Research View - All I Wanted For Christmas was the Santa Claus Rally!
In traditional equity markets, the Santa Claus rally has garnered increased interest from market participants. This concept is defined, in equity markets, as a calendar effect that (supposedly) points to a price rally in the last week of the year.
In 2019, there was no Santa Claus rally for large-cap cryptocurrencies as markets remained flat in December. For instance, Bitcoin closed the year at $7,200, with monthly low at $6,500 and high at $7,400. Similarly, Ethereum closed at $130 and XRP at $0.19. Interestingly, annual close prices were inferior to the estimation from institutional clients, which we collected in October 2019, by around -30% to -35% (“BTC: $10,000, ETH: $200, XRP: $0.30”).
While Santa did not come bearing gifts in the form of capital gains, Binance Staking continued to distribute more staking rewards, with the addition of two new cryptoassets for its services (Tezos and Kava).
However, Binance’s branded ERC-1155 tokens made the news with the launch of six NFTs to celebrate the end of the year. Some of these NFTs were exchanged at prices around 100-300 USD on OpenSea, a decentralized NFT marketplace, illustrating that scarcity of intangible items often leads to value creation. One of these rare collectibles, of which only 10 units were minted, even traded at $2,400 USD.
Furthermore, Binance Futures continued its fast growth, and the recent addition of a third perpetual contract on the platform (BCH/USDT, with leverage up to 50x) could potentially foster supplemental trading opportunities for all crypto-derivatives traders. Meanwhile, ETH/USDT maximum leverage was also increased (from 50x) to 75x.
Finally, Binance’s strategic investment in FTX will likely bring even more additional opportunities for all crypto-traders in the months to come, which may be one of the coverage points in our future reports.
Crypto spot markets
Table 1 - Overview of the largest assets by market cap (EOM - December 2019)
Ticker | Name | Monthly price change (%) | Average daily Binance volume (USDT) | Monthly avg. volume change (%) | Marketcap (EOM - USD) |
|---|---|---|---|---|---|
Bitcoin | -4.7% | $275.2 M | -25.6% | 130.45 B | |
Ethereum | -15.1% | $48.8 M | -28.9% | 14.14 B | |
XRP | -14.4% | $20.2 M | -44.6% | 8.36 B | |
Litecoin | -12.7% | $14.6 M | -39.4% | 2.64 B | |
Bitcoin Cash | -5.9% | $13.5 M | -56.3% | 3.72 B | |
BNB | -12.7% | $17.8 M | -44.4% | 2.14 B | |
EOS | -6.1% | $15.7 M | -48.7% | 2.44 B | |
Stellar | -21.7% | $2.4 M | -80.3% | 906.96 M | |
Cardano | -19.1% | $5.2 M | -48.9% | 851.58 M | |
Monero | -18.5% | $5.6 M | 1.2% | 774.58 M |
Table 2 - Monthly top 3 gainers on Binance.com in December 2019
Table 3 - Monthly top 3 losers on Binance.com in December 2019
Chart 1 - Bitcoin monthly trading dominance in 2019 on Binance.com
Sources: Binance Research, Binance.com.
As a reminder, we defined Bitcoin trading dominance, such as:
“Bitcoin trading dominance represents the respective volume contribution from Bitcoin trading, with BTC as a base currency, relative to the total spot volume on a platform (e.g., Binance) over a period of time.”
Source: Binance Research
Bitcoin trading dominance remained above the 40% mark in December (40.48%), a slight decrease (-1.28%) from 41.76% in November. Meanwhile, the Bitcoin market dominance increased slightly from ~ 67% to ~ 68%.
Table 4 - New CEX listings in December 2019
Ticker | Name | Pair asset(s) | Listing date |
|---|---|---|---|
VITE | BTC, BNB, USDT | ||
FTX Token | BTC, BNB, USDT |
Only two new assets were added to the platform in December: VITE, after its win at the community coin competition, and FTX Token (FTT), following the announcement of minor investment from Binance in the FTX derivatives platform.
In December, BUSD also continued its expansion with the addition of BUSD/RUB, BUSD/TRY, VET/BUSD, and QTUM/BUSD pairs on the exchange.
On-chain markets on Binance DEX
In December 2019, Binance DEX displayed minor activity with 4 new pairs being listed, yet, with only one new stablecoin listing. As of January 2nd 2019, Binance DEX had 121 pairs.
Table 5 - New DEX stablecoin pairs in December 2019
Ticker | Name | Pair asset(s) | Listing date |
|---|---|---|---|
Litecoin BEP-2 | BUSD |
Furthermore, it is worth noting that BNB/ETH (BEP-2) was also added for trading on the Binance DEX.
Chart 2 - Daily volume on the Binance DEX since August 2019 (USD million)
Sources: Binance Research, Binance Chain.
As illustrated in chart 2, the daily volume in December on the Binance DEX remains quite low, with a median of $0.9 million (MoM change of -$0.1 million).
Derivatives markets
For its fourth month, Binance Futures continued its fast growth, and the volume on BTC/USDT perpetual contract was often higher than the total spot volume across all pairs on Binance.com.
Furthermore, the recent addition of a third perpetual contract on the platform (BCH/USDT, with leverage up to 50x) could potentially foster supplemental trading opportunities for all crypto-derivatives traders. Meanwhile, ETH/USDT maximum leverage was also increased (from 50x) to 75x.
Chart 3 - Volume of Binance BTC/USDT perpetual futures contract and spot market (in USDT million)
Sources: Binance Research, Binance.com.
For BTC, its futures volume was higher than the spot volume in December. BTC/USDT perpetual contract markets exhibited a median daily volume of $923.1 million while the spot market displayed $285.6 million daily volume.
Chart 4 - Volume of Binance ETH/USDT perpetual futures contract and spot market (in USDT million)
Sources: Binance Research, Binance.com.
For ETH, its futures volume was higher than the spot volume in December. ETH/USDT perpetual contract markets displayed a median daily volume of $58.7 million while the spot market exhibited $32.9 million daily volume.
Borrowing and lending markets
Borrowing and lending markets remained extremely active in December. However, only one new asset was added for margin trading: Ravencoin (RVN).
Table 6 - New pairs eligible for margin trading in December 2019
Ticker | Name | Pair asset(s) | Date |
|---|---|---|---|
Ravencoin | BTC, USDT |
As of December 31st 2019, there were 29 assets supported for margin trading on Binance. For a list of all supported assets and trading pairs for margin trading, please refer to its website.
Staking markets
Staking markets have become increasingly relevant from the perspective of all crypto-participants, as illustrated in our recent report.
Binance Staking is a new service launched in the second half of 2019, which offers passive rewards for many cryptoassets supported by Binance.
Staking yields vary greatly amongst stake-able assets, with expected yields ranging from 1% (NEO) to as high as 16% (KAVA). Uniquely, Binance Staking provides zero-fee staking rewards, allowing users to get the full yields collected from staking funds on their behalf. To learn more about Binance Staking in detail, please visit the Binance Staking Explained page.
Chart 5 - Expected yields (%) for assets supported for soft staking on Binance.com
As of January 2nd 2019, staking services are currently supported for 14 cryptoassets, an increase of 2 assets (KAVA and Tezos (XTZ)).
Views from Binance Trading
This section has been prepared by Binance Trading, one of the world’s most liquid OTC desks for cryptocurrencies and digital assets1. The content reflects the views of Binance Trading solely.
Winter Bulls vs. Polar Bears
December was one of the more polarising months in recent memory in terms of opinions split about BTC’s price direction. As BTC hovered at the $7,250 mark, there was the debate about whether BTC would reach $6,500 or $8,000 first. We asked this question on a poll in the Binance Trading Telegram channel, and opinions were split almost exactly 50-50. The bears ended up being correct as BTC did reach $6,500 on Dec 18, but found strong support at this level and shot back up almost immediately to above $7,100. We enter 2020 with virtually the same question we had in our poll, and it seems that BTC may be range-bound for longer than many have expected.
Going into OTC flows, December started with a few sizeable BTC sells. We thought this could kickstart increased sell pressure on BTC, but prices held up well. As BTC moved sideways, sell flows for small-cap altcoins were dominant. Large-cap altcoins like ETH and XRP, on the other hand, were in demand and saw a higher than usual amount of buy flows.
BNB also saw a high amount of buy flows this month, notably when prices first dipped below $15. There was another round of buy flows when prices dropped below $13. Starting from a few days before Christmas to the end of the month, two-way flows for BTC picked up. Buyers may have been anticipating a Santa or an end-of-the-year rally, and sellers may have turned bearish after seeing BTC fail to pick up steam throughout December. It will be interesting to see whether BTC makes any significant movements in either direction in January, after a historically unusually calm December.
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