One of Galaxy Digital’s top executives says that the US government may be forced to look at Bitcoin (BTC) as a potential replacement for the US dollar in the future. In a new interview with Bloomberg Television, Galaxy Digital’s head of firmwide research Alex Thorn comments on the potential for the US to launch a […]
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This week’s Crypto Biz explores the launch of new crypto ETFs, CleanSpark’s acquisition of new mining sites, another round of conflict between Bitfarms and Riot, and more.
Wealth advisers are adopting Bitcoin exchange-traded funds at an unprecedented rate, faster than any previous ETF in history, according to Matt Hougan, chief investment officer at Bitwise.
The surge is primarily driven by financial advisers such as registered investment advisers and large firms like Morgan Stanley. BlackRock’s iShares Bitcoin Trust ETF alone has attracted $1.45 billion in flows from wealth managers.
Asset management firms are also looking to offer diversified exposure to blockchain technology. Over the past few days, State Street and Galaxy launched three new funds to provide alternative strategies for institutional investors.
Global investment bank Goldman Sachs has reported holdings of $418 million in spot bitcoin exchange-traded funds (ETFs) in the second quarter. Its biggest position is a $238 million stake in Blackrock’s Ishares Bitcoin Trust (IBIT). In contrast, Morgan Stanley reduced its bitcoin ETF holdings. Meanwhile, hedge funds are taking a more aggressive stance in the […]
U.S. spot bitcoin exchange-traded funds (ETFs) attracted $11.8 million on Thursday, marking the third consecutive day of inflows. Bitwise’s BITB fund topped the list, bringing in $8 million during the trading sessions. Demand for Bitcoin ETFs Continues Since Jan. 11, 2024, the 11 spot bitcoin ETFs have accumulated $14.45 billion in total net inflows, including […]
State Street Global Advisors has partnered with Galaxy Asset Management to provide advanced digital asset-based strategies, expanding investor access to the digital asset ecosystem beyond cryptocurrencies and bitcoin. “We believe we are in a strong position to make digital assets more accessible to the broader investment community through the creation of new ETFs offering exposure […]
Open interest on Bitcoin options recently hit a year-to-date high, but what is fueling this newfound bullish sentiment?
The recent gains are a rare sight in 2023, even considering Bitcoin's impressive 108% year-to-date performance. Notably, the last instance of such price action occurred on March 14 when Bitcoin surged from $20,750 to $26,000 in just two days, marking a 25.2% price increase.
It's worth noting the significance of the fact that a staggering 208,000 contracts changed hands in a mere two days. To put this into perspective, the prior peak, which occurred on August 18, saw a total of 132,000 contracts exchanged, but that was during a period when Bitcoin's price plummeted by 10.7% from $29,090 to $25,980 in just two days. Interestingly, Bitcoin's options open interest, which measures outstanding contracts for every expiry, reached its highest level in over 12 months on Oct. 26.
This surge in activity has led some analysts to emphasize the potential "gamma squeeze" risk. This theoretical analysis seeks to capture the need for option market makers to cover their risk based on their likely exposure.
the #bitcoin gamma squeeze from last week could happen again
— Alex Thorn (@intangiblecoins) October 30, 2023
if BTCUSD moves higher to $35,750-36k, options dealers will need to buy $20m in spot BTC for every 1% upside move, which could cause explosiveness if we begin to move up towards those levels
more pic.twitter.com/OA9tJ0ZaK9
According to estimates from Galaxy Research and Amberdata, BTC options market makers may need to cover $40 million for every 2% positive move in Bitcoin's spot price. While this number may seem substantial, it pales in comparison to Bitcoin's staggering daily adjusted volume of $7.8 billion.
Another aspect to consider when assessing Bitcoin options volume and total open interest is whether these instruments have primarily been used for hedging purposes or neutral-to-bullish strategies. To address this ambiguity, one should closely monitor the demand difference between call (buy) and put (sell) options.
Notably, the period from Oct. 16 to Oct. 26 saw a predominance of neutral-to-bullish call options, with the ratio consistently remaining below 1. Consequently, the excessive volume observed on Oct. 23 and 24 was skewed towards call options.
However, the landscape changed as investors increasingly sought protective put options, reaching a peak of 68% higher demand on Oct. 28. More recently, the metric shifted to a neutral 1.10 ratio on Oct. 30, indicating a balanced demand between put and call options.
To gauge whether investors using options have grown more confident as Bitcoin's price held above $34,000 on Oct. 30, one should analyze the Bitcoin options delta skew. When traders anticipate a drop in Bitcoin's price, the delta 25% skew tends to rise above 7%, while periods of excitement typically see it dip below negative 7%.
The Bitcoin options' 25% delta skew shifted to a neutral position on Oct. 24 after residing in bullish territory for five consecutive days. However, as investors realized that the $33,500 support level proved more resilient than anticipated, their confidence improved on Oct. 27, causing the skew indicator to re-enter the bullish zone below negative 7%.
Related: Bitcoin’s bull move might not be over yet — Here are 3 reasons why
Two noteworthy observations emerge from this data. Bitcoin bulls utilizing options contracts prior to the 17% rally that began on Oct. 23 were paying the highest premium relative to put options in over 12 months. A negative 18% skew is highly uncommon and signifies extreme confidence or optimism, likely fueled by expectations of the spot Bitcoin ETF.
What stands out most, however, is the present negative 13% skew after Bitcoin's price surged by 26.7% in the 15 days leading up to Oct. 27. Normally, investors would seek protective puts to hedge some of their gains, but this did not occur. Consequently, even if the initial demand for call options was primarily driven by ETF expectations, the prevailing optimism has endured as Bitcoin soared above $34,000.
Bitcoin (BTC) options volumes experienced a significant surge on Oct. 23 and Oct. 24, marking the highest level in over six months. This activity coincided with a remarkable 17% BTC price rally over two days. Traders are now pondering whether the increased activity in the BTC options market can be solely attributed to the anticipation of a Bitcoin spot exchange-traded fund (ETF) or if the optimism has dwindled following the recent price surge above $34,000.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Galaxy Digital’s CEO Mike Novogratz talked to Andrew Ross Sorkin on CNBC’s Squawk Box and gave his reaction to Sam Bankman-Fried’s (SBF) recent New York Times (NYT) Dealbook Summit interview. Novogratz said that SBF was “delusional” and insisted that the former FTX CEO needs to be prosecuted and further said, “he will spend time in […]
Following the issues surrounding FTX, the publicly-listed firm Galaxy Digital published its third-quarter earnings report and noted it has an “exposure of approximately $76.8 million of cash and digital assets to FTX.” The news follows a great number of exchange executives announcing that they had zero material exposure to the troubled exchange. Galaxy Digital Has […]
Celestia, a project that aims to solve the perceived centralization problem in current monolithic blockchains, has announced it has raised $55 million in its latest funding round. The round, which was led by Bain Capital Crypto and Polychain Capital, also saw the participation of Delphi Digital, Protocol Labs, Figment, Maven 11, and Spartan Group, among […]
According to statements made by the digital asset custody business and financial services provider Bitgo, the firm has filed a lawsuit against the crypto company Galaxy Digital and is seeking damages for more than $100 million. Bitgo says Galaxy’s “improper repudiation and intentional breach of its merger agreement” caused the lawsuit. Bitgo Seeks Damages From […]