Thales raises $2.5M for binary options platform in Synthetix ecosystem

July 14, 2021 Coin Telegraph

Thales raises .5M for binary options platform in Synthetix ecosystem

Binary options and sports betting will soon be launched on the Synthetix-based Thales platform.

A decentralized finance project providing binary options style trading has just completed a $2.5 million seed round.

Binary options are financial instruments that allow traders to speculate on the price movement of the underlying market or cryptocurrency. There are two possible outcomes which is why they are considered binary.

At launch, Thales will support markets for more than 60 different assets including cryptocurrencies, commodities, equities, and index products, before expanding into sports markets. At the time of writing, there was no mention of the specific launch date.

The strategic investment round for the Thales platform was led by Framework Ventures and Apollo Capital. There were several other venture capital contributors including LD Capital, Honey DAO, the LAO, Zee Prime Capital, IOSG Ventures, D64 Ventures, and Koji Capital.

The announcement added that there will be a two-year token vesting strategy by the protocol’s strategic partners starting at the token generation event.

The funding round was completed using 'DAO-first capital formation', a method proposed by Synthetix founder Kain Warwick earlier this month. This approach enables the project to establish token holder-based governance usi a Decentralized Autonomous Organization much sooner than going through legal structures and processes.

Thales is a Synthetix ecosystem project building support for trading binary options and on-chain derivatives on the Ethereum network. In late 2020, core contributors at Synthetix began to seek an external team to develop a binary options trading platform that would become Thales. It received seed funding from the SynthetixDAO to kick start the project.

Thales token distribution model will be weighted towards active Synthetix community members with 35% of the 100 million tokens claimable by SNX stakers with minted debt. Another 45% will go toward various incentive programs and yield farms and 20%, or 20 million Thales tokens, will be allocated to the current and future team.

The Thales airdrop will likely happen in August and September according to Synthetix core contributor, Jordan Momtazi.

Thales intends to venture into the realm of on-chain sports betting through a partnership with Chainlink which will be providing the oracles and data feeds.

In 2019, Cointelegraph reported that U.S. regulators were growing concerned about the emergence of binary options scams for this high-risk derivatives trading method emerging in the crypto sector.

Bitcoin price is down, but here’s 3 reasons why $1B liquidations are less frequent

July 13, 2021 Coin Telegraph

Bitcoin price is down, but here’s 3 reasons why B liquidations are less frequent

bitcoin futures

This year crypto derivatives traders faced some tough times, but the current situation seems much more favorable to Bitcoin bulls.

Bitcoin (BTC) might be struggling to break the $36,000 resistance for the past three weeks, but bulls now have one less thing to worry about: cascading futures contracts liquidations.

One might be under the impression that a $1 billion liquidation is usual for Bitcoin. Still, traders tend to remember the most recent exaggerated movements more than any other price shifts, especially when the price crashes and people lose money.

This negativity bias means that even when various price impacts with equal intensity occur, the unpleasant emotions and events have a more significant effect on a trader's psychological state.

For example, multiple studies show that winning $500 from playing the lottery is two to three times less 'impactful' than losing the same amount from the gambler's personal wallet.

*Bitcoin futures aggregate liquidation (red = longs). Source: Coinalyze*

Currently, we are six and a half months into 2021 and there have been only 7 times where a $1 billion or larger long contract liquidation has occurred. So, rather than being the norm, these are very unusual situations that can only take place when traders are using excessive leverage.

More importantly, there hasn't been a $1 billion short-seller liquidation even when Bitcoin rallied 19.4% on Feb. 8. These liquidations just show how leverage longs tend to be more reckless, leaving less margin on derivatives exchanges.

While retail traders use high leverage and eventually fall victim to liquidations, more intuitive traders that bet on a price drop are likely fully hedged and doing 'cash and carry' trades.

This is one of the three reasons why $1 billion futures liquidation should not be a concern right now.

Cash and carry trades have a low liquidation risk

The quarterly futures contracts usually do not trade at par with regular spot exchanges prices. Usually, there is a premium when the market is neutral or bullish and it ranges from 5% to 15% annualized.

This rate (known as the basis) is often comparable to the stablecoin lending rate because the decision to postpone settlement means sellers demand a higher price, and this causes the price difference.

This situation creates room for arbitrage desks and whales to buy Bitcoin at regular spot exchanges and simultaneously short the futures to collect the futures contract premium.

Although these traders will be displayed as 'short interest', they are effectively neutral. Thus, the result will be independent of the market moving up or down.

Today, longs are far from over-leveraged

Traders were ultra bullish on Bitcoin price as it rallied to a $65,800 high, but this sentiment flipped to bearish after the brutal long contracts liquidations between May 11 and May 23 as BTC crashed 53% from $58,500 to $31,000.

Looking at the perpetual contracts (inverse swaps) funding rate is a good way to measure investors' sentiment. Whenever longs are the ones demanding more leverage, the indicator will become positive.

*Bitcoin perpetual futures funding rate. Source: Bybt*

Since May 20, there hasn't been a single day where the 8-hour funding rate was higher than 0.05%. This evidence indicates that buyers are unwilling to use high leverage, and without it, it's harder to create $1 billion or higher liquidations.

Open interest also crashed when Bitcoin price imploded

Every futures contract needs a buyer and seller of the exact same size, and the open interest measures the aggregate notional in U.S. dollars. This means that as Bitcoin price moves down, so does the indicator.

*Bitcoin futures (quarterly and perpetual) aggregate open interest. Source: Bybt*

The above chart shows how the futures open interest surpassed $20 billion by mid-March. During that period, a $1 billion liquidation represented a mere 5% of the outstanding total.

Considering the current $11.8 billion open interest, the same $1 billion amount would represent 8.5% of the aggregate number of contracts.

In a nutshell, it is becoming much more difficult for cascading liquidations to take place because buyers are not using excessive leverage, and sellers appear to be fully hedged. Unless these indicators shift significantly, bulls can remain in peace.

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.

Buy the rumor, sell the news? $10K Ethereum options are 88% down from their peak price

July 7, 2021 Coin Telegraph

Buy the rumor, sell the news? K Ethereum options are 88% down from their peak price

Coin Telegraph

$10,000 Ethereum options for December 2021 cost buyers $734 each, but today they are only worth $85 and ETH price is 47% away from its all-time high.

This year's 500% accumulated gain took Ether's (ETH) price to a $4,380 all-time high on May 12, and this rally was even more robust than the late-2017 move. The famous bull market, or bubble, depending on how you see it, took Ether's price on a 390% rally from $290 in November 2017 to $1,420 in mid-January 2018.

Maybe this year's mega rally was a DeFi and NFT bubble that will take another two years to reclaim its peak, but it seems premature to make a prediction now. However, some analysts, including Celsius Network CEO Alex Mashinsky, argue that Ether's "flippening" has already happened when comparing the breadth of assets under management.

According to Mashinsky, Ether's primary use case is yield farming, the practice of staking or locking up crypto in return for rewards, while Bitcoin is mostly used as a store of value.

The expectation of increased scaling is another reason that leads Ether investors to remain bullish despite the current price being 47% below its all-time high. Furthermore, on July 1, global auditing giant Ernst & Young released the third iteration of its zero-knowledge proof Ethereum scaling solution called Nightfall 3.

Nightfall 3 uses zk-Rollups, a layer-two scalability consisting of batched transfers 'rolled' into one transaction, to improve transaction efficiency and privacy on the Ethereum network. According to the study, it will likely result in a 90% gas fee reduction.

Options price premium can reduce daily

Regardless of how bullish Ether investors are, the closer an options contract comes to the expiry date, the smaller the premium becomes. This effect means that the fewer days to reach a target price significantly reduces its odds.

*Ether $10,000 call option for Dec-31 at Deribit, in ETH. Source: Deribit*

The above chart shows Ether's $10,000 call (buy) option for year-end, peaking at 0.177 ETH on May 14. At that time, Ether was trading at $4,150, so each option was priced at $734.

Keep in mind that this option will be worthless if Ether trades below $10,000 on Dec. 31 at 8:00 am UTC. Even if the price reaches $9,950, the option buyer would have wasted his $734 upfront. Therefore, a 160% upside was needed for such call option holders to become profitable.

Not every $10,000 option trader is reckless

Cointelegraph previously explained how professional traders use call options in strategies involving multiple expiry dates, so the $10,000 Ether option trades should not be interpreted as merely speculative bullish bets.

For traders looking to profit from market distortions, selling the $10,000 call option is an excellent way for holders to generate some yield, plus the initial margin required is roughly 10%, which allows some leverage.

For example, if one bought the $6,000 Ether call option contract for Dec. 31 they could deposit 0.20 Ether and sell 1 contract to potentially collect the 0.073 ETH premium.

This generates a 36.5% return in 6 months, which is equivalent to an 86% APY. However, unless a substantial margin amount is deposited, the seller of a call option runs the risk of being liquidated if Ether price hikes.

The same exact trade will offer much higher returns during bullish markets because the call options premium tends to increase.

Ethereum bulls chase $2,200 ahead of Friday’s $230M ETH options expiry

July 2, 2021 Coin Telegraph

Ethereum bulls chase ,200 ahead of Friday’s 0M ETH options expiry

Bears

A $2,200 Ethereum price would give bulls a $28 million advantage in this week’s ETH options expiry, but traders are more focused on the impact of the London hard fork in mid-July.

Ether's (ETH) $1.5 billion monthly expiry on June 25 was slightly favorable for bears, and at the time, Cointelegraph reported that the $2,200 price was critical to eliminate 73% of the neutral-to-bearish put options.

However, bulls were not able to sustain their advantage because the expiry price was near $1,950. In the end, the protective put options outnumbered the neutral-to-bullish call options by $30 million.

Fast forward to July, and after a noticeable 10% rally, Ether's price again struggles to sustain the $2,100 support. Bitcoin's negative 3.5% performance could partially explain last week's price move, but the London hard fork scheduled for this month could also be responsible.

The proposal EIP-1559 will cap gas fees, making it more predictable for users. However, miners' revenue will be negatively impacted. Any pushback from miners could delay Eth 2.0 even more, which could be a reason for the recent price weakness.

Lastly, regulatory pressure could also be blamed for the negative sentiment. For example, the United States Financial Crimes Enforcement Network announced that cryptocurrencies would be among its top national priorities for countering terrorism financing and ensuring proper Anti-Money Laundering policies.

Bulls have a slight advantage, but overall the expiry should be small

The July 2 $230 million Ether options expiry perfectly reflects a scenario where both bulls and bears expected extreme price changes.

Ether’s July 2 aggregate options open interest. Source: Bybt

110,000 Ether contracts seem initially balanced between the call (buy) and put (sell) options. However, only 30% of the neutral-to-bullish call options have been placed at $2,200 or below, which is equivalent to a $36 million open interest. The remaining 70% of the call options are unlikely to take part in Friday's expiry.

On the other hand, protective puts were mostly placed at $1,900 and lower. However, these contracts are now worthless as there are less than 14 hours before they expire. Therefore, the remaining neutral-to-bearish options down to $2,100 amount to a $26 million open interest.

In a nutshell, Friday's Ether expiry will be relatively small, but the $2,200 mark is extremely important. Above that level, the bulls' lead increases by $18 million, causing a $28 million imbalance that favors call options.

Bears aim for $2,100 or lower to eliminate the bulls' advantage

For bears, any expiry price below $2,100 is enough to balance out the situation. However, it is worth noting that Friday's expiry size has been greatly reduced because both sides had extreme bets, but none of them were fulfilled.

At the time of writing, there is no reason to believe that either side will try to force Ether's price in a particular direction ahead of the expiry. Traders will likely concentrate their bets (and efforts) for the end of July, depending on whether or not the London hard fork faces any delays or surprises.

Bulls and bears fight over $34K Bitcoin price as $445M options expiry looms

July 1, 2021 Coin Telegraph

Bulls and bears fight over K Bitcoin price as 5M options expiry looms

bitcoin options

Bitcoin bears could take a $31-million lead if BTC falls below $33,000 by Friday’s options expiry, but at the moment, both sides are balanced.

Bitcoin (BTC) has been ranging from $30,400 to 36,400 for the last 12 days, and it has been difficult to pinpoint the exact reason for investors’ lack of appetite. Some analysts have pointed to the Grayscale Bitcoin Trust (GBTC) unlocking in mid-July finally giving institutional investors a chance to offload their funds, but this is not likely to be the main reason.

Meanwhile, industry leaders have suggested that the “crypto regulatory crackdown” taking shape in the United States is severely impacting investors’ sentiment, and this view is especially problematic considering China has recently banned all crypto mining activity in the country.

Lastly, renowned Bitcoin critics, including Aswath Damodaran, professor of finance at New York University’s Stern School of Business, have claimed that the cryptocurrency “failed miserably” as a currency.

Damodaran specifically cites Bitcoin’s limited use in microtransactions, even though El Salvador is pushing forward with a plan to democratize the Lightning Network solution.

Bulls have a better chance of winning the weekly expiry

After bears had a victory in the recent quarterly $3-billion options expiry on Friday, the winds may have shifted the tide favorably to bulls this time around. While the $34,000 level presented a $310-million advantage for the neutral-to-bearish put options last week, this upcoming Friday, July 2, holds an entirely different setup.

*Aggregate July 2 Bitcoin options open interest. Source: Bybt*

The initial picture paints a neutral structure, with the neutral-to-positive call options open interest dominating by 8% as per the call-to-put ratio. Out of the $445 million in open interest, $230 million is represented by the neutral-to-bullish call options, which gives a slight advantage to bulls. However, looking at more granular data provides a different angle.

Only 18% of the protective put options have been placed at $33,000 or higher strikes. Therefore, if Bitcoin is trading above that level at 8:00 am UTC on Friday, only $38 million worth of those neutral-to-bearish instruments will last.

$34,000 is the make-or-break level for both sides

On the other hand, bulls will likely try to defend the $34,000 level, resulting in $45 million in call (buy) options open interest.

Truth to be told, both sides have incentives to break this reasonable equilibrium at $34,000. For example, above $35,000, bulls’ advantage increased from $7 million to $57 million.

Conversely, bears have the upper hand if Bitcoin trades below $33,000. In this case, protective put options open interest is $31 million higher than the neutral-to-bullish call options.

To sum up, it is impossible to predict whichever side will come out stronger on Friday’s expiry. However, this is the first time in over four weeks that bulls have a decent fighting chance.

Tracer DAO raises $4.5M to launch derivatives for anything ‘with an oracle feed’

July 1, 2021 Coin Telegraph

Tracer DAO raises .5M to launch derivatives for anything ‘with an oracle feed’

Coin Telegraph

Tracer DAO has raised $4.5 million from the likes Framework Ventures, Maven 11, and Apollo Capital.

Decentralized derivatives platform, Tracer DAO, has announced a successful $4.5 million fundraising round to expand its team and product suite.

They hope to launch innovative derivatives for “any market with an oracle price feed,” with plans to one day allow ordinary consumers to hedge the cost of commuting and other household bills using tokenized derivatives.

This week’s raise saw participation from crypto venture heavyweights, including Framework Ventures, Maven 11, DACM, and Apollo Capital. The investors will share 10% of the project’s governance token supply, which will be vested linearly over two years.

Speaking to Cointelegraph, Pat McNab, Tracer DAO founder and co-founder of Mycelium — the Australian development team working to build Tracer DAO — emphasized that the team is currently working to launch v1 of its open-source perpetual swap contracts to Arbitrum mainnet in the coming months.

McNab described the swaps as standing out from the competition through its “highly capital efficient” design and unique insurance pool that allows anyone to “become an insurer for the protocol and earn interest.”

“For each perpetual swap market there will be an underlying insurance pool [...] that insurance pool collects funding payments in the form of an interest rate paid by traders,” he said, adding:

“If a trader goes under margin and there is counterparty risk, this is when the insurers funds will have to be used.”

Tracer is also currently working to launch leveraged tokens, predicting they will go live before the end of the year. Tracer DAO also plans to hold a public raise via Gnosis Auction in the coming months.

Looking forward, Tracer articulates a bold mission of enabling derivatives for “any market that has an oracle feed,” with McNab emphasizing the opportunity to use cryptocurrency to unlock new markets tied to real-world assets.

“We’re working with Chainlink currently on trying to aggregate fuel pricing data or gas pricing data around different jurisdictions such that, say, in a neo-banking app, consumers can effectively budget for their fuel consumption by buying into a derivatives position using a perpetual swap contract,” he said.

“Our vision for price feeds, especially in the real world [...] will certainly tend down the path of having consumers able to hedge their consumption to local goods markets.”

McNab added that Tracer is currently working with the Royal Melbourne Institute of Technology to “unpack how the water markets work within Australia, especially to determine if we can create more ways for people to effectively manage their risk when it comes to consuming water on a day-to-day basis.”

Here’s why pro traders expect further downside from Ethereum price

June 30, 2021 Coin Telegraph

bitcoin futures

Ethereum's EIP-1559 upgrade is fast approaching, but derivatives data shows traders are less than optimistic about ETH's short-term prospects.

Derivatives data shows that Ether (ETH) traders are feeling less bullish when compared to Bitcoin (BTC). Even though the altcoin captured a nearly 200% gain in the first half of 2021 versus Bitcoin's modest 22% price increase, traders seem to be more affected by Ether's recent underperformance.

Institutional flow also backs the decreased optimism seen in Ether derivatives, as ETH investment vehicles suffered record outflows this past week while Bitcoin flows began to stabilize. According to data from CoinShares, Ether funds experienced a record outflow of $50 million this past week.

*Ether (orange) versus Bitcoin (blue) prices. Source: TradingView*

Take notice of how Ether is underperforming Bitcoin by 16% in June. The London hard fork is scheduled for July, and its core proposal — dubbed as EIP-1559 — will cap Ethereum's gas fees. Therefore, the price action could be related to unsatisfied miners as the network migrates out of Proof-of-Work (PoW).

For this reason, Ether investors have reason to fear because uncertainties abound. Perhaps miners supporting a competing smart-contract chain or some other unexpected turn of events could further negatively impact Ether price.

Whatever the rationale for the current price action, derivatives indicators are now signaling less confidence when compared to Bitcoin.

Ether's December futures premium shows weakness

In healthy markets, the quarterly futures should trade at a premium to regular spot exchanges. In addition to the exchange risk, the seller is 'locking up' funds by deferring settlement. A 4% to 8% premium in the December contracts should be enough to compensate for those effects.

A similar effect occurs in almost every derivatives market, although cryptocurrencies tend to present higher risks and have higher premiums. However, when futures are trading below this range, it signals that there is short-term bearish sentiment.

*OKEx BTC (blue) vs. ETH (orange) December futures premium. Source: TradingView*

The above chart shows the Bitcoin December futures premium recovering to 3.5% while Ethereum contracts failed to follow. While both assets displayed a neutral-to-bearish indicator, there's evidence that the altcoin investors are less optimistic about a short-term recovery.

Another leg down will do even more harm to altcoins

Another thesis that could negatively impact Ether's premium is the impact of a potential negative 30% performance from Bitcoin. Filbfilb, an independent market analyst and the co-founder of the Decentrader trading suite, said that a 30% crash in the Bitcoin could prompt altcoins to drop twice as hard.

Clem Chambers, the chief executive of the financial analytics website ADVFN, also predicted another potential leg down, which would repeat the late-2018 crypto winter period. Chambers claims Bitcoin could capitulate and fall back towards $20,000.

While the overall market sentiment is neutral-to-bearish, it seems sensible to predict a more daunting scenario for Ether, including uncertainties from the transition to Proof-of-Stake (POS).

Derivatives Trading DEX Perpetual Protocol Unveils V2

June 30, 2021 The Crypto Briefing

Bitfinex shorts crumble, bears capitulate after Bitcoin holds above $30K

June 28, 2021 Coin Telegraph

Bitcoin

$726 million in Bitfinex shorts were quickly closed after Bitcoin price bounced at $30,500, leading traders to speculate whether bears have given up.

On June 25, the amount of Bitcoin (BTC) margin shorts at Bitfinex increased by 22,000, equivalent to $726 million. At the time, Cointelegraph reported that there was a significant increase in Bitfinex's spot volume market share starting at 9 am UTC, matching the demand in the short margin.

Data confirms that one (or more) whales actively shorted the market, betting on a price decrease. The average price of the trade was around $33,000, so every $500 difference would result in an $11 million profit or loss when closing the short position.

In the cryptocurrency world, traders tend to imagine that for some entity or group to build such a sizable position, there must be some 'inside' knowledge to protect them. However, as previously shown by Cointelegraph, the Bitfinex margin shorts from early June were underwater by $65 million when Bitcoin reached $40,400 on June 16.

*Bitcoin price at Coinbase, USD (left) vs. Bitfinex BTC Margin Shorts (right). Source: TradingView*

The important distinction between margin trading and futures (perpetual or quarterly) is that margin traders might use their own Bitcoin to close the trade. Thus, instead of buying it at the market, one needs only to inform the exchange that his spot holdings should be used to cover the short position.

The same feature is not available at futures markets because the contracts are synthetic. Depositing 10 Bitcoin at the exchange does not "free" a short seller from having to actually buy back the $360,000 worth of contracts.

Therefore, the short position could have been closed even if Bitfinex's spot volume doesn't completely account for the $900 million traded during that 8-hour period on June 25.

*Bitcoin spot exchanges aggregate volume. Source: Coinalyze*

Once again, the margin short close took place as the spot volume on Bitfinex increased on June 27. Therefore, it is reasonable to assume that the entities closing the margin trade did not previously buy Bitcoin to cover it.

The average price as the 22,000 Bitcoin margin shorts was closed in the 20 hours starting on June 26 afternoon was $32,500. This data indicates a potential $11 million gross profit for the trade. However, it is worth noticing that on June 26, Bitcoin peaked at $32,700, causing those margin shorts to face a momentary $15.4 million loss.

These traders could have closed their position as Bitcoin tested the $31,500 support, but the price showed resilience, and this might have erased most of the trade's gains. Regardless of what caused the short trades to be closed, it displays weakness from bears or a considerable discomfort in holding bear positions below $35,000.

Huobi Halts Crypto Derivatives Trading for Chinese Users

June 28, 2021 The Crypto Briefing

derivatives