Bitcoin options data shows sub-$17K BTC price gives bears a $200M payday on Friday

November 10, 2022 Coin Telegraph

Bitcoin options data shows sub-K BTC price gives bears a 0M payday on Friday

BTC bears are set to profit from this week's $710 million options expiry, which could be used to add further sell pressure to Bitcoin price.

Bitcoin (BTC) crashed below $16,000 on Nov. 9, driving the price to its lowest level in two years. The 2-day correction totaled a 27% downtrend and wiped out $352 million worth of leverage long (buy) futures contracts.

To date, Bitcoin price is 65% down for 2022, but it's essential to compare its price action against the world's biggest tech companies. For instance, Meta Platforms (META) is down 70% year-to-date, and Snap Inc. (SNAP) has dropped 80%. Furthermore, CloudFare (NET) lost 71% in 2022, followed by Roblox Corporation (RBLX) and Snapchat (SNAP), both down 70%.

Inflationary pressure and fear of a global recession have driven investors away from riskier assets. This protective movement has caused the U.S. Treasuries' 5-year yield to reach 4.33% earlier in November, its highest level in 15 years. Investors demand a higher premium to hold government debt, signaling a lack of confidence in the Central Bank's ability to curb inflation.

Contagion risks from FTX and Alameda Research's insolvency are the most pressing issues. The trading group managed multiple cryptocurrency project funds and was the second-largest trading exchange for Bitcoin derivatives.

Bulls were overly optimistic and will suffer the consequences

The open interest for the Nov. 11 options expiry is $710 million, but the actual figure will be lower since bulls were ill-prepared for prices below $19,000. These traders were overconfident after Bitcoin sustained above $20,000 for almost two weeks.

*Bitcoin options aggregate open interest for Nov. 11. Source: CoinGlass*

The 0.83 call-to-put ratio reflects the imbalance between the $320 million call (buy) open interest and the $390 million put (sell) options. Currently, Bitcoin stands near $17,500, meaning most bullish bets will likely become worthless.

If Bitcoin's price remains below $18,000 at 8:00 am UTC on Nov. 11, only $45 million worth of these call (buy) options will be available. This difference happens because the right to buy Bitcoin at $18,000 or $19,000 is useless if BTC trades below that level on expiry.

Bears aim for sub-$17k to secure a $200 million profit

Below are the three most likely scenarios based on the current price action. The number of options contracts available on Nov. 11 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $16,000 and $18,000: 1,300 calls vs. 12,900 puts. Bears dominate, profiting $200 million.
Between $18,000 and $19,000: 2,500 calls vs. 10,200 puts. The net result favors the put (bear) instruments by $140 million.
Between $19,000 and $20,000: 3,600 calls vs. 5,900 puts. The net result favors the put (bear) instruments by $40 million.

This crude estimate considers the call options used in bullish bets and the put options exclusively in neutral-to-bearish trades. Even so, this oversimplification disregards more complex investment strategies.

For example, a trader could have sold a call option, effectively gaining negative exposure to Bitcoin above a specific price, but unfortunately, there's no easy way to estimate this effect.

Bulls probably have less margin to support the price

Bitcoin bulls need to push the price above $19,000 on Friday to avoid a potential $140 million loss. On the other hand, the bears' best-case scenario requires a slight push below $17,000 to maximize their gains.

Bitcoin bulls just had $352 million leverage long positions liquidated in two days, so they might have less margin required to support the price. In other words, bears have a head start to pin BTC below $17,000 ahead of the weekly options expiry.

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.

Metaverse housing bubble bursting? Virtual land prices crash 85% amid waning interest

August 8, 2022 Coin Telegraph

Coin Telegraph

The virtual real estate market is crashing despite a McKinsey report predicting a $5 trillion market by 2030.

The metaverse sector is witnessing its very-own housing crisis moment, thanks to massive declines in the prices of its virtual lands in 2022, led by waning users' interest and a crypto bear market.

Land sales plunge 85% in 2022

In particular, metaverse projects built on the Ethereum blockchain, including the Sandbox and Decentraland, have witnessed substantial declines in their valuations and other key metrics, data from WeMeta shows.

For instance, the average price of lands sold across Decentraland peaked at $37,238 in February 2022. But as of Aug. 1, their costs had dropped to an average of $5,163. Similarly, the Sandbox's average sale price dropped from circa $35,500 in January to around $2,800 in August.

*Average sale price of virtual lands on Ethereum metaverse projects. Source: WeMeta*

Overall, the average price per parcel of virtual lands across the six major Ethereum metaverse projects dropped from approximately $17,000 in January to around $2,500 in August, or a 85% decline.

Declining metaverse volumes

Poor land sale volumes further indicate dampening user interest in Metaverse projects.

On a weekly average, the volume, which represents the amount of lands (derived in currency) traded, has dropped from its peak of $1 billion in November 2021 to approximately $157 million in August 2022.

*Metaverse land sale volumes. Source: WeMeta*

Simultaneously, the market valuations of the Metaverse tokens in circulation have dipped by more than 80%, led further by a broader retreat across the cryptocurrency sector due to unfavorable macroeconomic conditions.

For instance, the market valuation of Decentraland's MANA tokens in circulation dropped from $10 billion in November 2021 to $2 billion in August 2022. Similarly, Sandbox's SAND's net capitalization reached $8.4 billion to around $1.78 billion in the same period.

fricking metaverse housing bubble just popped who would’ve thought https://t.co/4OZKoi5fH4
— lil t the based god (@fauxzus) August 7, 2022

Metaverse ETF also takes ahit

Meanwhile, the Roundhill Ball Metaverse exchange-traded fund (METV) is tanking alongside blockchain-focused metaverse projects. The ETF gives investors exposure to companies that have been employing the Metaverse in their growth strategy,

On the daily chart, METV has dipped by nearly 45% from its record high of $17.11 in November 2021, with the companies iits stock portfolio, including Meta (formerly known as Facebook) and Snap, reporting substantial second-quarter losses.

*METV daily price chart. Source: TradingView*

Nonetheless, corporations, venture capital funds and private equity investors pour over $120 billion into the Metaverse sector between January and May 2022, more than double the $57 billion invested in all of 2021, according to a recent McKinsey report.

Despite the decline in the metaverse market, however, McKinsey believes the space can become a $5 trillion sector by 2030, noting that e-commerce will likely realize a market impact of between $2 trillion and $2.6 trillion alone, followed by the academic virtual learning sector, which could have an impact of $180 billion to $270 billion.

Weak stocks and declining DeFi use continue to weigh on Ethereum price

May 24, 2022 Coin Telegraph

Coin Telegraph

Crumbling tech stock prices, declining DApp use and bearish derivatives data continue to pin ETH price below $2,000.

Ether’s (ETH) 12-hour closing price has been respecting a tight $1,910 to $2,150 range for twelve days, but oddly enough, these 13% oscillations have been enough to liquidate an aggregate of $495 million in futures contracts since May 13 according to data from Coinglass.

*Ether/USD 12-hour price at Kraken. Source: TradingView*

The worsening market conditions were also reflected in digital asset investment products. According to the latest edition of CoinShare's weekly Digital Asset Fund Flows report, crypto funds and investment products saw a $141 million outflow during the week ending on May 20. In this instance, Bitcoin (BTC) was the investors' focus after experiencing a $154 weekly net redemption.

Russian regulation and crumbling U.S. tech stocks escalate the situation

Regulatory uncertainty weighed on investor sentiment after an updated version of the Russian mining law proposal came to light on May 20. The document in the lower chamber of the Russian parliament no longer contained the obligation for crypto mining operators registry nor the one-year tax amnesty. As cited by local media, the legal State department stated that these measures could "possibly incur costs on the federal budget."

Additional pressure on Ether price came from the Nasdaq Composite Index's 2.5% downturn on May 24. In addition, the heavily-tech stock-driven indicator was pressured after social media platform Snap (SNAP) tumbled 40%, citing rising inflation, supply chain constraints and labor disruptions. Consequently, Meta Platforms (FB) shares fell by 10%.

On-chain data and derivatives are in favor of bears

The number of active addresses on the largest Ethereum network's decentralized applications (DApps) has dropped by 27% from the previous week.

*Ethereum network’s most active DApps in USD terms. Source: DappRadar*

The network's most active decentralized applications saw a substantial reduction in users. For instance, Uniswap V3 weekly addresses decreased by 24%, while Curve faced 52% fewer users.

To understand how professional traders, whales and market makers are positioned let's look at Ether's futures market data.

Quarterly futures are used by whales and arbitrage desks primarily due to their lack of a fluctuating funding rate. These fixed-month contracts usually trade at a slight premium to spot markets, indicating that sellers request more money to withhold settlement longer.

These futures should trade at a 5% to 12% annualized premium in healthy markets. This situation is technically defined as "contango" and is not exclusive to crypto markets.

*Ether futures 3-month annualized premium. Source: Laevitas*

Ether's futures contracts premium went below the 5% neutral-market threshold on April 6. There's an evident lack of conviction from leverage buyers because the current 3% basis indicator remains depressed.

Ether might have gained 2% after testing the $1,910 channel resistance on May 24, but on-chain data shows a lack of user growth, while derivatives data point toward bearish sentiment.

Until there's some morale improvement that boosts the use of decentralized applications and the Ether futures premium regains the 5% neutral level, the odds of the price breaking above the $2,150 resistance seems low.

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.

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