FTX.US acquires Bitcoin derivatives platform LedgerX

August 31, 2021 Coin Telegraph

FTX.US acquires LedgerX for an undisclosed amount to dive into Bitcoin and Ether futures trading.

FTX.US, the United States-based affiliate of Sam Bankman-Fried’s cryptocurrency exchange FTX, is acquiring crypto derivatives platform LedgerX for an undisclosed amount.

FTX.US’ owner West Realm Shire Services announced on Aug. 31 that the company had executed a sale and purchase agreement to acquire LedgerX’s parent company Ledger Holdings. The deal is expected to close, pending satisfaction of customary closing conditions, the firm noted.

LedgerX is a digital currency futures and options exchange regulated under the Commodity Futures Trading Commission (CFTC), Swap Execution Facility (SEF), and Derivatives Clearing Organization (DCO). The platform is available for retail and institutional investors, allowing them to trade cryptocurrency futures with the physical settlement of all contracts.

According to the announcement, the acquisition will have no material impact on LedgerX's operations as the platform will continue to provide its current services to its existing customer base. The deal will reportedly provide FTX.US with the ability to offer options and futures contracts on Bitcoin (BTC) and Ether (ETH) to institutional and retail investors, significantly expanding its spot trading services.

“We believe the integration of our technological capabilities, product portfolio and large balance sheet with LedgerX will enhance our ability to provide innovative products to all US cryptocurrency traders,” FTX.US President Brett Harrison said. He also noted that it’s crucial for the industry to strive for relationships with regulators like the CFTC.

The news comes after FTX.US’ affiliate global crypto exchange FTX posted the largest private fundraiser in the crypto history, raising $900 million in July. The company’s CEO Bankman-Fried said in a Monday Forbes interview that the crypto derivatives market is a “somewhat misunderstood area” so far, but it has the potential to significantly expand wider crypto markets by adding liquidity and making them more efficient in general.

SBF promotes efficiency of ‘misunderstood’ crypto derivatives

August 31, 2021 Coin Telegraph

Coin Telegraph

FTX CEO Sam Bankman-Fried says derivatives are necessary to bolster the liquidity and efficiency of markets.

The chief executive of crypto derivatives exchange FTX, Sam Bankman-Fried (SBF), has argued that derivatives are vital for the efficiency of the digital asset markets.

In an interview with Forbes published Aug. 30, the crypto billionaire claimed that crypto derivatives are “misunderstood,” asserting that critics fail to recognise the vital role derivatives play in bolstering the liquidity and efficiency of markets.

Derivatives refer to financial contracts that derive their value from an underlying asset or benchmark. Crypto derivatives in the form of futures, options, and perpetual swaps have attracted significant popularity in recent years.

SBF described derivatives as “misunderstood,” adding:

“People will note that derivatives trade more volume in crypto than spot, which is true. But that is true of every asset class in the world.”

In addition to promoting the efficiency and liquidity of derivatives, Bankman-Fried highlighted that said products can offer greater flexibility to investors seeking exposure to crypto assets by allowing them to access the markets without taking on the challenges associated with custodying digital assets.

However, SBF acknowledged the risks associated with traders using excessive leverage, which can drive increased volatility and expose investors to liquidations. In March, Cointelegraph reported that extreme leverage had resulted in $500 million worth of BTC being liquidated over the course of just one hour.

In late July, SBF lowered the leverage available to traders on his FTX exchange from 101x down to 20x. At the time he stated the move was intended to “encourage responsible trading.” Speaking to Forbes, Bankman-Fried further elaborated on his decision to reduce the leverage available to FTX users:

“Any position that you're putting on with that level of leverage can't be absolutely crucial for efficient markets, and this is not something I felt was particularly important or good for crypto market health.”

SBF also encouraged the wider crypto industry to embrace regulation, urging digital asset firms to do “a more conscientious job of interfacing with regulators.”

Earlier this month, the FTX boss estimated that it will take three to five years before there is regulatory clarity for the crypto industry. “I’m spending five hours a day on everything from regulation to licensing and everything in between,” he said.

On Aug. 9 FTX announced that it will be streamlining its KYC (know-your-customer) procedures by checking phone numbers against data held on record to confirm users’ jurisdictions.

Here’s how Bitcoin options traders might prepare for a BTC ETF approval

August 30, 2021 Coin Telegraph

Bitcoin

Bloomberg analysts expect a BTC ETF approval in the next few months, and clever options traders might use this strategy to profit from the possibility.

Very few events can shake the cryptocurrency markets in a sustainable manner that really sends Bitcoin and altcoin prices into a sharp directional move. One example is when Xi Jinping, China's President, called for the development of blockchain technology throughout the country in October 2019.

The unexpected news caused a 42% pump in Bitcoin (BTC), but the movement completely faded away as investors realized China was not altering its negative stance on cryptocurrencies. As a result, only a handful of tokens focused on China's FinTech industry, blockchain tracing, and industry automation saw their prices consolidate at higher levels.

Some 'crypto news' and regulatory development have a lasting impact on investors' perceptions and willingness to interact with the crypto market. Not every one of these is positive. Take, for example, the launch of Chicago Mercantile Exchange (CME) Bitcoin futures in Dec. 2017, which experts say popped the 'bubble' and led to a nearly 3-year long bear market. Despite this outcome, a positive was institutional investors finally had a regulated instrument for betting against cryptos.

Tesla's February 2021 announcement that it had invested $1.5 billion in Bitcoin effectively changed the perception of reluctant corporate and institutional investors, and it validated the "digital gold" thesis. Even if the price spiked to a $65,000 all-time-high and retracted all the way to $29,000, it helped to establish a support level price-wise.

Believe it or not, investors have been expecting the United States Securities and Exchange Commission to approve a Bitcoin futures exchange-traded instrument since July 2013, when the Winklevoss brothers filed for their "Bitcoin Trust."

Grayscale's Bitcoin Trust (GBTC) was finally able to list it on OTC markets in March 2015, but numerous restrictions are applied to these instruments, limiting investor access.

A potentially positive price trigger is coming up

With that in mind, the effective approval of a U.S. listed ETF from the SEC will likely be one of those events that will alter Bitcoin's price forever. By expanding the field of potential buyers to the underlying asset, the event could be the trigger that drives BTC to become a multi-billion dollar asset.

Bloomberg ETF analysts Eric Balchunas and James Seyffart issued an investor note on Aug. 24 that suggested that the SEC approval could come as soon as October. Even though one could use futures contracts to leverage their long positions, they would risk being liquidated if a sudden negative price move occurs ahead of the approval.

Consequently, pro traders will likely opt for an options trading strategy like the 'Long Butterfly.'

By trading multiple call (buy) options for the same expiry date, one can achieve gains that are 3.5 times higher than the potential loss. The 'long butterfly' strategy allows a trader to profit from the upside while limiting losses.

It is important to remember that all options have a set expiry date, and as a result, the asset's price appreciation must happen during the defined period.

Using call options to limit the downside

Below are the expected returns using Bitcoin options for the October 29 expiry, but this methodology can also be applied using different time frames. While the costs will vary, the general efficiency will not be affected.

*Profit / Loss estimate. Source: Deribit Position Builder*

This call option gives the buyer the right to acquire an asset, but the contract seller receives (potential) negative exposure. The Long Butterfly strategy requires a short position using the $70,000 call option.

To initiate the execution, the investor buys 1.5 Bitcoin call options with a $55,000 strike while simultaneously selling 2.3 contracts of the $70,000 call. To finalize the trade, one should buy 0.87 BTC contracts of the $90,000 call options to avoid losses above such a level.

Derivatives exchanges price contracts in Bitcoin terms, and $48,942 was the price when this strategy was quoted.

The trade ensures limited downside with a possi 0.25 BTC gain

In this situation, any outcome between $57,600 (up 17.7%) and $90,000 (up 83.9%) yields a net profit. For example, a 30% price increase to $63,700 results in a 0.135 BTC gain.

Meanwhile, the maximum loss is 0.07 BTC if the price is below $55,000 on October 29. Thus, the 'long butterfly' appeal is a potential gain of 3.5 times larger than the maximum loss.

Overall, the trade yields a better risk-to-reward outcome than leveraged futures trading, especially when considering the limited downside. It certainly looks like an attractive bet for those expecting the ETF approval sometime over the next couple of months. The only upfront fee required is 0.07 Bitcoin, which is enough to cover the maximum loss.

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.

Chainlink (LINK) looks for momentum while pro traders target $40

August 26, 2021 Coin Telegraph

Chainlink

LINK price is struggling to maintain its bullish momentum but derivatives data shows a clear path to $40 in the long term.

Chainlink (LINK) is the leading oracle provider, and the project has onboarded over 281 crypto projects in 2021. Some of these include heavyweights like Huobi's ECO Chain, the Hedera Governing Council, and Alchemix.

Launched in Oct. 2020, Chainlink's verifiable randomness function, or VRF, has also gained notoriety among decentralized applications (dApps). VRF provides an automated source of randomness to ensure prizes and rewards are issued in a verifiably fair fashion.

For example, on Aug. 13, Arbitrum — a layer-two Ethereum scaling solution — launched a beta mainnet service integrated with Chainlink's oracle data feed and intends to add a "Proof of Reserve" service allowing collateralized assets to be audited using the oracle provider's web API.

Chainlink offers a secure connection between smart contracts and off-chain data and services, servicing decentralized finance (DeFi) applications, social networks, NFT platforms and interoperability projects.

Big players partner to back Chainlink adoption

Among Chainlink's major differentials are the node operators, and Swisscom, a Switzerland-based telecommunications company, chose the project for a pilot program on Aug. 5. The company is 51% owned by the Swiss government, and the telecom operator currently has more than 19,000 employees and 6 million subscribers.

On Aug. 10, Bancor, an Ethereum-based decentralized exchange (DEX) and liquidity provider, announced that its upcoming version would integrate Chainlink Keepers to work as external triggers for smart contracts. This tool simplifies the staking experience for liquidity providers and automates advanced trading features.

Bancor holds over $1.5 billion worth of various cryptocurrencies locked in its smart contracts, and this illustrates how Chainlink's oracle solutions have been forming a critical backbone to the dApps industry.

Derivatives data shows a glass half full

LINK is a crowd favorite, but after retracing 12% from the $30.50 top on Aug. 16, investors have reason to question if the bull trend has come to an end. Fortunately, for bullish investors, derivatives data is signaling that LINK could push to $40 or higher.

*Chainlink (LINK) price in USD at Coinbase. Source:* *TradingView*

Let's take a look at LINK's derivatives data to assess how traders are dealing with the 14% price correction since the $30.50 top in mid-Aug.

*LINK futures aggregate open interest. Source: Bybt.com*

Standing at $260 million, LINK futures' open interest might seem small compared to the $1 billion-plus held by Ether (ETH), Cardano (ADA), and XRP. The number is relevant considering its $560 million average daily spot exchange volume, but this is also 65% below larger market-cap altcoins according to Nomics' transparent volume.

Perpetual contracts, also known as inverse swaps, have an embedded rate usually charged every eight hours. This fee ensures there are no exchange risk imbalances. A positive funding rate indicates that longs (buyers) are the ones demanding more leverage.

However, the opposite situation occurs when shorts (sellers) require additional leverage, and this causes the funding rate to turn negative.

*LINK perpetual futures 8-hour funding rate. Source: Bybt.com*

As depicted above, the 8-hour fee reached an 0.07% average between Aug. 20 and Aug. 24, which is equivalent to 6.2% per month. This momentary spike rapidly seized as the LINK price crashed below $27 and signaled a well-balanced situation between the leverage used by longs and shorts.

Some analysts might interpret this data as neutral-to-bearish, but the absence of a high futures open interest and a neutral leverage situation is a healthy indicator. This is especially true considering that LINK has rallied 94% since its $13.40 low on July 20.

Consequently, derivatives markets signal a healthy recovery and no impediments for continuing the bullish momentum above $40.

Ethereum traders expect volatility ahead of Friday’s $820M options expiry

August 25, 2021 Coin Telegraph

Ethereum traders expect volatility ahead of Friday’s 0M options expiry

Coin Telegraph

Overly-confident Ethereum options traders are nervously watching the $3,200 level ahead of this week’s $800 million ETH options expiry.

Ether (ETH) will face a critical $820 million monthly options expiry on Friday, Aug. 27. That will be the first time that $3,000 and higher options will have a real fighting chance, even though bulls seem to have missed a good opportunity to dominate the expiry because they were too optimistic about Ether’s price potential.

It is unclear why $140 million of the neutral-to-bullish call options were placed between $3,800 and $8,000, but these instruments will likely become worthless as the monthly expiry approaches.

Competition and the success of interoperability-focused protocols impact Ether price

The Ethereum network has struggled due to its own success, which consistently leads to network congestion and transaction fees of up to $20 and higher. Furthermore, the rise of nonfungible tokens and decentralized finance imposed further stress on the network.

Maybe some of the inflow that was supposed to move Ether price up went to its competitors, which presented stellar performances recently. For example, Cardano (ADA) surged over 100% quarter-to-date as investors expect its long-awaited smart contracts to launch on Sept. 12.

Solana (SOL), another smart contract contender, captured one-third of the inflows to crypto investment products over the last week, according to CoinShares “Digital Asset Fund Flows Weekly.”

Lastly, layer-two scaling solutions like Polygon (MATIC) have also seen 150% gains after successfully bringing DeFi projects into its interoperability pool and launching a decentralized autonomous organization (DAO) to scale projects on the software development kits.

*Ether options aggregate open interest for Aug. 27. Source: Bybt.com*

Notice how the $3,000 level vastly dominates Friday’s expiry with 30,900 ETH option contracts, representing a $100 million open interest.

The initial call-to-put analysis shows a slight prevalence of the neutral-to-bullish call instruments, with 13% larger open interest. However, bears seem to have been taken by surprise because 83% of their bets have been placed at $2,900 or lower.

To succeed, bears need to push and hold Ether price below $2,900

Nearly half of the neutral-to-bullish call options have expiry prices set at $3,500 or higher. These instruments will become worthless if Ether trades below that price on Friday. The options expiry happens at 8:00 am UTC, so traders might expect some price volatility nearing the event.

Below are the three most likely scenarios that will likely happen and their estimated gross result. Keep in mind that some investors could be trading more complex strategies, including market-neutral ones that use calls and protective puts. Consequently, this estimation is somewhat rudimentary.

The simplistic analysis weighs the call (buy) options against the put (sell) options available at each strike level. So, for example, if Ether’s expiry happens at $3,050, every neutral-to-bullish call option above $3,000 becomes worthless.

Below $2,900: 36,360 calls vs. 32,700 puts. The net result is virtually balanced.
Between $2,900 and $3,000: 36,770 calls vs. 20,320 puts. The net result favors the neutral-to-bullish instruments by $48 million.
Between $3,000 and $3,200: 55,660 calls vs. 8,320 puts. The net result favors the neutral-to-bullish instruments by $147 million.
Above $3,200: 62,260 calls vs. 1,490 puts. The net result favors the neutral-to-bullish instruments by $197 million.

Bears will try to minimize the damage, and luckily for them, the honeypot for a favorable price move doesn’t look worthwhile of a significant effort from bulls.

As for the excessively optimistic options traders, they should better rethink their strategy for the September expiry. The Ethereum network seems to be its own biggest enemy because the increasing adoption has fueled the rise in competitors’ decentralized finance applications.

Here’s why Bitcoin bulls might trample $50K ahead of Friday’s $2B BTC options expiry

August 24, 2021 Coin Telegraph

Here’s why Bitcoin bulls might trample K ahead of Friday’s B BTC options expiry

Bitcoin Price

Bitcoin has lost the $50,000 level but derivatives data lays out a few good reasons why bulls might march on the resistance level ahead of Friday’s $2 billion BTC options expiry.

$2 billion worth of Bitcoin (BTC) options will expire on Friday, Aug. 27. Some analysts argue that a strong call (buy) option buying activity on Aug. 22 was likely the catalyst for the recent $50,000 price test.

Digital asset trading firm QCP Capital mentioned in its market update that an entity has been "consistently pushing (option) prices higher in the last few weeks." The activity, which took place during the morning trading session in Asia, aggressively bought bullish options in chunks of 100 BTC contracts each.

The report also mentions the exhaustion of regulatory concerns in the near term, as crypto-related decisions from the Senate Banking Committee and regulators are unlikely to bear fruits in 2021.

Bears might be analyzing different data

However, the most recent "The Week On Chain" report from blockchain analytics provider Glassnode included some concerning data from Bitcoin on-chain activity. Such analysis found that the amount of entity-adjusted transactions has not responded to the ongoing bullish action.

Moreover, Decentrader, a crypto market-intelligence provider, highlighted insufficient trading volume during this recent move to push BTC's price above $52,000.

*Bitcoin options aggregate open interest for Aug. 27. Source: Bybt.com*

Friday will be an important test of the $50,000 level, as 4,372 BTC option contracts await the $218 million decision.

The initial call-to-put analysis shows the vast dominance of the neutral-to-bullish call instruments, with 60% larger open interest. Nevertheless, bulls might have been too optimistic, as 68% of their bets have been placed at $50,000 or higher.

91% of the put options will probably be worthless at expiry

On the other hand, 91% of the protective put options have been placed at $46,000 or below. Those neutral-to-bearish instruments will become worthless if Bitcoin trades above that price on Friday. The options expiry happens at 8:00 am UTC, so some additional volatility is expected ahead of the event.

Below are the four most likely scenarios, considering the current price levels. The imbalance favoring either side represents the potential profit from the expiry considering calls (buy) options are more frequently used in bullish strategies, whereas protective puts are used in neutral-to-bearish trades.

Below $45,000: 4,040 calls vs. 2,500 puts. The net result is a $69 million advantage for the neutral-to-bullish instruments.
Above $46,000: 6,500 calls vs. 1,300 puts. The net result is $239 million favoring the neutral-to-bullish instruments.
Above $48,000: 7,400 calls vs. 420 puts. The net result is a $335 million advantage for neutral-to-bullish instruments.
Above $50,000: 12,000 calls vs. 35 puts. The net result is a $600 million advantage for neutral-to-bullish instruments.

The above data shows how many contracts will be available on Friday, depending on the expiry price. There's no way to measure the net result for every market participant as some investors could be trading more complex strategies, including market-neutral ones using both calls and protective puts.

Those two competing forces will show their strength as bears will try to minimize the damage. Either way, bulls have complete control of Friday's expiry, and there seem to be enough incentives for them to defend the $48,000 level and even try a more significant gain by pushing the price above $50,000.

Meanwhile, bears should concentrate on the September expiry, although keeping in mind that El Salvador is expected to introduce Bitcoin as legal tender next month. In addition, the country is building the infrastructure to support a state-issued Bitcoin wallet called Chivo.

FTX buys name rights to Cal Memorial Stadium for 10 years in $17.5M deal

August 24, 2021 Coin Telegraph

FTX buys name rights to Cal Memorial Stadium for 10 years in .5M deal

Cal Golden Bears

FTX has purchased naming rights to the Cal Memorial Stadium in its second major sports branding venture after buying the naming rights to the Miami Heat arena in March.

Crypto derivatives exchange, FTX, has purchased the naming rights to California University’s Cal Memorial Stadium with a view to introducing its own branding.

The Sam Bankman-Fried owned derivatives exchange is delving deeper into sports after signing a 10-year, $17.5 million naming rights deal with the university.

The stadium's home team, the Cal Golden Bears, will now play their games on newly rebranded FTX Field this football season, according to Bloomberg. The $17.5 million will also be paid to the university in the form of crypto assets.

The deal is FTX's latest foray into sponsoring sports to drum up awareness of crypto.

In March, the North American division of the exchange, FTX.US, entered into a naming rights deal with the Miami Heat basketball team. The partnership saw the team’s home-stadium rebranded to FTX Arena.

The company is also the official crypto exchange of Major League Baseball (MLB). As part of the sponsorship deal, which is expected to last for at least 5 years, every MLB umpire will don an FTX patch on their uniform.

The Cal Memorial stadium is located in Alameda County, the namesake of Bankman-Fried’s trading firm, Alameda Research.

Some of FTX’s executives also have long-standing ties to the Cal Golden Bears, with Chief Operating Officer Sina Nader having been a walk-on member of the Golden Bears when he was an undergraduate.

In June, seven-time Super Bowl champion quarterback Tom Brady and wife Gisele Bündchen partnered with FTX to promote crypto adoption.The deal saw Brady and Bündchen each take equity stakes in FTX and receive crypto.

On July 20, Cointelegraph reported that FTX smashed the crypto funding record with a $900 million raise to become an “exchange decacorn” — a company worth over $10 billion.

Time to pump? Data suggests traders intend to push Filecoin (FIL) above $100

August 23, 2021 Coin Telegraph

Time to pump? Data suggests traders intend to push Filecoin (FIL) above 0

Chainlink

Derivatives data and recent protocol developments signal that retail traders have turned bullish on FIL.

Filecoin (FIL) accumulated 65% gains over the past 30 days to reach its highest price since June 8. The recent strength was accelerated after an Aug.6 partnership with Chainlink's oracle protocol on Aug. 6 allowed the projects to join their grant initiatives to speed up the development of hybrid smart contracts to leverage code running on the blockchain while the managing data computation process off-chain.

*Filecoin (FIL) price in USD at Coinbase. Source:* *TradingView*

Numerous events triggered the $235 all-time-high on April 1, but that movement is clearly long gone because the cryptocurrency is 67% below that level. Let's take a moment to understand what triggered the rally and whether these drivers still exist.

China-based mining activity boosted investors' expectations

Filecoin is a decentralized cloud-based data storage network that allows its users to gain rewards for selling their excess storage on an open-source platform. The built-in economic incentives ensure files are reliably stored over time.

The network's storage capacity surpassed 2.5 exabytes in February, which lead to positive remarks from influencers like Cameron Winklevoss, the billionaire investor and co-founder of the Gemini exchange.

The amount of network storage power, active miners, and Github contributors continues to grow on the @Filecoin $FIL network. Not surprised to see price rocketing. pic.twitter.com/0Ua77UJlgl
— Cameron Winklevoss (@cameron) March 17, 2021

On March 17, Grayscale Investments, the digital currency asset manager behind the GBTC Trust, announced the launch of its Filecoin investment vehicle.

On March 25, a $23 million Filecoin Ecosystem Fund was announced, backed by large Chinese investment groups like Fenbushi Capital, SNZ Capital, and Neo's EcoFund.

New smart contract capabilities are expected and FIL's daily issuance was cut

On March 31, Qtum founder Patrick Dai said that the protocol was working to enable smart contracts for Filecoin through the Qtum network.

On April 10, Martin Gaspar, a research analyst at CrossTower exchange, told Cointelegraph that solid demand from Chinese miners emerged due to a shortage of proof-of-work rigs. Gaspar added that these miners "are required to pledge the FIL token as collateral, resulting in demand for the token."

Lastly, on April 15, Filecoin changed its supply economics, reducing its daily issuing from 648,000 FIL per day to 365,000. The drastic cut likely led to a perception of scarcity for the token. In turn, it may have caused retail investors and miners to accelerate their investments ahead of the event.

Data shows retail activity has been picking up

Perpetual futures contracts, also known as inverse swaps, have an embedded rate usually charged every eight hours to ensure no exchange risk imbalances.

Whales, arbitrage desks, and market makers avoid exposure to these instruments due to their variable funding rates. When longs (buyers) demand more leverage, they are the ones paying the fee. The opposite holds when shorts (sellers) use more leverage, thus causing a negative funding rate.

*Filecoin (FIL) perpetual futures 8-hour funding rate. Source: Bybt.com*

The above data clearly shows the funding rate surging between Aug. 10 and Aug. 17, and it reached a positive 0.08% average. This number translates to 1.7% per week, indicating increased leverage longs activity. After receding for a couple of days, the indicator initiated another hike to a 0.10% fee charged every 8-hour from longs.

The current 2.1% weekly equivalent fee indicates even stronger leverage from retail traders, which means optimism. Of course, there's no way to know if the recent move will be enough to spark a continuous price improvement, but traders seem to believe $100 is closer than ever.

CFTC commissioner says agency has broad enforcement authority on crypto derivatives

August 23, 2021 Coin Telegraph

bitcoin regulation

"A trading platform that offers derivatives on digital assets to U.S. persons without registering, or in violation of CFTC trading rules, is subject to the CFTC’s enforcement authority," said Dawn Stump.

Dawn Stump, one of four commissioners currently serving at the Commodity Futures Trading Commission, or CFTC, has released a statement clarifying the agency's authority with respect to digital assets.

In a Monday statement, Stump said the CFTC is empowered with both regulatory and enforcement authority for commodities. She did not specifically say that digital assets were cash-like commodities in the eyes of the regulatory body, but “even if a digital asset is a commodity, it is not regulated by the CFTC.” However, according to the commissioner, the agency is within its power to regulate derivatives on digital assets, “such as the futures contracts on Bitcoin and Ether listed for trading on various CFTC-regulated exchanges.”

U.S. government agencies including the CFTC, Securities and Exchange Commission, or SEC, and the Financial Crimes Enforcement Network, or FinCEN, are largely responsible for handling digital asset regulation and enforcement in the country. However, each has different jurisdictional claims regarding crypto, often leading to confusion for companies trying to operate within the law.

According to the commissioner, the CFTC should analyze a digital asset already considered a security — and would thus fall under the SEC’s regulatory umbrella — to determine where the agency’s regulatory authority would lie for a derivatives product for that same project. However, she clarified that the CFTC had enforcement authority over financial products that it currently regulates.

“A trading platform that offers derivatives on digital assets to U.S. persons without registering, or in violation of CFTC trading rules, is subject to the CFTC’s enforcement authority,” said Stump. “That was the case in the recent CFTC enforcement action against BitMEX, and the CFTC has brought similar such actions dating back to 2015.”

She added:

"To determine the CFTC’s regulatory authority with respect to a digital asset, ask not whether the digital asset is a commodity or a security — ask whether a futures contract or other derivatives product is involved."

In the case of BitMEX, the crypto derivatives exchange agreed to pay $100 million as part of a settlement with both the CFTC and the FinCEN. However, the regulatory agency is also reportedly looking into Binance Holdings Limited for possible derivatives trades made by U.S.-based customers, and previously filed charges against the Laino Group for soliciting investors on Bitcoin (BTC), Ether (ETH), and Litecoin (LTC) futures trading without proper registration.

While Stump has taken a position that seems to relegate many cryptocurrencies to the SEC’s regulation and enforcement, she is only one of four voices — usually six — on the panel regulating commodities. Commissioner Brian Quintenz, a seemingly pro-crypto advocate in the CFTC, reportedly plans to step down at the end of August.

Derivatives data shows pro traders turning bullish on EOS price

August 23, 2021 Coin Telegraph

Block.one

Retail traders turned their backs on EOS, but derivatives data shows pro traders maintaining a bullish perspective for the short-term.

EOS rallied in May after Block.one, a blockchain software firm, announced a $10 billion funding round to build an EOS-based crypto exchange platform called Bullish. The EOSIO development company revealed that it had raised capital from Peter Thiel and Mike Novogratz, as well as hedge fund managers Alan Howard and Louis Bacon.

In light of the 'bullish' news, the recent $6 local top stands 60% below the $15 high reached on May 12, and this leaves investors with little reason to celebrate. At the moment, retail traders are not comfortable using leverage for bullish positions and professional traders have been neutral-to-optimistic since mid-July.

*EOS price in USD at Kraken. Source:* *TradingView*

Analysts also pointed to a May 2 report commissioned by Block.one that suggested an increase in the inflation rate from 1% to somewhere between 1.2% and 3.8%. The new issuance rate would be necessary to increase financial incentives for voters and block producers.

However, the lack of deliveries and partnerships caused EOS to quickly lose steam, and the price fell to a low at $3.04 on June 22. The bearish trend ended on June 23, as the little-known 'Bullish' exchange said it would be going public on the New York Stock Exchange via a special-purpose acquisition company, or SPAC.

A positive and lasting trend initiated as the 'Bullish' exchange released its private alpha version on July 27 and promised a full launch later in 2021. The project also mentioned that it would have spot trading, margin trading, and liquidity pools.

Finally, on Aug. 19, EOS announced free access to live pricing data using real-time market information provided by AlgoTrader. The Swiss-based startup oracle includes multiple assets from various exchanges and can create synthetic instruments, derivatives, and stablecoins.

Retail traders were momentarily bullish

To understand whether traders are leaning bullish as EOS price holds the $5 support, one should analyze the perpetual contracts futures data. This is the retail traders' preferred leverage instrument because its price usually perfectly tracks the regular spot markets. There is also no need to manually roll over contracts nearing expiry, as required on quarterly futures.

In any futures contract, trade longs (buyers) and shorts (sellers) are matched at all times, but their leverage varies. Consequently, exchanges will charge whichever side is using more leverage at a funding rate to balance their risk, and this fee is paid to the opposing side.

Neutral markets tend to display a 0% to 0.03% positive funding rate, equivalent to 0.6% per week, indicating that longs are the ones paying it.

*EOS perpetual futures 8-hour funding rate. Source: Bybt.com*

Data reveals a modest excitement building up from Aug. 8, which lasted less than 10 days. The positive funding rate shows that longs (buyers) were the ones paying the fees, but the movement seems reactive to the price increase and faded as EOS failed to breach the $6 resistance.

Data shows pro traders have a bullish bias

It is also useful to analyze the premium quarterly futures contracts, as whales and arbitrage desks trade such instruments more frequently. In the fixed-month contracts, eventual demand imbalances are reflected by a price difference versus regular spot markets.

Healthy markets should display a 0.5% to 1% premium, which is equivalent to 3% to 6% annualized. If the futures contract's premium is nonexistent, it is a bearish indicator because investors are not comfortable creating long positions using leverage.

*EOS Sept. futures contracts premium at FTX. Source:* *TradingView*

There has been no change in the 6% annualized premium this time despite EOS's price movement. However, data shows that professional traders have been slightly bullish since mid-July, while retail traders were primarily flat apart from a brief 10-day period.

Although it remains unclear how the 'Bullish' exchange launch might impact the price of EOS, derivatives indicate that whales and arbitrage desks positively reacted to the news and have kept the bullish stance ever since.

derivatives

A potentially positive price trigger is coming up

Using call options to limit the downside

The trade ensures limited downside with a possi 0.25 BTC gain

Big players partner to back Chainlink adoption

Derivatives data shows a glass half full

Competition and the success of interoperability-focused protocols impact Ether price

To succeed, bears need to push and hold Ether price below $2,900

Bears might be analyzing different data

91% of the put options will probably be worthless at expiry

China-based mining activity boosted investors' expectations

New smart contract capabilities are expected and FIL's daily issuance was cut

Data shows retail activity has been picking up

Retail traders were momentarily bullish

Data shows pro traders have a bullish bias

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