Indicted FTX Co-Founder Sam Bankman-Fried Discussed ‘Pandemic Prevention’ With Biden Administration Officials

January 4, 2023 Bitcoin.com

Bitcoin derivatives data suggests bears will pin BTC below $21K leading in Friday’s options expiry

July 14, 2022 Coin Telegraph

Bitcoin derivatives data suggests bears will pin BTC below K leading in Friday’s options expiry

CME

Bitcoin’s failure to break above $22,000 on July 8 opened room for bears to score a $100 million profit in this week’s options expiry.

Most Bitcoin (BTC) traders would rather see a sharp price correction and a subsequent recovery than agonize for multiple months below $24,000. However, BTC has been doing the opposite since June 14 and its most recent struggle is the asset’s failure to break above the $22,000 resistance. For this reason, most traders are holding back their bullish expectations until BTC posts a daily close above $24,000.

Events outside of the crypto market are the primary factor impacting investors' perspectives on digital assets and on July 14, United States Treasury Secretary Janet Yellen warned that inflation is "unacceptably high" and she reinforced the support of the Federal Reserve’s efforts. When questioned about the impact of rising interest rates on the economy, Yellen recognized the risk of a recession.

On the same day, JPMorgan Chase reported a 28% decline in profits versus the previous year despite recording stable revenues. The difference comes chiefly from a $1.1 billion provision for credit losses because of a "modest deterioration" in its economic outlook.

Bitcoin’s correlation to the S&P 500 remains incredibly high and investors fear that a potential crisis in the global financial sector will inevitably lead to a retest of the $17,600 low from June 18.

*S&P 500 and Bitcoin/USD 30-day correlation. Source: TradingView*

The correlation metric ranges from a negative 1, meaning select markets move in opposite directions, to a positive 1, which reflects a perfect and symmetrical movement. A disparity or a lack of relationship between the two assets would be represented by 0.

The S&P 500 and Bitcoin 30-day correlation presently stands at 0.87, which has been the norm for the past four months.

Most bullish bets are above $21,000

Bitcoin's failure to break above $22,000 on July 8 took bulls by surprise because only 2% of the call (buy) options for July 15 have been placed below $20,000. Thus, Bitcoin bears are slightly better positioned for the $250 million weekly options expiry.

*Bitcoin options aggregate open interest for July 15. Source: CoinGlass*

A broader view using the 1.15 call-to-put ratio shows more bullish bets because the call (buy) open interest stands at $134 million against the $116 million put (sell) options. Nevertheless, as Bitcoin currently stands below $21,000, most bullish bets will likely become worthless.

If Bitcoin's price remains below $21,000 at 8:00 am UTC on July 15, only $25 million worth of these calls (buy) options will be available. This difference happens because there is no use in the right to buy Bitcoin at $21,000 if it trades below that level on expiry.

Bears could pocket a $100 million profit

Below are the three most likely scenarios based on the current price action. The number

of options contracts available on July 15 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $18,000 and $19,000: 10 calls vs. 5,200 puts. The net result favors bears by $100 million.
Between $19,000 and $20,000: 200 calls vs. 3,400 puts. The net result gives bears a $60 million advantage
Between $20,000 and $21,000: 1,300 calls vs. 1,700 puts. The net result is balanced between bulls and bears.

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.

Futures markets show bears are better positioned

Bitcoin bears need to pressure the price below $19,000 on July 15 in order to secure a $100 million profit. On the other hand, the bulls' best-case scenario requires a push above $20,000 to balance the scales.

The lack of appetite from professional traders in the Bitcoin CME futures indicates that bulls are less inclined to push the price higher in the short term.

With that said, the most probable scenario favors bears, and to secure this Bitcoin price only needs to trade below $21,000 going into the July 15 options expiry.

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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June 9, 2022 Bitcoin.com

Bitcoin and Ethereum had a rough week, but derivatives data reveals a silver lining

May 13, 2022 Coin Telegraph

Asia

BTC, ETH and altcoin prices were crushed this week, but the futures funding rate shows retail traders are not ready to become permabears.

This week the crypto market endured a sharp drop in valuation after Coinbase, the leading U.S. exchange, reported a $430 million quarterly net loss and South Korea announced plans to introduce a 20% tax on crypto gains.

During its worst moment, the total market crypto market cap faced a 39% drop from $1.81 trillion to $1.10 trillion in seven days, which is an impressive correction even for a volatile asset class. A similar size decrease in valuation was last seen in February 2021, creating bargains for the risk-takers.

*Total crypto market capitalization, USD billion. Source: TradingView*

Even with this week’s volatility, there were a few relief bounces as Bitcoin (BTC) bounced 18% from a $25,400 low to the current $30,000 level and Ether (ETH) price also made a brief rally to $2,100 after dropping to a near-year low at $1,700.

Institutional investors bought the dip, according to data from the Purpose Bitcoin ETF. The exchange-traded instrument is listed in Canada and it added 6,903 BTC on May 12, marking the largest single-day buy-in ever registered.

On May 12, the United States Treasury Secretary Janet Yellen stated that the stablecoin market is not a threat to the country’s financial stability. In a hearing of the House Financial Services Committee, Yellen added:

“They present the same kind of risks that we have known for centuries in connection with bank runs.”

The total crypto capitalization down 19.8% in seven days

The aggregate market capitalization of all cryptocurrencies shrank by 19.8% over the past seven days, and it currently stands at $1.4 trillion. However, some mid-capitalization altcoins were decimated and dropped more than 45% in one week.

Below are the top gainers and losers among the 80 largest cryptocurrencies by market capitalization.

*Weekly winners and losers among the top-80 coins. Source: Nomics*

Maker (MKR) benefited from the demise of a competing algorithmic stablecoin. While TerraUSD (UST) succumbed to the market downturn, breaking its peg well below $1, Dai (DAI) remained fully functional.

Terra (LUNA) faced an incredible 100% crash after the foundation responsible for administering the ecosystem reserve was forced to sell its Bitcoin position at a loss and issue trillions of LUNA tokens to compensate for its stablecoin breaking below $1.

Fantom (FTM) also faced a one-day 15.3% drop in the total value locked, the amount of FTM coins deposited on the ecosystem’s smart contracts. Fantom has been struggling since prominent Fantom Foundation team members Andre Cronje and Anton Nell resigned from the project.

Tether premium shows trickling demand from retail traders

The OKX Tether (USDT) premium indirectly measures retail trader crypto demand in China. It measures the difference between China-based USDT peer-to-peer trades and the official U.S. dollar currency.

Excessive buying demand puts the indicator above fair value, which is 100%. On the other hand, Tether‘s market offer is flooded during bearish markets, causing a 2% or higher discount.

*Tether (USDT) peer-to-peer vs. USD/CNY. Source: OKX*

Currently, the Tether premium stands at 101.3%, which is slightly positive. Furthermore, there has been no panic over the past two weeks. Such data indicate that Asian retail demand is not fading away, which is bullish, considering that the total cryptocurrency capitalization dropped 19.8% over the past seven days.

Altcoin funding rates have also dropped to worrying levels. Perpetual contracts (inverse swaps) have an embedded rate that is usually charged every eight hours. These instruments are retail traders‘ preferred derivatives because their price tends to perfectly track regular spot markets.

Exchanges use this fee to avoid exchange risk imbalances. A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.

*Seven-day accumulated perpetual futures funding rate. Source: Coinglass*

Notice how the accumulated seven-day funding rate is mostly negative. This data indicates higher leverage from sellers (shorts). As an example, Solana‘s (SOL) negative 0.90% weekly rate equals 3.7% per month, a considerable burden for traders holding futures positions.

However, the two leading cryptocurrencies did not face the same leverage selling pressure, as measured by the accumulated funding rate. Typically, when there‘s an imbalance caused by excessive pessimism, that rate can easily move below negative 3% per month.

The absence of leverage shorts (sellers) in futures markets for Bitcoin and Ethereum and the modest bullishness from Asian retail traders should be interpreted as extremely healthy, especially after a -19.8% weekly performance.

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.

Here’s why Ethereum traders could care less about ETH’s current weakness

December 18, 2021 Coin Telegraph

basis

ETH price could hit new lows near $3,600, but derivatives data suggests pro traders still feel bullish.

Since hitting an all-time high at $4,870 on Nov. 10, Ether (ETH) price has been posting lower lows over the past 50 days. If this downtrend continues, the lower trendline support suggests that the altcoin will bottom at $3,600. Still, derivatives data is signaling that pro traders are not concerned about the seemingly bearish market structure.

Ether/USD price on FTX. Source: TradingView

Notice how the price peaks are getting lower on the 12-hour time frame as mounting regulatory concerns drive investors away from the sector. In a press conference on Dec. 17, Russia's Central Bank governor, Elvira Nabiullina, stated that banning crypto in the country is "quite doable."

Nabiullina cited crypto's frequent use for illegal operations and significant risks for retail investors. Russian President Vladimir Putin also recently criticized cryptocurrency by saying they are not backed by anything. Interestingly, the country plans to launch its own central bank digital currency even as the Russian ruble lost 44% against gold over the past four years.

In the United States, a bipartisan group of U.S. senators has called on Treasury Secretary Janet Yellen to clarify the language in the infrastructure bill relating to the crypto tax reporting requirements. Under the current broader "broker" definition, miners, software developers, transaction validators and node operators will likely be required to report digital asset transactions worth more than $10,000 to the Internal Revenue Service.

Even with the regulatory uncertainty and negatively skewed price action, traders should monitor the futures contracts premium — also known as the "basis rate" — to analyze how bullish or bearish professional traders are.

Pro traders are neutral despite the price weakness

The basis indicator measures the difference between longer-term futures contracts and the current spot market levels. A 5% to 15% annualized premium is expected in healthy markets. This price gap is caused by sellers demanding more money to withhold settlement longer.

However, a red alert emerges whenever this indicator fades or turns negative, also known as "backwardation."

*Ether 3-month futures basis rate. Source: Laevitas.ch*

Notice how the sharp decrease after the 24% intraday crash on Dec. 3 caused the annualized futures premium to reach its lowest level in two months. After the initial panic, the Ether futures market recovered to the current 9% level, which is close to the middle of the "neutral" range.

To confirm whether this movement was specific to that instrument, traders should also analyze the options markets. The 25% delta skew compares similar call (buy) and put (sell) options. The indicator will turn positive when "fear" is prevalent because the protective put options premium is higher than similar risk call options.

When market makers are bullish, the 25% delta skew indicator shifts to the negative area, and readings between negative 8% and positive 8% are usually deemed neutral.

*Ether 30-day options 25% delta skew. Source: Laevitas.ch*

For the past three weeks, the 25% delta skew ranged between a positive 3 and 8 which is in the neutral zone. Consequently, options market data validate the sentiment seen in futures markets and signals that whales and market makers are not worried about the recent price weakness.

If investors "zoom-out" a bit, they will see that Ether's year-to-date gains are at 300%, and this explains why pro traders are not worried about a 20% drop from the $4,870 all-time high.

Furthermore, the Ethereum network's total value locked in smart contracts doubled over the past six months to $148 billion. This data gives derivatives traders the confidence needed to remain calm even with the current short-term price weakness.

‘An Act of War Against the Middle-Class’ — Americans Criticize Janet Yellen’s Idea to Tax ‘Unrealized Capital Gains’

October 25, 2021 Bitcoin.com

Ethereum’s spot setup looks grim, but derivatives data tells a different story

September 21, 2021 Coin Telegraph

basis

Ether price is stuck in a rut, but derivatives data shows pro traders are bullish even with ETH below $3,000.

Ether (ETH) price fell below the $3,000 support on Sept. 20 as global markets entered a risk-aversion mode. The Invesco China Technology ETF (CQQQ) closed down 4.2%, while the SPDR S&P Metals and Mining ETF (XME) lost 3.8%.

Some analysts pointed to the potential ripple effects of the default of Evergrande, a major Chinese real estate company. In contrast, others blame the ongoing debates over the debt limit in Washington as the catalyst for this week's volatility. As a result, the CBOE Volatility Index (VIX), usually referred to as the "stock market fear index," jumped by more than 30% to reach its highest level since May.

On Sept.19, U.S. Treasury Secretary Janet Yellen called for Congress to raise the U.S. debt ceiling again in a Wall Street Journal op-ed. Yellen suggested that avoiding this would risk causing the government to default on payments and generate a "widespread economic catastrophe."

One of the major focuses for traditional markets is this week's U.S. Federal Open Market Committee meeting, which ends on Sept. 22. At the meeting, the Federal Reserve is expected to signal when it will cut back its $120 billion monthly asset purchase program.

How these events impact Ether price

*Ether price in USD at Bitstamp. Source: TradingView*

Even though the $3,000 level sits near the bottom range of the previous performance of the past 45 days, Ether still accumulated 210% gains in 2021. The network's adjusted total value locked (TVL) jumped from $13 billion in 2020 to $60 billion and the decentralized finance (DeFi), gaming, and nonfungible token (NFT) sectors experienced an impressive surge while Ethereum maintained dominance of the sector's market share.

Despite mean gas fees surpassing $20 in September, Ethereum has kept roughly 60% of the decentralized exchange (DEX) volume. Its largest competitor, Binance Smart Chain, held an average daily volume slightly below $1 billion, albeit having a transaction fee below $0.40.

Ether futures data shows pro traders are still bullish

Ether's quarterly futures are the preferred instruments of whales and arbitrage desks due to their settlement date and the price difference from spot markets. However, the contract's biggest advantage is the 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. Therefore, futures should trade at a 5% to 15% annualized premium in healthy markets. This situation is technically defined as "contango" and is not exclusive to crypto markets.

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

As displayed above, Ether's futures contracts premium spiked to 15% on Sept. 6 as ETH price tested the $4,000 resistance. Apart from that brief overshot, the basis indicator ranged from 8% to 12% over the past month, considered healthy and bullish.

The crash to sub-$3,000 in the early hours of Sept. 21 was not enough to scare seasoned traders. More importantly, U.S. Securities and Exchange Commission chairman Gary Gensler's interview on cryptocurrency regulation also had no noticeable impact on Ether price. Had there been a generalized fear, Ether futures premium would have reflected this.

Yellen