We’re thrilled to announce that Kraken now supports new margin pairs for Render (RENDER), THORChain (RUNE), Cat in a Dogs World (MEW), Turbo (TURBO), Toncoin (TON), Gala (GALA), Eigenlayer (EIGEN) and ZKsync (ZK)!
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We nearly doubled our selection of margin collateral currencies, which now include AAVE, DOGE, PEPE, SHIB, WIF, XRP & more!
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We’re thrilled to announce that Kraken now supports new margin pairs for Bonk (BONK), Bittensor (TAO), Stacks (STX) and Jupiter (JUP)!
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The Federal Court of Australia has ruled that Bit Trade Pty Ltd., operating crypto exchange Kraken in Australia, failed to meet regulatory obligations for its margin trading product. The product was offered without a required market determination, breaching the Corporations Act. ASIC emphasized the need for compliance in the crypto industry, aiming to ensure consumer […]
Bitcoin margin and futures markets display strength as institutional appetite surges after multiple spot ETF requests.
After a failed rally above $31,000 on June 23, Bitcoin (BTC) has sustained the $30,300 resistance for the past three days. Curiously, this happened while gold reached its lowest level in three months, trading at $1,910 on June 22, down from a $2,050 peak in early May.
Investors now question how solid Bitcoin’s $30,000 support is. So analyzing what caused the recent price rally is essential to understanding how traders are positioned on BTC margin and futures markets.
Some analysts attribute Bitcoin’s recent 21.5% gains in 11 days to BlackRock’s spot Bitcoin exchange-traded fund (ETF) filing. But other events might have fueled the cryptocurrency gains. For instance, on June 26, HSBC Bank in Hong Kong reportedly introduced its first local cryptocurrency services using three listed crypto ETFs.
Moreover, the ProShares Bitcoin Strategy ETF, a Bitcoin futures fund, experienced its largest weekly inflow in a year at $65 million, with its assets topping $1 billion. It was the first BTC-linked ETF in the United States and is one of the most popular among institutional investors.
But, more importantly, the U.S. crypto regulatory environment may be improving after a period marked by enforcement actions from the Securities and Exchange Commission (SEC) aimed at exchanges supposedly operating as unregistered securities brokers.
Related: How security, education and regulation can mitigate rising crypto scams
On June 25, Federal Reserve governor Michelle Bowman said that financial institutions had been left in a “supervisory void” in terms of emerging technologies, including digital assets. Bowman added that policymakers have been relying on “general but non-binding statements,“ leaving substantial uncertainty and imposing new business requirements after significant investments have been made.
In that sense, a draft bill in the U.S. House of Representatives aims to prohibit the SEC from denying digital asset trading platforms registration as a regulated alternative trading system. Published on June 2, the proposed legislation would allow such firms to offer “digital commodities and payment stablecoins.“
Now let’s look at Bitcoin derivatives metrics to better understand how professional traders are positioned amid improved regulatory perspectives and a sizable institutional inflow.
Margin markets provide insight into how professional traders are positioned because they allow investors to borrow cryptocurrency to leverage their positions.
OKX, for instance, provides a margin-lending indicator based on the stablecoin/BTC ratio. Traders can increase their exposure by borrowing stablecoins to buy Bitcoin. On the other hand, Bitcoin borrowers can only bet on the decline of a cryptocurrency’s price.
The above chart shows that OKX traders’ margin-lending ratio bottomed at 17 on June 20 but has improved over the past four days. The movement indicates a prevalence of margin longs as the present 24x ratio favors bullish stablecoin lending.
Still, investors should analyze the Bitcoin futures long-to-short metric, which excludes externalities that might have solely impacted the margin markets.
There are occasional methodological discrepancies between exchanges, so readers should monitor changes instead of absolute figures.
Top traders at Huobi vastly increased their longs between June 22 and June 24 as Bitcoin price broke above the $30,000 resistance.
On the other hand, OXK’s top traders initially increased their shorts on June 22 and June 23, but subsequently reverted their positions by adding bullish bets.
Lastly, the top traders at Binance started adding longs on June 21 and have kept increasing bullish positions until June 23.
Overall, Bitcoin bulls have added leverage-long positions using margin and futures markets backed by the positive momentum from multiple spot Bitcoin ETF requests, heavy institutional inflow and a more rational approach from U.S. lawmakers.
The SEC’s regulation-by-enforcement approach is not backed by some U.S. Federal Reserve governors and has faced some serious backlash in the U.S. House of Representatives. For example, Representative Warren Davidson has introduced the SEC Stabilization Act, citing “ongoing abuse of power” and demanding the removal of Gary Gensler as chair of the SEC.
Given the favorable scenario toward cryptocurrencies, Bitcoin bulls should now have the upper hand to sustain the $30,000 BTC price support level in the coming weeks.
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.
BTC price falls below the 55-day support level at $27,000, but futures market resilience sparks hope for a recovery toward $28,000.
Bitcoin’s price (BTC) broke below its 55-day support at $27,000 on May 12. In result, the two-day, 7% correction to $26,155 caused $100 million worth of long BTC futures contracts to be liquidated.
However, Bitcoin margin and futures markets displayed strength during the down-move, fueling hope of a recovery toward $28,000.
Regulatory uncertainty in the United States significantly increased after Bitcoin miner Marathon Digital received yet another subpoena. The publicly traded mining company informed investors on May 10 that it received a subpoena from the U.S. Securities and Exchange Commission (SEC) concerning whether it may have violated federal securities laws, among other things, by using related-party transactions.
Furthermore, there’s the additional risk of the 627,522 Bitcoins held by the Grayscale GBTC Trust Fund, which has been trading at a steep discount for over a year while Grayscale’s holding company, Digital Currency Group (DCG), struggles with some failing subsidiaries. DCG’s crypto lending and trading firm, Genesis Capital, filed for Chapter 11 bankruptcy protection in January.
Despite having separate corporate structures, Genesis Capital had "intercompany obligations" with the holding company DCG, so the consequences for the administration of the Grayscale funds are unknown. Additionally, the group reportedly owes Gemini's clients about $900 million, and the U.S. SEC charged Genesis and Gemini in January.
Bitcoin’s 7.2% correction happened as the dollar strength index (DXY), which measures the U.S. currency against a basket of foreign exchanges, displayed strength. The indicator reached 101 on May 8, nearing its 12-month low, a sign of low-confidence in the government’s ability to curb inflation while simultaneously managing to increase the debt limit.
Historically, there has been an inverse correlation between the DXY index and risk-on assets such as Bitcoin, given that a weaker dollar tends to drive demand for alternative store-of-values and scarce assets.
Let's look at derivatives metrics to better understand how professional traders are positioned in the current market environment.
Margin markets provide insight into how professional traders are positioned because they allow investors to borrow cryptocurrency to leverage their positions.
OKX, for instance, provides a margin lending indicator based on the stablecoin/BTC ratio. Traders can increase their exposure by borrowing stablecoins to buy Bitcoin. On the other hand, Bitcoin borrowers can only bet on the decline of the cryptocurrency's price.
The above chart shows that OKX traders' margin lending ratio decreased between May 8 and May 11. Still, that is not concerning, given that those traders remain favoring bullish strategies as the stablecoin (long) demand currently surpasses the BTC (short) demand by a factor of 18 times — which is healthy.
Related: Texas votes to add crypto to state’s Bill of Rights
To exclude externalities that might have solely impacted the margin markets, traders should analyze the long-to-short metric. The metric gathers data from exchange clients’ positions on spot, perpetual, and quarterly futures contracts, thus offering better information on how pro traders are positioned.
There are occasional methodological discrepancies between different exchanges, so readers should monitor changes instead of absolute figures.
Even though Bitcoin broke below the $28,000 support, professional traders have increased their leveraged long positions using futures, according to the long-to-short indicator.
At crypto exchange OKX, the long-to-short ratio increased, from 0.92 on May 8 to 1.01 on May 12. Meanwhile, at Binance, the long-to-short ratio stabilized at 1.13, indicating there was no shift to a bearish position from whales and market makers.
Therefore, despite the 12% price decline from a high of $29,865 on May 6, traders using margin and futures contracts did not abandon their bullish stance. The movement indicates confidence that Bitcoin is more likely to reclaim $28,000 than succumb to the next support level near $24,500.
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.
Binance’s market dominance fell largely due to its decision to end zero-fee trading for some trading pairs and not the CFTCs lawsuit, says Kaiko.
The dominance of cryptocurrency exchange Binance in trading volume market share has slipped over the past two weeks following a lawsuit from the United States commodities regulator and its decision to halt some zero-fee trading.
In an April 4 newsletter blockchain analytics platform Kaiko reported Binance “lost 16% market share of trade volume,” with its market share at 54% as of the end of Q1.
The U.S. Commodity Futures Trading Commission (CFTC) sued Binance on March 27 alleging it flouted regulatory compliance through violations of derivatives laws by offering trading to U.S. customers without registering.
Kaiko said Binance still takes in more volume than the rest of its combined competitors but its March 15 decision to end zero-fee spot and margin trading for 13 trading pairs including BNB (BNB), Bitcoin (BTC) and Ether (ETH) trading pairs with multiple fiat currencies and stablecoins largely contributed to the firm’s downfall.
“Overall, Binance’s excess volume largely vanished with the end of zero-fee trading, which was reflected in an even dispersal in market share among the remaining exchanges,” Kaiko reported.
Kaiko explained part of this fall was alleviated by its U.S. arm, Binance.US, which managed to triple its market share over the quarter from 8% to 24%.
Binance didn’t fall excessively in every domain though, the exchange managed to maintain its derivatives dominance, only giving up 2% market share over the last quarter.
Kaiko explained that the fall in trading volume figures was influenced mostly by the end of zero-fee spot trading as opposed to the CFTC lawsuit:
“The trend is quite different when looking at derivatives volumes: Binance only lost about 2% of market share for perpetual futures trade volume. This suggests that the majority of market share was lost purely due to the end of zero-fee spot trading, rather than trepidations around a lawsuit.”
The market share fall to 54% comes as Binance was one of the “big winners” of the FTX fiasco which saw its market share in trading volume rise to 65% during the last quarter of 2022:
“Binance’s market share increased from 50% to 65% after November 2022, while OKX saw its market share increase from under 10% to 17%. Bybit and the three smaller exchanges Huobi, Bitmex and Deribit, on the other hand, saw their market share decline.”
Over the last quarter, Upbit was the only crypto exchange to reclaim a “significant share” in trading volume of the 17 trading platforms that Kaiko analyzed.
Related: DEXs growing faster than CEXs but Binance still sees 171M visitors in a month
In light of recent regulatory pressures, the banking crises and the catastrophic collapse of FTX, many reports have observed a growing trend towards decentralized alternatives and self-custody wallets.
Bitcoin and Ether left centralized exchanges in record numbers following the fall of FTX. The daily trading volume of decentralized perpetual exchanges also reached $5 billion in November 2022, the most since Terra Luna Classic (LUNC) and its connected TerraClassicUSD (USTC) stablecoin collapsed in May 2022.
Trading volumes on the decentralized exchange Uniswap are now rivaling that of crypto exchanges Coinbase and OKX but is still only a fraction of the size processed by Binance.
Magazine: Can you trust crypto exchanges after the collapse of FTX?
On-chain analysis highlights a slow down in selling and improving investor sentiment which could help BTC price recover.
Bitcoin (BTC) price is showing notable resilience at the $17,000 level, and according to data from Glassnode, a number of metrics that track the pace of selling and the on-chain behavior of investors are beginning to show a reduction in the factors that trigger sharp sell-offs.
The FTX bankruptcy fueled a historic sell-off resulting in $4.4 billion in realized Bitcoin losses. By analyzing realized losses with the daily weighted average metric, Glassnode analysts found that the on-chain losses are subsiding.
According to Glassnode, Bitcoin hit an all-time low in the realized profits versus losses ratio. Toward the end of the most recent bull market, realized losses were 14 times larger than profits, which historically coincided with a positive market shift.
The on-chain data also shows realized losses are declining and Bitcoin price is above the balanced price and realized cap is dropping, removing excess liquidity generated from over-leveraged entities.
The realized cap is the net sum of Bitcoin capital inflows and outflows since BTC’s launch.
The current realized cap is 2.6% higher than the May 2021 peak, suggesting that Bitcoin’s all-time high has retraced and all excess liquidity from bad debt and over-leveraged entities has been drained from the market.
In the past, as bad debt was removed from the ecosystem, a launch pad for future bull markets was established.
According to the analysts:
“The 2010-11 realized cap saw a net capital outflow equivalent to 24% of the peak. The 2014-15 realized cap experienced the lowest, yet non-trivial capital outflow of 14%. The 2017-18 recorded a 16.5% decline in realized cap, the closest to the current cycle of 17.0%. By this measure, the current cycle has seen the third largest relative outflow of capital, and has now eclipsed the 2018 cycle, which is arguably the most relevant mature market analogue.”
Balanced price and delta price are algorithmic analyses used to revisit previous bear cycles. In previous bear cycles, Bitcoin’s price has traded between the balanced price and the delta price 3.0% of the time.
The current balanced price range is between $12,000 and $15,500 with the current delta price concentrating between $18,700 to $22,900. Concurrent with previous bear markets, Bitcoin’s price is above the balanced price, finding support at $15,500.
Related: BTC price levels to watch as Bitcoin holds $17K into the market open
While a market bottom has yet to be found, and a handful of potential downside catalysts remain, on-chain analysis is showing that the sentiment of market participants is slowly shifting out of bearish extremes, with the peak of realized losses and forced selling seemingly concluded.
A tighter view of Bitcoin holders' acquisition cost will also make anticipating reactions to possible upcoming volatility easier. A large amount of excess liquidity has dissipated, possibly creating a firmer price floor for a sustainable BTC price recovery.
The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
On Dec. 1, 2022, an attorney for the U.S. Trustee submitted a written letter to Delaware bankruptcy court officials that seeks to establish an independent examiner to investigate the FTX Chapter 11 bankruptcy proceedings. The U.S. Trustee explained in the letter that FTX’s collapse was comparable to complex bankruptcy cases like Lehman’s, Washington Mutual Bank’s, […]
In the past 48-hours Bitcoin traders added to their leveraged long positions even as crypto critics and politicians ramp up their criticism of cryptocurrencies.
Bitcoin (BTC) price has tested the $16,000 resistance multiple times since the 25% crash that occurred between Nov. 7 and Nov. 9, and some critics will justify their bearish bias by incorrectly assuming that the failure of FTX exchange should trigger a much broader correction.
It's kind of annoying me that Bitcoin is still selling for $16k-ish, even in the wake of all of this FTX news. I mean I assume the volume is low, but what on earth will it take to properly crush this zombie "currency" back to its rightful value of nearly zero?
— Daniel Knowles (@dlknowles) November 18, 2022
For example, Daniel Knowles, a correspondent at The Economist, says the 26th largest tradable asset in the world with a $322 billion market capitalization is "astonishingly useless and wasteful." Knowles also said that, "there is still no logical case for specifically Bitcoin. It's pure ponzi."
If you think it through, for outsiders, Bitcoin's price is the single most important indicator of success, regardless of its valuation surpassing secular companies such as Nestle (NESN.SW), Bank of America (BAC) and Coca-Cola (KO).
Most people's need for centralized authority of their money is so entrenched that cryptocurrency exchanges’ success and failure rate becomes the gatekeeper and success benchmark, when in fact, quite the opposite is true. Bitcoin was created as a peer-to-peer monetary transmission network, so exchanges are not synonyms for adoption.
It is worth highlighting that Bitcoin has been trying to break above $17,000 for the past seven days, so there is certainly a lack of appetite from buyers above that level. The most likely reason is that investors fear contagion risks, similar to what was seen with Genesis Block, the last FTX-related victim to halt service due to liquidity concerns. According to recent reports, the company announced plans to cease trading and shutter operations.
Bitcoin price is stuck in a downtrend, and it will be hard to shake it, but it’s a fallacy to assume that centralized cryptocurrency exchange failure is the primary reason for Bitcoin’s downtrend, or a reflection of its actual value.
Let's look at crypto derivatives data to understand whether investors remain risk-averse to Bitcoin.
Fixed-month futures contracts usually trade at a slight premium to regular spot markets because sellers demand more money to withhold settlement for longer. Technically known as contango, this situation is not exclusive to crypto assets.
In healthy markets, futures should trade at a 4% to 8% annualized premium, which is enough to compensate for the risks plus the cost of capital.
Considering the data above, it is evident that derivatives traders have flipped bearish on Nov. 9, as the Bitcoin futures premium entered backwardation, meaning the demand for shorts — bearish bets — is extremely high. This data reflects professional traders’ unwillingness to add leveraged long (bull) positions despite the inverted cost.
To exclude externalities that might have solely impacted the quarterly contracts, traders should analyze the top traders' long-to-short ratio. It gathers data from exchange clients' positions on the spot, perpetual and fixed-calendar futures contracts, thus better informing on how professional traders are positioned.
There are occasional methodological discrepancies between different exchanges, so readers should monitor changes instead of absolute figures.
Even though Bitcoin failed to break the $17,000 resistance on Nov. 18, professional traders slightly increased their leverage long positions according to the long-to-short indicator. For instance, the Huobi traders' ratio improved from 0.93 on Nov. 16 and presently stands at 0.99.
Related: Crypto Biz, FTX fallout leaves blood in its wake
Similarly, OKX displayed a modest increase in its long-to-short ratio, as the indicator moved from 1.00 to the current 1.04 in two days. Lastly, the metric stood flat near 1.00 at the Binance exchange. Thus, such data show traders did not become bearish after the latest resistance rejection.
Consequently, one should not conclude that the futures backwardation considering the broader analysis of the long-to-short ratio, show no evidence of excessive bearish demand from whales and market makers.
It will likely take some time until investors exclude the potential regulatory and contagion risks caused by FTX and Alameda Research's downfall. Until then, a sharp recovery for Bitcoin seems unlikely for the short term.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
