The approval of spot market Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs) could reportedly happen in Hong Kong as early as next week According to a new report by Bloomberg, anonymous people familiar with the matter say that two companies – Chinese asset manager Harvest Fund Management as well as a partnership between Bosera […]
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Dog-themed crypto asset Dogecoin (DOGE) is surging after Coinbase announced its plans to launch futures trading for the memecoin. According to a filing by Coinbase earlier this month, the top US-based crypto exchange platform registered with the Commodity Futures Trading Commission (CTFC) to offer DOGE derivatives starting on or after April 1st. “Pursuant to Commodity […]
The post Dogecoin Up by Nearly 15% in 24 Hours After Coinbase Announces Plans To Launch DOGE Futures Trading appeared first on The Daily Hodl.
Recent data reveals a significant uptick in open interest for bitcoin futures and options across various trading platforms in recent weeks. On Monday, insights from QCP Capital indicated a notable interest in long-term September and December bitcoin calls, aiming for the lofty six-figure price brackets. Confidence Soars With Bets on Bitcoin Exceeding $100K Just last […]
Bitcoin bulls expectations of $50,000 and higher remain feasible according to BTC futures and options markets.
Bitcoin (BTC) price continues to trade below its 2023 high, a sign that investors may have underestimated the strength of the $44,000 resistance. Even as BTC price trades below $42,000, it doesn't necessarily mean that reaching $50,000 and beyond is no longer possible. In fact, quite the opposite seems more likely to occur. Looking at Bitcoin derivatives metrics, it is clear that traders ignored the 6.9% drop and remained optimistic. However, is this optimism enough to justify further gains?
The $127 million liquidation of leveraged long Bitcoin futures on Dec. 11 may seem significant in absolute terms, but it represents less than 1% of the total open interest – the value of all outstanding contracts. Nevertheless, it's undeniable that the liquidation engine triggered a 7% correction in less than 20 minutes.
On one hand, one could argue that derivatives markets played a crucial role in the recent negative price movement. However, this analysis overlooks the fact that after hitting a low of $40,200 on Dec. 11, Bitcoin's price increased by 4.2% in the following six trading hours. In essence, the impact of forceful liquidation orders had dissipated long ago, disproving the notion of a crash solely driven by futures markets.
Data shows top traders futures’ Bitcoin long-to-short at the lowest level in 30 days, but what does this mean for BTC's short-term price action.
Bitcoin (BTC) has experienced a remarkable 15.7% price surge in the first six days of December. This surge has been heavily influenced by the anticipation of an imminent approval of a spot exchange-traded fund (ETF) in the United States. Senior Bloomberg ETF analysts have expressed a 90% probability for approval by the U.S. Securities and Exchange Commission, which is expected before Jan. 10.
However, Bitcoin’s recent price surge may not be as straightforward as it seems. Analysts have failed to consider the multiple rejections at $37,500 and $38,500 during the second half of November. These rejections have left professional traders, including market makers, questioning the market’s strength, particularly from the perspective of derivatives metrics.
Bitcoin’s 7.6% rally to $37,965 on Nov. 15 resulted in disappointment as the movement fully retracted the following day. Similarly, between Nov. 20 and Nov. 21, Bitcoin's price declined by 5.3% after the $37,500 resistance proved more formidable than anticipated.
Nearly $1.8 billion flowed into crypto investment products over the last 10 weeks, which hasn’t been seen since Bitcoin futures were launched in October 2021.
Bitcoin (BTC)-related investment products have become the “main beneficiary” of recent investor interest in crypto, amid growing anticipation of a spot Bitcoin ETF approval in the United States.
A total of $1.76 billion of investors’ funds have flowed into crypto products over a 10-week period, making up for the largest inflows over such a period since October 2021 — when Bitcoin futures launched, according to a Dec.
Record inflows! Last 10 weeks now total U$1.76bn inflows, the highest on record since October 2021’s futures-based ETF launch in the US.
— CoinShares (@CoinSharesCo) December 4, 2023
Week 49 inflows: U$176 million
– #Bitcoin –
$BTC: U$133m inflows
Short Bitcoin: US$3.6m inflows
Trading volumes in ETPs remain… pic.twitter.com/Elon1F2pHl
CoinShares’ weekly reports over the past 10 weeks shows at least $1.44 billion of inflows went to Bitcoin investment products over the period, as the price of Bitcoin has gained from $26,600 to $37,700 on Dec.
Meanwhile, the latest week ending Dec. Bitcoin (BTC) investment products were the “main beneficiary,” said Butterfill, recording $132.8 million of inflows over the past week, while Ether (ETH) and Solana (SOL) products tallied $30.8 million and 4.3 million, respectively.
Related: Bitcoin prices should ‘logically’ correct in January, but crypto’s a ‘wild card’
The inflows come as spot Bitcoin ETF applications are inching closer toward potential approval in the U.S.
Some Bitcoin futures-based products could be reaping benefits of the recent excitement over approvals, said James Edwards, cryptocurrency analyst at fintech firm Finder in a previous interview with Cointelegraph.
The Bitcoin futures annualized premium jumped to 34% on Nov. 28, leading analysts to speculate about an imminent spot BTC ETF approval.
The demand for institutional investors for Bitcoin (BTC) became evident on Nov. 10 as the Chicago Mercantile Exchange (CME) Bitcoin futures flipped Binance's BTC futures markets in terms of size. According to BTC derivatives metrics, those investors are showing strong confidence in Bitcoin's potential to break above the $40,000 mark in the short term.
CME's current Bitcoin futures open interest stands at $4.35 billion, the highest since November 2021 when Bitcoin hit its all-time high of $69,000–a clear indication of heightened interest, but is it enough to justify further price gains?
The impressive 125% surge in CME's BTC futures open interest from $1.93 billion in mid-October is undoubtedly tied to the anticipation of the approval of a spot Bitcoin ETF. However, it's important to note that there's no direct correlation between this movement and the actions of market makers or issuers. Cryptocurrency analyst JJcycles raised this hypothesis in a Nov. 26 social media post.
What if CME (US institutions) opened longs to hedge for the spot #Bitcoin ETF approval which might be imminent?
— JJcycles (@JJcycles) November 26, 2023
Open interest surely surged on CME in the last couple of weeks.
✍️ pic.twitter.com/poFpuOidL0
To avoid the high costs associated with futures contracts, institutional investors have various options. For instance, they could opt for CME Bitcoin options, which require less capital and offer similar leveraged long exposure. Additionally, regulated ETF and exchange-traded notes (ETN) trading in regions like Canada, Brazil, and Europe provide alternatives.
It seems somewhat naive to believe that the world’s largest asset managers would take risky gambles using derivatives contracts on a decision that depends on the U.S. Securities and Exchange Commision (SEC) and is not expected until mid-January. Yet, the undeniable growth in CME Bitcoin futures open interest is hard evidence that institutional investors are setting their sight in the cryptocurrency.
It might seem naive to think that the world's largest asset managers would take significant risks with derivatives contracts on a decision dependent on the SEC, expected only in mid-January. However, the undeniable growth in CME Bitcoin futures open interest underscores the increasing interest of institutional investors in the cryptocurrency market.
While CME's Bitcoin futures activity has been steadily rising, the most noteworthy development has been the spike in the contracts' annualized premium (basis rate). In neutral markets, monthly futures contracts typically trade with a 5% to 10% basis rate to account for longer settlement times. This situation, known as contango, is not unique to cryptocurrency derivatives.
On Nov. 28, the annualized premium for CME Bitcoin futures surged from 15% to 34%, eventually stabilizing at 23% by day's end. A basis rate exceeding 20% indicates substantial optimism, suggesting that buyers were willing to pay a substantial premium to establish leveraged long positions. Currently, the metric stands at 14%, indicating that whatever caused the unusual movement is no longer a factor.
It's worth noting that during that 8-hour period on Nov. 28, Bitcoin's price rose from $37,100 to $38,200. However, it's challenging to determine whether this surge was driven by the spot market or futures contracts, as arbitrage between the two occurs in milliseconds. Instead of fixating on intraday price movements, traders should look to BTC option markets data for confirmation of heightened interest from institutional investors.
Related: Why is the crypto market down today?
If traders anticipate a decline in Bitcoin's price, a delta skew metric above 7% is expected, whereas periods of excitement typically result in a -7% skew.
Over the past month, the 30-day BTC options 25% delta skew has consistently remained below the -7% threshold, standing near -10% on Nov. 28. This data supports the bullish sentiment among institutional investors using CME Bitcoin futures, casting doubts on the theory of whales accumulating assets ahead of a potential spot ETF approval. In essence, derivatives metrics do not indicate excessive short-term optimism.
If whales and market makers were genuinely 90% certain of SEC approval, in line with the expectations of Bloomberg’s ETF analysts, the BTC options delta skew would likely be much lower.
Nonetheless, with Bitcoin's price trading near $38,000, it appears that bulls will continue to challenge resistance levels as long as the hope for a spot ETF approval remains a driving force.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
A spot Bitcoin ETF will bring fresh money to the market, but it will not change a fundamental reality: Bitcoin liquidity is declining.
The Chicago Mercantile Exchange (CME) has long been the home of crypto for traditional finance investors, and this is unlikely to change — even with the approval of a Bitcoin spot ETF.
Activity on the CME has expanded significantly over the past 12 months. The CME now sees more Bitcoin (BTC) futures trading than the world’s biggest crypto exchange, Binance. Open BTC interest on the CME now makes up 24.7% of the entire market, making it the top Bitcoin futures trading venue in the world
While some of this activity is almost certainly linked to anticipation of approval for a spot ETF, the launch of one or more will not lead to a reduction of activity in the futures market. In fact, futures trading is likely to expand rather than contract when the SEC finally gives BlackRock et. al. the green light.
Related: History tells us we’re in for a strong bull market with a hard landing
There is no doubt that a spot ETF will bring large flows of institutional money into the sector. However, it will not change the basic fundamentals of Bitcoin liquidity. As we know, the supply of Bitcoin is capped at 21 million. That means the futures market is the only place where real trade action can happen.
The CME has been successfully used by Goldman Sachs, Morgan Stanley, JP Morgan and others to trade cryptocurrency instruments for years, and they have been using futures to do so. Futures remain the instrument of choice because liquidity is the main issue in the spot market. These huge institutional investors could buy bitcoin at any time, but liquidity remains the chief drawback - not the lack of a spot ETF.
Institutional investors that use the CME are also highly sophisticated. As such, any fund manager that takes a position in BlackRock’s spot ETF, for example, will want to hedge that position using futures on the CME. Accordingly, we can expect activity on the CME to grow almost in lockstep with the growth in spot ETFs.
Futures are also — as we know — a speculative instrument, and there is perhaps no market that is more speculative than cryptocurrency. As the asset class gains more legitimacy and credibility with the approval of a spot ETF, we will see more investors interested in all corners of digital asset trading.
Related: Bitcoin ETFs: A $600B tipping point for crypto
Adventurous day traders who may have stuck to the foreign-exchange market in the past will likely start to venture into Bitcoin and other crypto instruments. And they will exercise this interest through the CME. Indeed, I suspect we will see increasing interest in perpetual swaps and other types of derivative instruments in the sector next year.
Crypto futures also benefit from clearer and more consistent regulation, which is another major factor here. While the Commodity Futures Trading Commission (CFTC) looks after futures, nobody has yet fully decided who looks after the crypto spot market from a regulatory perspective, and this remains a problem. Applications for these Bitcoin spot ETFs are currently sitting on the Securities and Exchange Commission’s desk, but as has become abundantly clear, Chairman Gary Gensler is a big fan of ambiguity.
Clear regulation is leading to obvious success in cryptocurrency futures, while the spot market is being hindered by regulatory opacity. And so, while the approval of an ETF is just a matter of time at this stage, we still don’t know how much time. While we are waiting, the futures market remains an extremely enticing trading ground for institutional investors.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
The U.S. Securities and Exchange Commission (SEC) is delaying its decisions on several Bitcoin (BTC) and Ethereum (ETH) exchange-traded fund (ETF) applications until next year. In new filings, the regulatory agency says that it will be delaying its decisions on applications filed by asset management firm Hashdex to create a mixed spot and futures Ethereum […]
The post US SEC Delays Decisions on Multiple Bitcoin (BTC) and Ethereum (ETH) ETF Applications appeared first on The Daily Hodl.
Getting regulatory approval has been crucial for companies, particularly in a tight regulatory environment during the crypto winter.
As the final weeks of 2023 approach, it’s fair to say that one of the most dominant trends and drivers of crypto companies’ strategies over the past months can be summed up in a single word: licenses.
In a tight regulatory environment, getting the green light from regulators has been crucial for companies, particularly during the crypto winter.
Some countries have taken a stand by developing a crypto-friendly environment. For example, the United Arab Emirates continues to attract major crypto companies to its shores, with digital assets exchange Crypto.com recently receiving a Virtual Assets Service Provider (VASP) license in Dubai. The license allows Crypto.com’s local business to offer retail and institutional trading, as well as broker-dealer and credit-related services.
Dubai also granted a similar license for institutional crypto custodian Hex Trust. The crypto firm has offices in Hong Kong, Singapore, Vietnam, Dubai, Italy and France.
Traditional players are also seeking crypto licenses. In Germany, Commerzbank has been granted a crypto custody license, according to a Nov. 15 announcement, allegedly becoming the first “full-service” bank in the country to receive the license.
Also, in this week’s regulatory headlines, Bitget dropped plans to obtain a Virtual Asset Trading Platform (VATP) license in Hong Kong, citing business and market-related considerations. As a result, the exchange is winding down its local operations in the coming weeks.
Although licenses are essential for crypto firms to operate, they also represent a new step in the growing connection between crypto and governments worldwide.
This week’s Crypto Biz also explores Uniswap’s Android app, Cboe’s move into crypto margin futures trading and Disney’s upcoming nonfungible token (NFT) platform.
Uniswap Labs has publicly released an Android mobile wallet app on the Google Play Store. The new app allows users to make swaps through the decentralized exchange from within the app, eliminating the need for a separate web browser extension, Uniswap Labs vice president of design Callil Capuozzo told Cointelegraph. Uniswap added support for new languages and now supports English, Spanish, Japanese, Portuguese, French and Chinese — both traditional and simplified — and added a setting that allows users to view the value of their crypto in their local currency. The app’s iOS version was released in April.
Disney and blockchain firm Dapper Labs have teamed up to create a nonfungible token (NFT) platform. According to an announcement, Disney will tokenize its iconic cartoon characters from the past century onto its upcoming NFT marketplace, Disney Pinnacle. The platform will also include icons from Pixar and heroes and villains from the Star Wars galaxy, uniquely styled as collectible and tradable digital pins. The NFT platform will launch later in 2023 for iOS, Android and on the web.
Cboe Digital has announced the launch of Bitcoin (BTC) and Ether (ETH) margin futures trading on Jan. 11, 2024. The regulated crypto-native exchange and clearinghouse will become the first in the United States to offer both spot and leveraged derivatives trading on a single platform, it said in a statement. Eleven firms, including crypto and traditional financial firms, will support the new capability from its launch. They include B2C2, BlockFills, Cumberland DRW and Talos, among others. Cboe Digital provides trading for individuals and institutions. It received approval for margin futures trading from the U.S. Commodity Futures Trading Commission in June.
Global investment bank Goldman Sachs and French bank BNP Paribas have reportedly led a new funding round for Fnality, a blockchain-based wholesale payments firm backed by Nomura Group. Fnality has reportedly raised 77.7 million British pounds ($95.09 million) in a second round of funding. Other investors included the global exchange-traded fund firm WisdomTree and Fnality’s existing investor Nomura. The new capital will be used for setting up a round-the-clock global liquidity management network for new digital payment models in wholesale financial markets and emerging tokenized asset markets, Fnality said. Fnality was founded in 2019 as a UBS-led blockchain project aiming to build digital versions of major currencies for wholesale payments and transactions involving digital securities.
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