousands of years, the shiny metal known for its inflation-hedging abilities and lack of correlation to risk assets. For many, Bitcoin’s vision is to claim the title of some sort of digital gold. 

The below chart displays the current gulf between these assets – even after the dampening down in crypto volatility this year, it’s on a completely different planet to gold. 

Alternatively, one can simply compare the daily returns of the assets, which conveys the same thing. 

Thus, while crypto volatility is currently sluggish, it has a long way to go before it matches gold. More importantly, there is no guarantee that this volatility will stay low. Quite the opposite – given the low liquidity in the space, less capital is needed to move crypto markets than has been the case previously. 

In light of this, it feels like the downward trend in volatility (exacerbated in the last couple of months by a classic summer lull in trading) should return. Not to mention the fact that with the interest rate hiking cycle coming to a close, markets could be at an inflection point. It is always hard to predict the future in crypto, but it feels unlikely that digital assets’ volatility will stay at these uncharacteristically low levels for long. 

Bitcoin is still stalling in terms of its price movement and has not made any significant jumps in the past couple of weeks. However, there could be a change in the trajectory of the digital asset in the coming weeks as the Bitcoin MVRV Ratio could be announcing a bottom signal.

Bitcoin MVRV Ratio Reaches 2019 Lows

Co-founder and CEO of on-chain data analysis firm Cryptoquant recently took to Twitter to share an interesting chart. The image showed that the bitcoin MVRV Ratio has fallen to levels that have not been seen since 2019 – three years ago.

Now, the bitcoin MVRV Ratio compares the market capitalization of BTC to its realized value. This helps to determine if the digital asset is actually trading at a fair value, if it’s overvalued, or if it is currently undervalued. The lower the value falls, the more undervalued BTC is.

The times when the BTC MVRV Ratio has fallen to similar levels as the one shown in the Cryptoquant chart has been when the market had reached its bottom. This is during bear markets when prices decline drastically for a stretched-out period of time before bouncing back up.

MVRV Ratio falls to 3-year low | Source: Cryptoquant

Looking at the chart, it is easy to spot the times when the MVRV Ratio had been so low was when the previous bottom was reached. One time was in 2015, and the other time was in 2019, a couple of months before the bull market was triggered.

If history is anything to go by, then this chart shows that the BTC bottom is already in, or very close to it. However, going by the previous timelines of when the MVRV Ratio has declined so low, it could be a few months at least before another bull market is triggered. 

What To Do With Such Trends

With the bitcoin MVRV Ratio being so low, it does provide a unique opportunity for investors to buy the digital asset at one of the lowest possible prices before another bull rally. BTC being so undervalued in previous years has only ended in a bull cycle that saw its price hit a new all-time high.

Even if this is not the bottom, it may be very close to it, so investors may not suffer heavy losses even if the price ended up falling lower. The lack of interest in the market in the market has beaten down investor sentiment but it brings into play a strategy proposed by legendary investor Warren Buffett: “Be greedy when others are fearful.”

BTC is trending at $16,855 at the time of this writing. It is up 0.64% in the last 24 hours and 1.21% in the last 7 days.

Ethereum is back on another winning streak as it breaks above $1,900. This follows a weekend that was mostly characterized by low momentum but would eventually turn for the better. In the wake of this, there have been a lot of short liquidations in the market due to the recovery. However, the liquidations in Ethereum hit a new three-year high when thousands of short positions were liquidated on the Bitfinex cryptocurrency exchange.

Bitfinex Short Liquidations Grow

The Bitfinex crypto exchange is one of the largest exchanges in the world and is highly favored by both amateur and professional traders. This is why liquidation volumes are oftentimes pronounced on the platform. However, Monday’s liquidations would pose a new record for the market given that Ethereum liquidations alone had surged past $600 million.

Related Reading | Bitcoin Dominates Derivatives Market To End May On A High Note

This pushed the digital asset into the largest daily liquidations in three years. In total, there were more than $690 million in Ethereum shorts liquidated across various exchanges. Shorts made up 99.5% of these liquidations that were recorded over a four-hour period. However, the majority had come from the Bitfinex crypto exchange. It came out to almost $670 million liquidated on the exchange as ETH had barreled past the $1,900 level.

Other cryptocurrencies such as Bitcoin had taken a hit in the same timeframe but none close to the degree to which Ethereum traders had been liquidated. It shows that sentiment is turning towards the positive it comes to the long-term for the digital asset.

Ethereum Standing Its Ground

Ethereum has been on a recovery trend alongside Bitcoin. This has shot the digital asset above its 20-day moving average. Making its way above $1,900 remains an important point for ETH which has recently been struggling with the $1,700 level. It also marks the only green close in recent weeks for the digital asset as it had been closely trailing the price of Bitcoin.

ETH price breaks above $1,900 | Source: ETHUSD on TradingView.com

Liquidations in Ethereum have eased up, however. The four-hour period where the Bitfinex short liquidations had rocked the market had quickly passed, paving way for more reasonable liquidation volumes. Presently, liquidations across the crypto market sit at less than $130 million for the last 24 hours.

Related Reading | Institutional Investors Turn To Competitors As Ethereum Tumbles

Ethereum has since gone back to trailing behind Bitcoin when it comes to liquidations. The pioneer digital asset has seen traders lose $44.4 million in the past one day at the time of this writing while ETH traders have recorded $32 million in losses. A total of 48,219 traders have been liquidated and Bitfinex still maintains the largest single liquidation with a total of $2.06 million from a single trade.

Featured image from CNBC, chart from TradingView.com

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Earlier this week, the world’s largest cryptocurrency Bitcoin (BTC) made a brief move above $45,000. However, ever since the Federal Reserve announced the inflation numbers on Thursday, it has been moving sideways.

Bitcoin has corrected over 7% from its weekly highs and is currently trading at $42,268 with a market cap of $801 billion. However, one of the biggest positive indicators is that the Bitcoin exchange supply has touched a three-year low since December 2018. On-chain data provider Santiment reported:

With another series of dramatic drops, #Bitcoin’s supply on exchanges is now down to just 10.87%, the lowest percentage seen since December 2018. Generally, this continued trend of coins moving off of exchanges limits the risk of major sell-offs.

A look Into the Bitcoin Crowd Sentiment

Bitcoin has been somewhat volatile over the last week. However, data provider Santiment reports that the positive sentiment lead to a FOMO-like event which caused the price to drop later. It further added:

Bitcoin’s crowd sentiment has remained positive this week, and this is likely contributing to the decline it & #altcoins have seen to end the week. We will be looking for a bit of crowd #FUD as a signal that bounces will happen heading into next week.

The world’s largest cryptocurrency has been under pressure over the last three days and it has also pulled down altcoins along with it. Along with the inflation data, some analysts believe that geopolitical factors such as the Ukraine crisis are weighing up on the market.

However, Bitcoin proponents believe that it is still less risky to hold Bitcoin against other asset classes. MicroStrategy CEO Michale Saylor said:

Given the uncertainties that investors currently face, it feels less risky to be holding #bitcoin than any mix of currencies, credit, equity, commodities, or property.

As per the Bloomberg report, Bitcoin miners have been selling their holdings recently. The net Bitcoin miners’ holdings have turned negative since February 5. The report stated:

The turn in the metric, or the net change of miner balances over a trailing 30-day window, shows that miners have sold their coins in a possible sign a shakeout of less-efficient operators is coming.

About Author

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

Ethereum balances have continued their decline that began earlier this year. The decline of coins being kept on centralized exchanges has pointed to bullish sentiment among the large holder base of the digital asset. Despite the increase in the price of the asset in the past weeks and hitting new all-time highs since then, ETH being held on exchanges have continued to plummet.

Ethereum Exchange Reserves Hit 3-Year Low

Data from Glassnode shows that Ethereum exchange reserves have plummeted towards new lows. The chart shows that this has been long in the making as the downtrend throughout the year 2021 has not faltered. The price of the digital asset and centralized exchange balances have shown to be inversely correlated as the latter has plummeted while the former is on the rise.

Ethereum exchange balances hit three-year low | Source: Glassnode

There is currently 14,241,063 ETH present on exchanges, representing 12% of the total supply of Ethereum. The last time volumes were this low was in 2018 after the bull run had ended.

Related Reading | TIME Magazine Will Hold Ethereum On Balance Sheet As Part Of New Deal

Exchange reserves had picked back up again in 2019, running into 2020. However, the beginning of the bull run towards the end of 2020 saw volumes plummet despite high prices.

Factors Driving Towards A Supply Shock

There are periods where coins on exchanges have tended to decline in the past, mainly during bear markets when investors are snapping up as much crypto as they can. This time, exchange balances have been declining during a bull market. This goes against past behavior in the market where investors would be moving their holdings to exchanges to take profit.

Related Reading | Real Vision CEO Raoul Pal Maps Out A 300% Rally For Ethereum

The reasons for this decline spread across several factors. One is the rise of decentralized finance. A good portion of Ethereum leaving centralized exchanges are usually headed for decentralized exchanges where users can put their coins to work for them and earn passive income. Services like staking and yield farming have become the order of the day as investors can hold their coins and earn sizable interests from them at the same time.

ETH holding above $4,000 | Source: ETHUSD on TradingView.com

Another reason is the rise of bullish sentiment among investors. The multiple bull rallies of 2021 have demonstrated what the crypto market is capable of. Investors have seen that they stand a better chance of seeing higher gains when they hold their coins. In addition, the crypto market is still arguably in its early stages. So, investors are stocking up on the coins while they await even better market conditions.

Ethereum is not the only digital asset that has seen declining balances on centralized exchanges. Top cryptocurrency Bitcoin has also recorded plummeting exchange reserves all through the bull rally, signaling the beginning stages of a supply shock.

Featured image from Crypto News Flash, chart from TradingView.com

Bitcoin exchange balances have been on the decline since the bull rally began. The volumes were expected to go up once the digital asset had hit a new all-time high in October. However, this was not the case. Previous trends have often pointed to exchange balances seeing an increase in bull markets when investors moved their holdings to exchanges in order to take profits. This bull market has defied all expectations for it and continues to do so.

Outflows from exchanges outpace inflows as investors withdraw BTC from exchanges en masse. Exchange balance volumes relative to the circulating supply of bitcoin have declined towards three-year lows. BTC exchange balances now sit at levels not seen since January 2018. This has led to a supply squeeze on exchanges, causing sell pressures to drop tremendously.

Related Reading | American Singer Mariah Carey Offers Free $20 In Bitcoin To Promote Adoption

Big Exchanges See Declining Balances

Big exchanges like Binance, Coinbase, and Huobi have seen large volumes of bitcoin withdrawn from their exchanges. Binance recorded the highest outflows for the last week with 21,000 BTC withdrawn from the crypto exchange. This is one of the sharpest declines recorded in the market.

BTC exchange balances continue to decline | Source: Arcane Research

Huobi also saw thousands of BTC leave the exchange in the past week. The past seven days save 8,000 BTC withdrawn from the cryptocurrency exchange. The outflows from the exchange culminated in a 9% drop in the volume of bitcoin held on Huobi.

These outflows are no longer surprising given that the market has continuously followed this trend for the past few months. Growing scarcity has led to mounting buy pressures as investors scramble to get their hands on as much of the digital asset as they can.

Exchanges Hold 12.94% Of Bitcoin Supply

The share of the total circulating supply held by exchanges has plummeted in October. Currently, exchanges hold 2.44 million BTC on their balances. This translates to 12.94% of the total circulating supply, a new three-year low. A total of 27,500 BTC left exchanges in the past week alone.

Related Reading | Brace For Impact: Wall Street Is Headed Straight For Bitcoin, Says Analyst

Chart trends show that the volume held by these exchanges has consistently declined as the price of bitcoin has grown. Exchange balances had peaked for the year in June after the market had experienced a crash that put an end to the bull rally in April. Sell pressures eased in the months following June, leaving room for further accumulation by investors. Investors are choosing to leave their assets in cold storage rather than moving to exchanges to take gains from the market.

BTC trading in the mid-$58K | Source: BTCUSD on TradingView.com

Glassnode’s data shows that Coinbase holds 29% of global exchange reserves. Despite the sharp decline in its balances, Binance still holds 21% of global bitcoin exchange reserves. Gemini holds the third-largest volume with 12% of global reserves. The report however did not include balances from the crypto exchange, FTX.

Featured image from Bitcoin News, charts from Arcane Research and TradingView.com