derivatives
Binance to cease crypto futures and options in Australia
Binance users in Australia have 90 days to close their positions for futures, options and leveraged tokens.
Binance, the world’s largest cryptocurrency exchange by trading volume, continues limiting its services amid the ongoing global regulatory scrutiny, announcing new trading restrictions in Australia.
Existing Binance users in Australia will have 90 days to reduce and close their positions for products like cryptocurrency futures, options and leveraged tokens, the exchange announced Sept. 20.
Effective from Friday, Australian users will no longer be able to increase or open new positions for derivatives products on Binance. Users will still be able to top-up their margin balances to prevent liquidations and margin calls, the announcement notes.
After Dec. 23, Binance users in Australia will no longer be able to manually reduce or close their positions as all remaining open positions will be closed.
“We are committed to our industry for the long term and we want to ensure our product offerings are welcomed by users and local regulators,” a spokesperson for Binance told Cointelegraph. “We also monitor local regulatory requirements across different markets as Binance operates globally. We want to ensure the process for any transition we make is not disruptive,” the representative added.
Related: Binance limits SGD product offerings in Singapore amid regulatory warnings
Binance’s latest trading suspensions in Australia follow a series of similar restrictions in other countries amid the exchange facing several warnings from multiple global regulators. In August, Binance reportedly halted crypto derivatives trading in Brazil, following similar suspensions on its Hong Kong operations. Previously, Binance suspended derivatives trading for users in Germany, Italy and the Netherlands as part of its broader plans to cease these products across Europe.
Coinbase applies to trade crypto futures
If Coinbase gets approval from the National Futures Association, it will then need to register with the Commodity Futures Trading Commission to get the green light.
Top U.S. crypto exchange Coinbase has submitted an application to become a registered Futures Commission Merchant (FCM) with the National Futures Association (NFA).
Details are sparse, but according to the NFA website the pending application was submitted on Sept. 15 under the name “Coinbase Global Inc.”
Coinbase highlighted the move via Twitter on Sept. 16 and stated that “this is the next step to broaden our offerings and offer futures and derivatives trading on our platforms. Goal: Further grow the crypto economy.”
If Coinbase becomes an approved FCM member under the NFA, the firm will then need to register with U.S. derivatives regulator the Commodity Futures Trading Commission to get the green light.
Related: President Biden announces picks to fill CFTC vacancies
The crypto derivatives markets dwarf the size of spot markets, and despite an abundance of regulatory FUD derivatives have exploded in popularity in 2021. According to data from CoinGecko the market processed more than $143 billion over the past 24 hours. Binance, FTX and Bybit currently lead the pack in terms of 24-hour open interest, with $10.1 billion, $6.8 billion and $3.8 billion respectively.
Coinbase will be hoping its move to futures and derivatives goes a lot smoother than its plans to offer a USD coin (USDC) lending product, after the Securities and Exchange Commission (SEC) threatened to sue the company if it went through with the launch.
According to a Sept. 15 report from The Economic Times, Coinbase also sold $2 billion worth of junk-bonds this week in an offering that saw $7 billion worth of orders placed for seven and 10-year bonds.
3 reasons why Polkadot is en-route to a new ATH even after a 256% rally
Steady development and strong fundamentals suggest that DOT's rally toward a new all-time high is in the making.
The recent 256% Polkadot (DOT) recovery over the past 56 days has been nothing short of spectacular. Although the price is 23% below its $49.80 all-time high from four months ago, the altcoin's $39 billion market capitalization has outperformed the Ether (ETH) by 66% over the past thirty days.
Polkadot is a blockchain network designed to support various interconnected, application-specific parallel chains, known as parachains. This scalability-focused project breaks up transactions into many shards and processes them in parallel, similar to what ETH 2.0 aims to achieve.
Polkadot refers to the entire ecosystem of parachains that plug into a single base platform known as the relay chain. This baselayer provides security to the network and handles the consensus, finality and voting logic.
To support parachain launches, users vote for projects by locking up DOT tokens. Currently, only Kusama — Polkadot's "canary" network and an early, unrefined release of Polkadot — is holding its own auctions for these slots. Polkadot is expected to initiate the same process over the next couple of months.
Polkadot's integration to DeFi increases
Polkadot's ecosystem has been growing consistently and on Sept. 8 SubQuery, a decentralized data aggregator, raised $9 million to build Polkadot's first data aggregation layer.
As an example of this integration, the Moonbeam parachain has tokens built on Polkadot's development tool (Substrate). These tokens can be seamlessly sent to Ethereum wallets and smart contract addresses. On Sept. 9, Moonbeam announced a partnership with Lido, a decentralized liquid staking derivatives protocol currently deployed to Ethereum and Terra.
The latest update came from dTrade, a decentralized exchange. After successfully raising $6.4 million in a seed funding round in May of 2021, the DEX gathered another $22.8 million market-making fund designed to provide "deep liquidity" backed by some of crypto's largest market makers.
Related: Governance proposals and layer-two launches provide a boost to altcoins
Derivatives data shows potential for a fresh all-time high
Technical analysts are quick to make price projections but investors should analyze Polkadot's derivatives data. For example, a nonexistent futures contracts premium means that investors are not comfortable creating bullish positions using leverage.
DOT's total futures open interest grew to $685 million from $360 million in 30 days and this is a positive indicator because it reflects the willingness of leverage traders to keep their long positions open despite the rally.
In futures contracts trading, both longs (buyers) and shorts (sellers) are matched at all times, but their leverage varies. Eventual imbalances are reflected in the funding rate and derivatives exchanges will charge whichever side is using more leverage to balance their risk.
Steady protocol development will be the ultimate driven of DOT price
In the first week of September, a healthy dose of optimism was reflected because the 8-hour funding rate reached 0.10%, which is equivalent to 2.1% per week. Nevertheless, the situation reverted after the 35% price crash on the morning of Sept. 7.
This $22.70 intraday low from a week ago might seem irrelevant since the price of DOT is above $36, but traders' appetite for leveraged long positions has yet to recover from this.
The most likely case is a "glass half full" scenario where investors will regain confidence as the project continues to deliver.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Derivatives exchange dTrade raises $22.8M for market makers
The Polkadot-centric exchange allows users to trade perpetual swaps and options with on-chain settlement.
Decentralized exchange dTrade has raised $22.8 million for a market-making fund designed to provide the ecosystem with higher liquidity, potentially setting the stage for wider DeFi adoption on Polkadot once the DEX launches later this year.
The funds will enable dTrade to launch with “deep liquidity” backed by some of crypto’s largest market makers, the company announced Tuesday. Specifically, the capital will be used to facilitate on-chain loans to market makers that provide order book liquidity on dTrade. Community members will also have the opportunity to participate in the on-chain program once dTrade launches, which is expected soon after Polkadot concludes its parachain auctions later this year.
The capital raise had participation from some of blockchain’s biggest companies, including Alameda Research, CMS, Hypersphere, Polychain and DeFiance.
Market makers facilitate smooth open and exit positions for traders who are buying and selling assets on the open market. Market makers essentially place buy and sell orders for tradeable assets to provide liquidity and ensure that transactions are executed at close to fair prices as possible.
Related: Automated market makers are dead
As Cointelegraph reported, dTrade concluded a $6.4 million seed round in May of this year to bolster DeFi capabilities on the Polkadot network. The capital raised over the last two rounds coincided with a sharp increase in derivatives trading, which accounts for the majority of cryptocurrency trades, according to some estimates.
Crypto’s volatile price swings this year have been largely linked to derivatives. During Bitcoin’s (BTC) flash crash in May, crypto liquidations topped $2.4 billion over a 24-hour period, according to ByBit data. Over-leveraged traders were purged from the market during the extreme bearish trend, though recent data suggests open interest in Bitcoin options is on the rise again.
Related: Delta Exchange launches options trading for Solana and Cardano
The market for crypto derivatives began to take shape in the second quarter of 2020 but remains in its very early stages. Goldman Sachs became the latest high-profile multinational to enter the market after expanding adding Ether (ETH) options and futures to its trading operations.
Bitcoin price flirts with $40K, but derivatives data is still bullish
Bitcoin is leaning toward the $40,000 level, but derivatives data shows traders are holding a neutral-to-bullish stance.
The price of Bitcoin (BTC) is facing an intense period of volatility since moving from a $52,950 top on Sept. 7 to a $42,800 low just two hours later. More recently, the $45,000 support was held for a couple of days despite being heavily tested, and this triggered a $3,400 up- and down-swing on Sept. 13.
There’s little doubt that shorts — traders betting on a price decrease — have taken the upper hand since the liquidation of $3.54 billion worth of long (buyers) futures contracts on Sept. 7.
MicroStrategy’s Sept. 13 announcement that it added over 5,050 Bitcoin at an average price of $48,099 was not enough to reestablish confidence, and the cryptocurrency’s price remained unchanged near $44,200.
While the impact of shorts may be being felt, it’s more likely that regulatory concerns continue to suppress markets, as the United States Treasury Department has reportedly discussed potential regulation for private stablecoins, as reported by Reuters on Sept. 10.
The growing interest from regulators comes as the stablecoin market capitalization has grown from $37 billion in January to its current $125 billion. Furthermore, both Visa and Mastercard have reiterated their interest in stablecoin-related solutions.
Regardless of the reason behind the current price weakness, derivatives contracts have been displaying bullish sentiment since Aug. 7.
Professional traders have been bullish for the past five weeks
Bitcoin quarterly futures are the preferred instruments of whales and arbitrage desks because they have the significant advantage of lacking a fluctuating funding rate. However, these might seem complicated for retail traders due to their settlement date and the price difference from spot markets.
When traders opt for perpetual contracts (inverse swaps), derivatives exchanges charge a fee every eight hours depending on which side demands more leverage. Meanwhile, fixed-date expiry contracts typically trade at a premium from regular spot market exchanges to compensate for the delayed settlement.
A 5% to 15% annualized premium is expected in healthy markets because the money locked in these contracts could otherwise be used on lending opportunities. This situation is known as contango and happens on almost every derivatives instrument.
However, this indicator fades or turns negative during bearish markets, causing a red flag known as “backwardation.”
The above chart shows the premium (basis rate) rising above 8% on Aug. 7 and sustaining this moderate bullishness ever since. Thus, data is exceptionally healthy and depicts hardly any lack of conviction, even with Bitcoin testing the sub-$44,000 level twice in the past 15 days.
Related: Regulatory and privacy concerns trail SEC’s threat to Coinbase
Futures open interest remains healthy
The $3.54 billion in liquidations across derivatives markets on Sept. 7 definitely hurt overleveraged traders, but the open interest on Bitcoin futures is still healthy in the grand scheme of things.
Check out how the current $14.8 billion figure is 23% above June’s and July’s $12 billion average. This contradicts speculations that traders have been severely impacted and are hesitant to create positions due to Bitcoin’s volatility or somehow fearing an impending bearish event.
There should be no doubt, at least according to futures markets, that investors are neutral to bullish despite the recent price correction. Of course, traders should monitor important resistance levels, but so far, $44,000 has held firm.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
dYdX exchange releases governance token, making its airdrop worth up to $100K
The DYDX governance token becomes the latest airdrop to surpass $100,000 for the most active users, and the DEX's transaction volumes highlight the rising popularity of layer-2 platforms.
Airdrops have been a fan-favorite in the cryptocurrency ecosystem for years because they offer projects a way to reward early adopters and increase token distribution.
The latest project to surprise its community of supporters with retroactive rewards for its newly minted token is dYdX, a non-custodial decentralized derivatives exchange that operates on a layer-2 version of the Ethereum (ETH) network.
Data from CoinGecko shows that on its first day of trading live in the markets, DYDX is trading at a price of $10.28 at the time of writing after hitting an intra-day high at $14.24.
The number of tokens received by each user was determined by their previous trading actively on the platform, with the lowest tier user receiving 310 tokens for trading at least $1 on the exchange, and the highest tier user earning 9,529 tokens for trading volumes exceeding $1 million.
At the daily high of $14.24, the airdrop was worth between $4,414 and $135,692 with the average user who traded between $1,000 and $10,000 in value on the platform receiving 1,163 DYDX worth $16,561.
Related: Ethereum layer-twos reportedly processing more transactions than Bitcoin
The ongoing shift to layer-two solutions
The retroactive 'release' of the DYDX governance token marks a big step for the protocol as it embarks on its path to becoming a fully decentralized, community-governed platform. It is and another sign of a larger shift by a growing number of projects shifting to layer-two solutions in order to operate in a lower fee environment.
Many blockchain projects are migrating to various cross-chain and layer-two solutions like Polygon and dYdX was actually one of the first decentralized exchanges to announce that it would launch on StarkWare, a layer-two solution it developed in conjunction with StarkEx.
According to data from dYdX, at the close of the first mining epoch, there were 32,700 DYDX holders and the platform had transacted $13.8 billion in monthly trading volume and $141 million in market-maker capital has been staked.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Delta Exchange launches options trading for Solana and Cardano
Crypto derivatives markets are growing in popularity as traders seek strategic, short-term exposure to digital assets.
Crypto derivatives platform Delta Exchange announced Wednesday that it has launched futures trading on Solana (SOL) and Cardano (ADA), giving investors a new access point to the leading altcoins.
The initial rollout of SOL and ADA call and put options will have daily maturities, with weekly and monthly maturities to be made available at a later date.
Options give owners the right, but not the obligation, to buy or sell a specific security at a specified price within a pre-defined timeframe. Call and put options are used heavily in traditional markets but have become more prevalent within crypto markets.
Delta Exchange already provides options trading for Bitcoin (BTC), Ether (ETH), XRP (XRP), Bitcashpay (BCP) and Binance Coin (BNB). As Cointelegraph reported, the derivatives exchange launched several options products in mid-2020.
The crypto derivatives market has grown exponentially this year, with traders defying a regulatory crackdown from global financial authorities. Cryptocurrency exchange Binance recently announced it was restricting derivatives trading for Hong Kong users amid local pressures. In the United States, officials at the Commodity Futures Trading Commission have voiced their support for broader enforcement on crypto-based derivatives.
Related: Derivatives data shows Ethereum traders positioned to extend the ETH rally
After a mid-summer lull, options trading picked up significantly in August as crypto markets staged a massive rebound. By mid-August, the open interest in Bitcoin options had more than doubled from their yearly low set in late June.
Research undertaken by CoinMarketCap determined that, by December 2020, derivatives accounted for 55% of the overall cryptocurrency market. The growth of platforms like FTX, Bybit and Delta suggest derivatives may account for a larger percentage of the overall market.
Bitcoin bulls target $50K as Friday’s $655M BTC options expiry approaches
$655 million in BTC options expire on Sept. 3, and data suggests bulls may be motivated to break the $50,000 resistance prior to the expiry.
Bitcoin (BTC) failed to break the critical $50,000 psychological barrier on Aug. 23 and has since then retested the $47,000 support. If historical data plays any role in Bitcoin price, the month of September presented negative performances in 4 of the previous 5 years.
Cointelegraph contributor and market analyst Michaël van de Poppe recently said that Ether's (ETH) break above $3,500 could be a leading indicator for Bitcoin's next bull run, and now that Ether trades at $3,700, traders anxiously await BTC's next move.
Bulls could be excited for El Salvador's 'Bitcoin Law,' which is scheduled to take effect on Sept. 7. In addition, the recent $150 million Bitcoin Trust fund approval by the country's Legislative Assembly is another potentially bullish development.
The money will be used to support the installation of government-backed crypto ATMs and to offer incentives that encourage the adoption of Chivo, the government-backed digital wallet.
This week Coinbase also saw a large Bitcoin outflow after a relatively stable period. The move brought the exchange's balance below 700,000 BTC, a figure last seen in Dec. 2017. These movements are usually considered bullish because they signal that holders are less likely to sell coins in the short term.
The Sept. 3 expiry will be a test of strength for bulls because 93% of the $390 million call (buy) options have been placed at $48,000 or higher.
Moreover, these neutral-to-bullish instruments dominate the weekly expiry by 48% compared to the $265 million protective put options.
However, the 1.48 call-to-put ratio is deceiving because the excessive optimism seen from bulls could wipe out most of their bets if Bitcoin price remains below $48,000 at 8:00 am UTC on Friday. After all, what good is a right to acquire Bitcoin at $52,000 if it's trading below that price?
Bears were also caught by surprise
78% of the put options, where the buyer holds a right to sell Bitcoin at a preestablished price, have been placed at $46,000 or lower. These neutral-to-bearish instruments will become worthless if Bitcoin trades above that price on Friday morning.
Below are the four most likely scenarios that consider the current price levels. The imbalance favoring either side represents the potential profit from the expiry.
- Between $45,000 and $46,000: 140 calls vs. 1,220 puts. The net result is $48 million favoring the protective put (bear) instruments.
- Between $46,000 and $48,000: 590 calls vs. 735 puts. The net result is balanced between bears and bulls.
- Between $48,000 and $50,000: 1,930 calls vs. 120 puts. The net result is $88 million favoring the call (bull) options.
- Above $50,000: 3,310 calls vs. 0 puts. The net result is a complete dominance with $165-million worth of bullish instruments.
The above data shows how many contracts will be available on Friday, depending on the expiry price.
This crude estimate considers calls (buy) options being used in bullish strategies, whereas put (sell) options exclusively in neutral-to-bearish trades. Unfortunately, real life is not that simple because it's possible that more complex investment strategies are being deployed.
For example, a trader could have sold a put option, effectively gaining a positive exposure to Bitcoin above a specific price. Still, there's no easy way to measure this effect, so the simple analysis above is the best guess.
Incentives are in place for bulls to try to break $50,000
These two competing forces will show their strength, and the ears will try to minimize the damage. On the other hand, the bulls have modest control over the situation if BTC price remains above $48,000.
The most important test will be the $50,000 level because bulls have significant incentives to obliterate every single protective put option and land a $165 million advantage.
The bear's only hope resides in some surprise regulatory newsflow or a negative outcome for Bitcoin price coming from the U.S. jobless claims data on Sept. 2.
Even though there's still room for additional volatility ahead of the expiry, the bulls seem to be better positioned.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Expanding ecosystem and LedgerX acquisition send FTX Token (FTT) to a new ATH
FTT price soared to a new all-time high after FTX exchange added LedgerX to its ever-expanding list of acquisitions and partnerships.
Real-world adoption and brand awareness are one of the best ways for a blockchain project to increase its value and attract new users to users to its ecosystem.
One project that has seen massive growth throughout 2021 thanks to its increasing public exposure and exciting protocol launches and partnerships is FTX, a crypto-derivatives trading platform founded by Sam Bankman-Fried and Gary Wang.
Data from Cointelegraph Markets Pro and TradingView shows that after hitting a low near $50 on Aug. 31, the price of FTT catapulted 42% higher to a new all-time high at $66.50 on Sep. 1 as its 24-hour trading volume increased by 200% to $1.675 billion.
The sudden burst in momentum came following the Aug. 31 announcement that FTX US, the United States-based arm of the exchange, would be acquiring LedgerX, a fully licensed, U.S.-based options and futures trading platform.
We are excited to announce that FTX US is acquiring LedgerX!
— FTX - Built By Traders, For Traders (@FTX_Official) August 31, 2021
We look forward to partnering with the @LedgerX team to offer CFTC-regulated crypto derivatives to the US market. pic.twitter.com/6VgH4psaL5
Through this acquisition, the company will now be able to offer regulated crypto futures and options trading to the US market.
FTX has had a busy year of partnerships and publicity generating moves such as purchasing the naming rights for several stadiums and becoming the official crypto exchange sponsor of Major League Baseball, but many feel that this is the biggest development to date for the platform because it gives FTX US a unique product in the US marketplace.
Related: FTX crypto exchange seals $210M naming rights deal for esports behemoth TSM
And just to show that it also has an ear on the pulse of the cryptocurrency community, FTX also recently announced plans to list the up and coming Star Atlas gaming metaverse and NFT ecosystems, a highly anticipated project that looks to capture the surging momentum of the NFT and gaming sectors.
That's one small step for a man, one giant #listing for mankind. - @staratlas pic.twitter.com/MCY72eWNsN
— FTX - Built By Traders, For Traders (@FTX_Official) August 31, 2021
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.