Category: Derivatives

Bitcoin Futures ETF Exceeds Expectations, Trades $1 Billion On Day One

Bitcoin Futures ETF Exceeds Expectations, Trades $1 Billion On Day One

The numbers are in, and the Bitcoin Futures ETF had the biggest debut of the year. By far. We have to “exclude ETFs where their Day One volume was literally one pre-planned giant investor or BYOA,” but that’s fair. Apparently, the ProShares Bitcoin Strategy ETF got to the top naturally, via real trades by real people and institutions. Considering that just its approval by the SEC seemed to catapult Bitcoin’s price to the edge of an All-Time High, a question arises. How will the market react tomorrow? And the day after that?
Related Reading | Bitcoin ETF Check, What’s Next For BTC
But let’s avoid speculation and check Senior ETF Analyst for Bloomberg, Eric Balchunas’ charts:

If we don’t exclude ETFs where their Day One volume was literally one pre-planned giant investor or BYOA (not natural), it still ranks #2 overall. Here’s that list. The reason some of these shouldn’t be included IMO is they don’t really represent grassroots interest. pic.twitter.com/wmZiHnpFrS
— Eric Balchunas (@EricBalchunas) October 19, 2021

Considering the first-ever Bitcoin Futures ETF “also traded more than 99.5% of all ETFs,” it’s fair to say the launch was a huge success. What does it mean for the following ETFs? According to Balchunas, it’ll be hard for them to succeed. “Every day counts because once an ETF gets knows as ‘the one’ and has tons of liquidity, it’s virtually imposs to steal.” And, what does this mean for the market in general? NewsBTC already covered this question:
“Although these ETFs have attracted criticism for being backed by futures contracts and not the underlying asset, they could still have big implications for Bitcoin — allowing tax-sheltered and retirement accounts to easily get exposure, and potentially opening the cryptoasset to a much broader audience.”

The NYSE welcomes @ProSharesETF in celebration of the first U.S. Bitcoin-Linked ETF $BITO https://t.co/0qh0NDS2d4
— NYSE 🏛 (@NYSE) October 19, 2021

Why Is There A Bitcoin Futures ETF Instead Of A Bitcoin ETF?
Who better to answer this question than the SEC’s chairman himself, Gary Gensler told CNBC: 
“What you have here is a product that’s been overseen for four years by the U.S. federal regulator CFTC, and that’s being wrapped inside of something within our jurisdiction called the Investment Company Act of 1940, so we have some ability to bring it inside of investor protection.” 
So, the Bitcoin Futures ETF falls under the Commodity Futures Trading Commission jurisdiction. Plus, it tracks the Chicago Mercantile Exchange (CME) Bitcoin futures. And the SEC considers that the institutional support will protect the customer. According to them, the underlying asset, Bitcoin, is too volatile and subject to manipulation.
The first persons to propose a Bitcoin ETF in the USA, the Winklevoss twins, lament that when they did the price of Bitcoin was $68 and nowadays is $64K. “That’s almost a 1000x return in the meantime. I’m glad we got here, but it has taken too long.”

When @cameron and I first proposed a bitcoin ETF in July 2013, the price of bitcoin was $68.
Today, upon the launch of two bitcoin futures ETFs, the price of bitcoin is $64,000.
That’s almost a 1000x return in the meantime. I’m glad we got here, but it has taken too long.
— Tyler Winklevoss (@tyler) October 19, 2021

Also a skeptic of the Bitcoin Futures ETF‘s long term potential, Anthony Bertolino, VP of growth at iTrustCapital, told CNBC:
“The launch of the first bitcoin-linked ETF in the U.S. will bolster the broader crypto market and help an entirely new investor class experience the benefits of bitcoin as a legitimate asset. However, a derivatives-based bitcoin ETF is not where we want to be long-term.”

BTC price chart for 10/20/2021 on Forexcom | Source: BTC/USD on TradingView.com
What Are The ProShares Bitcoin Strategy ETF’s Characteristics?
The next few days will be crucial for this story. There’s a possibility that today’s demand was orchestrated, at least in part. If this happened, it’ll be very obvious in the following days. In any case, the fund’s official site defines the first Bitcoin Futures ETF as:
“ProShares Bitcoin Strategy ETF (BITO) is the first U.S. bitcoin-linked ETF offering investors an opportunity to gain exposure to bitcoin returns in a convenient, liquid and transparent way. The Fund seeks to provide capital appreciation primarily through managed exposure to bitcoin futures contracts.”
Related Reading | Grayscale Investments Set to File for Bitcoin Spot ETF as Competition Heats Up
And alerts the clients that “The fund does not invest directly in bitcoin,” and that “The price and performance of bitcoin futures should be expected to differ from the current “spot” price of bitcoin.” Forewarned is forearmed.
Featured Image: Screenshot of the ETF’s opening bell ceremony| Charts by TradingView

Bulls target $100 Filecoin (FIL) after data points to improving fundamentals

Bulls target $100 Filecoin (FIL) after data points to improving fundamentals

Some traders have said that Filecoin (FIL) has lost its momentum because its current price at $64 is more than 70% below its all-time high at $238. However, this decentralized data-sharing platform is showing signs of increasing adoption and this could cause the FIL token price to accelerate its current uptrend.The FIL token is used to purchase storage space and retrieve data from the Filecoin Network. At the same time, its users gain rewards for selling their excess storage using this open-source platform. To compete with existing centralized cloud storage services, Filecoin has economic incentives to ensure files are reliably stored over time.Filecoin (FIL) price at Coinbase in USD. Source: TradingViewNotice how the past three weeks showed a potential reversion to the previous downtrend movement. That upward channel points to a $90 support by mid-November and resistance near $107, which would be a 55% gain from the current pricing.Related: Bitcoin-related altcoins surge as BTC ETF rumors spread across the sectorPartnerships and adoption could pave the way to $100On Sept. 14, Filecoin announced a referral program for users who bring members carrying datasets larger than 90 Terabytes. The network reached 9,000,000 Terabytes in August, and according to their website, there are over 3,000 systems and storage providers serving capacity to 400+ applications.On Oct. 13, Filecoin announced a storage collaboration with Flow Blockchain, which is backed by Dapper Labs. The service will establish decentralized data storage for nonfungible tokens (NFTs), along with the media assets associated with them. Flow’s platforms include Eternal, Starly, Versus and the upcoming multiplayer online game Chainmonsters.More importantly, on Oct. 15, the daily release of Filecoin tokens will decrease by 23.8% to mark a year since the mainnet launched. Specifically, that affects the 7.5% stake held by early investors, equivalent to 150 million FIL tokens after the three-year issuing period.Filecoin future gregate open interest. Source: BybtSince Sep. 30, Filecoin futures open interest has increased by 45%, signaling that investors’ interest is finally starting to pick up. This metric represents the total number of contracts in play, regardless of whether they have actually been traded on a specific date.Glass half full: The funding rate has room for buyers’ leverage To assess whether the market is leaning bullish, one should analyze the perpetual contracts funding rate. Even though buyers and sellers’ open interest is matched at all times, leverage can vary. When buyers (longs) are demanding more leverage, the funding rate turns positive. Thus, they are the ones paying the fees to the sellers (shorts).However, the opposite situation occurs when shorts require additional leverage, and this causes the funding rate to turn negative.Filecoin perpetual futures 8-hour funding rate. Source: Bybt.comThe above chart shows a brief period of excessive buyers (longs) leverage building in early September as the funding rate reached 0.10% or 2.1% per week. More recently, Filecoin’s funding rate surpassed 0.06% per 8-hour as FIL token struggled with the $80 resistance on Oct. 8 but failed to break through.Currently, derivatives metrics show few signs that investors have abandoned Filecoin despite its price hanging 70% below the $238 all-time high. The recent partnership with Flow Blockchain, increasing network use and capacity, and the reduced token emission point to a possible continuation of the previous three-week uptrend. Nothing seems to be holding back FIL from reaching the $90 to $107 range in November.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.

ProShares Bitcoin ETF to debut on NYSE on Oct. 19

ProShares Bitcoin ETF to debut on NYSE on Oct. 19

The first Bitcoin (BTC) futures-linked exchange-traded fund (ETF) in the United States, ProShares’ Bitcoin Strategy ETF, will begin trading on the New York Stock Exchange (NYSE) on Oct. 19 under the ticker BITO.ProShares CEO Michael Sapir said the launch marks an important milestone for cryptocurrency ETFs in the United States following several years of effort to list one on an exchange:“BITO will continue the legacy of ETFs that provide investors convenient, liquid access to an asset class. 1993 is remembered for the first equity ETF, 2002 for the first bond ETF, and 2004 for the first gold ETF. 2021 will be remembered for the first cryptocurrency-linked ETF.”Sapir went on to say that the Bitcoin ETF’s debut on NYSE unlocks massive exposure for investors in traditional financial markets.“BITO will open up exposure to Bitcoin to a large segment of investors who have a brokerage account and are comfortable buying stocks and ETFs, but do not desire to go through the hassle and learning curve of establishing another account with a cryptocurrency provider and creating a Bitcoin wallet or are concerned that these providers may be unregulated and subject to security risks,” he said.The news comes shortly after the U.S. Securities and Exchange Commission (SEC) accepted the registration request for ProShares’ Bitcoin ETF on Oct. 15. On the same day, the SEC also accepted the registration request for shares of Valkyrie’s Bitcoin Strategy ETF for listing on Nasdaq.Related: Grayscale hints at plans to convert Bitcoin trust into BTC-settled ETFOn Oct. 5, the SEC also approved Volt Crypto Industry Revolution and Tech ETF, a crypto ETF linked to companies with Bitcoin exposure, including firms like Microstrategy and Tesla.“Though it isn’t holding the actual coin, it doesn’t look like a coin-based ETF will be coming out this year either. The next approvals will probably be futures based ETFs which also aim for bitcoin exposure, but they come with their own set of problems that isn’t in a coin-based ETF,” Volt Equity CEO Tad Park told Cointelegraph.Amid positive Bitcoin ETF news in the United States, Bitcoin price surged around 30% over the past 14 days, crossing $60,000 for the first time since April on Oct. 15. At the time of writing, Bitcoin is trading at $61,692, up around 1.3% over the past 24 hours, according to data from CoinGecko.

Bitcoin bulls target prices above $58K ahead of Friday’s $820M options expiry

Bitcoin bulls target prices above $58K ahead of Friday’s $820M options expiry

Everyone is talking about a six-figure Bitcoin (BTC) price now that the digital asset has broken out of its multi-month downtrend and confirmed that a bullish trend is in play. If Bitcoin happens to enter a parabolic move toward $110,000, that would finally match PlanB’s Stock-to-Flow model prediction. According to the pseudonymous analyst, the scarcity and valuation of gold and other precious metals and “Elon Musk’s energy FUD and China’s mining crackdown” are a few of the factors responsible for the past five months of 50% or higher inaccuracy in the model.Bulls’ hopes mostly cling to an exchange-traded fund being approved by the United States Securities and Exchange Commission. Currently, there are multiple requests pending review between Oct. 18 and Nov. 1, but the regulator could postpone its final decision.Oct. 15’s $830 million options expiry was largely impacted by the 20% price rally initiated on Oct. 4, which most likely eliminated 92% of the put (sell) options.Bitcoin price on Coinbase in USD. Source: TradingViewThe aftermath of China’s mining crackdown was an important event that might have fueled investor sentiment, and research shows the U.S. accounting for 35.4% of the Bitcoin hash rate. Furthermore, as Cointelegraph reported, the U.S. states of Texas and Ohio are also expected to receive additional large-scale Bitcoin mining centers, which will effectively boost the U.S. crypto market share even higher.The Oct. 8 expiry was profitable for bullsFollowing last week’s $370 million estimated net profit from the BTC options expiry, bulls had more firepower, and this is evident in this Friday’s $820 million expiry. This advantage explains why the call (buy) options open interest is 43% larger than the neutral-to-bearish put options.Bitcoin options aggregate open interest for Oct. 15. Source: BybtAs the above data shows, bears placed $335 million in bets for Friday’s expiry, but it appears that they were caught by surprise, as 92% of the put (sell) options are likely to become worthless.In other words, if Bitcoin remains above $56,000 on Oct. 15, only $36 million worth of neutral-to-bearish put options will be activated on Friday’s 8:00 am UTC expiry.Bulls have a reason to push BTC price above $58,000Below are the four likeliest scenarios for Oct. 15’s expiry. The imbalance favoring either side represents the theoretical profit. In other words, depending on the expiry price, the quantity of call (buy) and put (sell) contracts becoming active varies:Between $52,000 and $54,000: 3,140 calls vs. 2,110 puts. The net result is $55 million favoring the call (bull) instruments.Between $54,000 and $56,000: 3,700 calls vs. 1,240 puts. The net result is $130 million favoring the call (bull) instruments.Between $56,000 and $58,000: 4,850 calls vs. 680 puts. The net result is $235 million favoring the call (bull) instruments.Above $58,000: 6,230 calls vs. 190 puts. The net result is complete dominance, with bulls profiting $350 million.This raw estimate considers call options being exclusively used in bullish bets and put options in neutral-to-bearish trades. However, investors might have used a more complex strategy that typically involves different expiry dates.Bears need a 7% price correction to reduce their lossIn every scenario, bulls have absolute control of this Friday’s expiry, and there are a handful of reasons for them to keep the price above $56,000. On the other hand, bears need a 7% negative move below $54,000 to avoid a loss of $235 million or higher.Nevertheless, traders must consider that during bull runs, the amount of effort a seller needs to pressure the price is immense and usually ineffective. Analytics point to a considerable advantage from call (buy) options, fueling even more bullish bets next week.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.

Traders pin Ethereum’s route to new ATH to eventual Bitcoin ETF approval

Traders pin Ethereum’s route to new ATH to eventual Bitcoin ETF approval

Ether (ETH) price is lagging Bitcoin’s (BTC) price action by 13% in October, but is this relevant? To date, the altcoin has still outperformed BTC by 274% in 2021. However, traders tend to be short-sighted and some will question whether the Ethereum network can successfully migrate to proof of stake (PoS) validation and finally solve the high gas fees issue.Bitcoin and Ether prices at Bitstamp. Source: TradingViewMoreover, the increasing competition from smart contract networks like Solana (SOL) and Avalanche (AVAX) have been worrying investors:One big problem with the “ETH is ultra sound money” meme is that EIP-1559 only limits the supply of ETH if Ethereum continues to have lots of transactions. It’s just as possible that people will tire of $80 gas fees and opt for one of numerous alternatives (SOL, AVAX, etc).— dennis in SF // OP_CTV (@pourteaux) October 8, 2021According to Cointelegraph, the recent speculation over the possible approval of a Bitcoin exchange-traded fund (ETF) raised traders’ appetite for BTC. The U.S. Securities and Exchange Commission (SEC) is expected to announce its decision on multiple ETF requests over the next couple of weeks. However, it remains a possibility that the regulator will postpone these dates.Pro traders are unfazed by the recent price stagnationTo determine whether professional traders are leaning bearish, one should start by analyzing the futures premium — also known as the basis rate. This indicator measures the price gap between futures contract prices and the regular spot market.Ether’s quarterly futures are the preferred instruments of whales and arbitrage desks. These derivatives might seem complicated for retail traders due to their settlement date and price difference from spot markets, but their most significant advantage is the lack of a fluctuating funding rate.Ether three-month futures basis rate. Source: Laevitas.chThe three-month futures typically trade with a 5% to 15% annualized premium follows the stablecoin lending rate. By postponing settlement, sellers demand a higher price, and this causes the price difference.As depicted above, Ether’s failure to break the $3,600 resistance has not caused a shift in pro traders’ sentiment because the basis rate remains at a healthy 13%. This shows that there is no excessive optimism at the moment.Retail traders have been neutral for the past five weeksRetail traders tend to opt for perpetual contracts (inverse swaps), where a fee is charged every eight hours to balance the leverage demand. To understand if some panic selling occurred, one must analyze the futures markets funding rate.Ether perpetual futures 8-hour funding rate. Source: BybtIn neutral markets, the funding rate tends to vary from 0% to 0.03% on the positive side. This fee is equivalent to 0.6% per week and indicates that longs are the ones paying it.Since Sept. 7, there hasn’t really been any indication of high leverage demand from either bulls or bears. This balanced situation reflects retail traders’ lack of appetite for leverage long positions, but at the same time shows little panic selling or excessive fear.Derivatives markets show that Ether investors are not worried about the recent underperformance versus Bitcoin. Furthermore, the lack of excessive long leverage after a 274% gain year-to-date should be positively portrayed.By leaving some room for bullishness without compromising the derivatives market structure, Ether traders seem prepared for a rally above its all-time high, especially if a Bitcoin ETF is approved.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.

Bitcoin price is correcting, but what does futures data show?

Bitcoin price is correcting, but what does futures data show?

Bitcoin had been underperforming most altcoins for the past two months, but that trend reversed this week when (BTC’s) 20% rally pushed its market capitalization to break the $1 trillion mark on Oct. 6. That shifted investors’ attention back to the leading cryptocurrency, and altcoins are currently in the red for the day. The current positive momentum could be dangerous if Bitcoin traders become overconfident and abuse leverage to open long positions. To avoid this, traders need to carefully analyze derivatives markets to exclude this risk.Top 14 coins weekly performance. Source: CoinMarketCapNotice above how the altcoin market capitalization increased by 5.8% while Bitcoin posted a 20.8% gain in the same period. Sure enough, there were some outliers like Shiba Inu (SHIB) which rose by 200%, Fantom (FTM), which rallied 60%, and Klaytn (KLAY), which gained 36%. However, the aggregate market capitalization from altcoins did not accompany Bitcoin’s performance.Some well-known personalities, such as billionaire Wall Street investor Bill Miller recently expressed their optimism for Bitcoin while raising concerns on most altcoin projects. Miller explicitly mentioned the “big banks” getting involved and referred to “huge amounts” of venture capital money flowing into Bitcoin.The recent Bitcoin frenzy seems driven by the macro-economic scenario. The United States increased its debt limit by $480 billion to pay off its obligations until early December. The inflationary pressure brought by unending stimulus packages and meager interest rates has been fueling the long rally in commodities. For example, oil reached its highest level in seven years, and wheat futures recently hit a record high not seen since February 2013. Even the S&P Case-Shiller home price index has presented an annualized 23.3% gain.To understand if Bitcoin traders got overly excited, traders should analyze Bitcoin’s derivatives indicators like the futures markets premium and options skew.The futures premium shows traders are slightly bullishThe basis rate measures the difference between longer-term futures contracts and the current spot market levels. This indicator is also frequently referred to as the futures premium.Bitcoin 3-month futures annualized basis. Source: Laevitas.chA 5% to 15% annualized premium is expected in healthy markets, which is a situation known as contango. This price difference is caused by sellers demanding more money to withhold settlement longer.The recent 20% Bitcoin price rally caused the indicator to reach the upper limit of this neutral zone, meaning investors are bullish but not yet overconfident. Whenever buyers demand excessive leverage, the basis rate can easily surpass 25%, as seen in mid-May.To exclude externalities specific to the futures instrument, one should also analyze options markets.Bitcoin options signal “neutral” sentiment The 25% delta skew compares similar call (buy) and put (sell) options. This metric will turn positive whenever “fear” is prevalent because traders expect potential downside.The opposite holds when option traders are bullish, causing the 25% delta skew indicator to shift to the negative area. Readings between negative 8% and positive 8% are usually deemed neutral.Deribit BTC options 25% delta skew. Source: LaevitasThe above chart shows that there hasn’t been a single instance of options traders becoming overconfident in the past six months, which would signal “greed” because the 25% delta skew dropped below negative 8%. Meanwhile, the indicator has ranged near 0 for the past week, showing balanced risks between the bears and bulls.Those findings necessarily show a lack of confidence from buyers, but it is quite the opposite. Had Bitcoin bulls already been overly confident at $57,000, there would be little room for additional leverage, increasing the risk of a cascading liquidation if a momentary price correction occurred.Bulls are modestly confident and even a 20% price correction is unlikely to change the situation because the futures market’s basis rate shows a reasonable premium after the recent rally.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.

Bitcoin price is back at $50K, but exactly how 'bullish' are the bulls?

Bitcoin price is back at $50K, but exactly how 'bullish' are the bulls?

Cryptocurrency markets rallied 12.5% over the past seven days to reach a $2.44 trillion market capitalization. However, that move doesn’t seem to be inspiring confidence because the same level was tested 16 days ago when a 27% retrace followed ether’s (ETH) attempt to break $3,650 over the next six days. Regulation seems to be a key concerning factor for buyers as the U.S. House of Representatives is expected to vote on the $1 trillion infrastructure bill this month. In addition to defining who qualifies as a broker, the legislation would impose anti-money laundering (AML) and know-your-customer (KYC) type requirements on many kinds of cryptocurrency transactions, which could also be detrimental for DeFi protocols.Top eight cryptos 7 and 30-day performances. Source: CoinMarketCapAs shown above, the negative performance seen in the top-10 cryptocurrencies has impacted investor sentiment over the past 30 days. For this reason, it’s important to measure more than just Bitcoin’s nominal price. Traders should also analyze BTC’s derivatives indicators like the futures markets premium and options skew.The futures premium shows traders are slightly bullishThe basis rate is also frequently referred to as the futures premium and it 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, which is a situation known as contango. This price difference is caused by sellers demanding more money to withhold settlement longer.Bitcoin 3-month futures annualized basis. Source: Laevitas.chAs depicted above, the current 9% annualized premium is neutral but shows an improvement over the previous couple of weeks. That indicates that traders are cautiously optimistic, leaving room for further long leverage when confidence is fully restored.Options traders exit ‘fear’ modeTo exclude externalities specific to the futures instrument, one should also analyze options markets.The 25% delta skew compares similar call (buy) and put (sell) options. The metric will turn positive when “fear” is prevalent as the protective put options premium is higher than similar risk call options.The opposite holds when market makers are bullish, causing the 25% delta skew indicator to shift to the negative area. Readings between negative 8% and positive 8% are usually deemed neutral.Deribit BTC options 25% delta skew. Source: LaevitasNotice how Bitcoin option traders entered the “fear” level on Sept. 25 as the $41,000 support was tested multiple times. Nevertheless, a drastic change took place since Sept. 30, and the indicator now sits at a neutral zone.As the situation currently stands, both the futures’ basis and options 25% skew show a typical “glass half full” scenario. Meaning that even though Bitcoin reached its highest level in 27 days and is above the $50,000 resistance, there’s still room for buyers to strap on additional leverage before metrics flash signs of overextension or euphoria. A $50,000 breakout with the current meager derivatives data would usually be interpreted as a weakness. However, considering that the total crypto capitalization is still in the same place as 30 days ago and the unmitigated regulatory concerns, there is no reason to worry. At the moment, neither the futures markets nor options markets show any signs of bearishness.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.

French regulator warns against unauthorized crypto platforms

French regulator warns against unauthorized crypto platforms

French stock market regulator, the Autorité des Marchés Financiers (AMF), continues monitoring the cryptocurrency market to warn investors about unauthorized crypto services.On Oct. 1, AMF updated its web portals identified as offering crypto and foreign exchange (forex) investments through unauthorized entities. The list included four websites related to cryptocurrency derivatives investments alongside 12 forex-related sites.According to the regulator, the listed entities have been offering investment products without being authorized to provide such services. To protect investors from potentially fraudulent investments, AMF and French Prudential Supervision and Resolution Authority (ACPR) regularly update the blacklist of unauthorized investment providers. Still, those lists are “not intended to be complete” as “new unauthorized entities appear regularly.”The authority strongly recommended investors to follow the list of authorized investment providers using the online register of financial service providers as well as the list of authorized in the financial investment advisor or crowdfunding categories.The AMF’s latest warning comes shortly after Paris-based derivatives fund manager Melanion Capital launched a Bitcoin (BTC) exchange-traded fund (ETF) in August. Melanion CEO Jad Comair reportedly said that getting the fund approved by AMF was “a real challenge because of the sensibilities and politics currently surrounding Bitcoin and Bitcoin investing.”Related: South Africa’s financial regulator issues warning against BinanceGlobal authorities have been increasingly expressing concerns over unregulated crypto investment services recently.In mid-August, the Australian Securities and Investments Commission advised citizens to only invest in crypto via financial institutions holding an Australian Financial Services license. According to the Australian Competition and Consumer Commission, crypto scams made up more than 50% of Australian investors’ losses in the first six months of 2021.Earlier this year, Bank of France governor Francois Villeroy de Galhau urged Europe to prioritize crypto regulation due to the risk of digital assets challenging its monetary sovereignty.

Bears intend to pin Bitcoin price below $42K until Friday's $700M expiry passes

Bears intend to pin Bitcoin price below $42K until Friday's $700M expiry passes

Bitcoin (BTC) has been trading in a descending pattern since the strong $53,000 rejection that occurred on Sept. 7, and the $3.4 billion futures contracts liquidation along with China’s ban on crypto trading appear to have severely impacted traders’ morale. Adding to the negative sentiment, major crypto exchanges like Binance and Huobi halted some services in mainland China, and some of the largest Ethereum mining pools, like Sparkpool and BeePool were forced to shut down completely.Bitcoin price in USD at Coinbase. Source: TradingViewBased on the above chart, it is possible to understand why buyers placed 80% of their bets at $44,000 or higher. However, the past two weeks definitively caused those call (buy) options to lose value quickly.On Sept. 25, the People’s Bank of China (PBoC) posted a nationwide ban on crypto and barred companies from providing financial transactions and services to market participants. The news triggered an 8% dip in Bitcoin’s price along with a broader pullback on altcoins.The bearish sentiment was confirmed after Tesla CEO Elon Musk expressed his support for cryptocurrency at the Code Conference in California. Musk said:”It is not possible to, I think, destroy crypto, but it is possible for governments to slow down its advancement.”Had we been in a neutral-to-bullish market, those remarks would likely have reversed the negative trend. For example, on July 21, Elon Musk said that Bitcoin had already hit his benchmark on renewable energy. As a result, Bitcoin price, which had previously dropped 12% in ten days, reverted the move and hiked 35% over the next ten days.The Oct. 1 expiry will be a strength test for bulls because any price below $42,000 means a bloodbath with absolute dominance of put (sell) options.Bitcoin options aggregate open interest for Oct. 1. Source: Bybt.comInitially, the $285 million neutral-to-bullish instruments dominated the weekly expiry by 21% compared to the $320 million puts (sell) options.However, the 1.21 call-to-put ratio is deceiving because the excessive optimism seen from bulls could wipe out most of their bets if Bitcoin price remains below $43,000 at 8:00 am UTC on Friday. After all, what good is a right to acquire Bitcoin at $50,000 if it’s trading below that price?Bears were also caught by surpriseSixty-six percent of the put options, where the buyer holds a right to sell Bitcoin at a pre-established price, has been placed at $42,000 or lower. These neutral-to-bearish instruments will become worthless if Bitcoin trades above that price on Friday morning.Below are the four most likely scenarios that consider the current price levels. The imbalance favoring either side represents the potential profit from the expiry.The data shows how many contracts will be available on Friday, depending on the expiry price.Between $40,000 and $41,000: 110 calls vs. 4,470 puts. The net result is $175 million favoring the protective put (bear) instruments.Between $41,000 and $43,000: 640 calls vs. 4,000 puts. The net result continues to favor bears by $140 million.Between $43,000 and $45,000: 1,780 calls vs. 2,070 puts. The net result is balanced between bears and bulls.Above $45,000: 2,530 calls vs. 1,090 puts. The net result shifts in favor of bulls by $65 million.This crude estimate considers call (buy) options used in bullish strategies and put (sell) options exclusively in neutral-to-bearish trades. Unfortunately, real life is not that simple because it’s possible that more complex investment strategies are being deployed.For example, a trader could have sold a put option, effectively gaining a positive exposure to Bitcoin above a specific price. Consequently, there’s no easy way to estimate this effect, so the simple analysis above is a good guess.As things currently stand, bears have absolute control of the Oct. 1 expiry and they have a few good reasons to keep pressuring the price below $43,000. Unless some unexpected buying pressure comes out over the next 12 hours, the amount of capital required for bulls to force the market above the $45,000 threshold seems immense and unjustified.On the other hand, bears need a 5% negative price swing that takes BTC below $41,000 to increase their lead by $35 million. So this move also shows little return for the amount of effort required.The bull’s only hope resides in some surprise positive newsflow for Bitcoin price ahead of Oct. 1 at 8:00 am UTC. If any sensible action is bound to occur, it will likely take place during the weekend, when there’s less active flow.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.

Ethereum bears look to score on Friday’s $340M weekly ETH options expiry

Ethereum bears look to score on Friday’s $340M weekly ETH options expiry

Ether (ETH) price has seen quite a bit of volatility lately and to the surprise of many traders, the $4,000 level continues to present considerable resistance. Currently, the price is respecting the upward channel which started in August but every time the support is tested, the risk of an aggressive correction increases. With that in mind, this Friday’s $340 million options expiry will likely be dominated by neutral-to-bearish put options. Ether price at Bitstamp in USD. Source: TradingViewBulls placed larger bets for the expiry but it appears that they were too optimistic for Oct. 1, so their $215 million call (buy) options are getting closer to becoming with the looming approach of the expiry date.It’s possible that Ether could be a victim of its own success because the demand for decentralized finance (DeFi) applications and the minting of non-fungible tokens (NFT) continue to clog the network. This has caused the average gas fee to surpass $20 over the past ten days.Largest gas spenders past 24 hours. Source: etherscan.ioNotice above how OpenSea, the largest NFT marketplace, represents over 20% of the entire Ethereum network’s gas use in the past 24 hours. When analyzing the incredible demand for blockchain transactions, Polygon’s co-founder, Sandeep Nailwal, says it is a matter of time before Ethereum overtakes Bitcoin as the dominant layer-1 protocol.However, negative news continues to emerge as the fourth-largest Ethereum mining pool will shut down operations in China, citing “regulatory policies.” Furthermore, SparkPool, the second-largest Ether mining pool, will also cease operations this month.As for the $340 million options expiry on Friday, bulls need to push the price above $3,000 to avoid significant bearish pressure.Ethereum options aggregate open interest for Oct. 1. Source: Bybt.comAs noted above, bulls were caught by surprise because the call (buy) instruments were placed at $2,900 or higher. Consequently, if Ether remains below that price on Sept. 17, only $1.4 million worth of neutral-to-bullish call options will be activated on the expiry.This means that a $3,000 put option becomes worthless if Ether remains below that price at 8:00 am UTC on Oct. 1.Bulls placed more bets, but there’s a catchThe 1.74 call-to-put ratio represents the slight difference between the $215 million worth of call (buy) options versus the $125 million put (sell) options. Although favoring bulls, this broader view needs a more detailed analysis because some of those bets are implausible considering the current $2,800 price.Below are the four most likely scenarios for Ether price. The imbalance favoring either side represents the theoretical profit from the expiry. Depending on the expiry price, the quantity of calls (buy) and puts (sell) contracts becoming active varies:Between $2,400 and $2,500: 0 calls vs. 38,050 puts. The net result is $95 million favoring the protective put (bear) instruments.Between $2,500 and $2,800: 100 calls vs. 22,300 puts. The net result is $60 million favoring the protective put (bear) instruments.Between $2,800 and $3,000: 2,300 calls vs. 13,800 puts. The net result is $33 million favoring the protective put (bear) instruments.Between $3,000 and $3,200: 9,600 calls vs. 6,700 puts. The net result is balanced between bears and bulls.This raw estimate considers call options being exclusively used in bullish strategies and put options in neutral-to-bearish trades. However, investors might have used more complex strategies that typically involve different expiry dates.Bulls are wrecked one way or anotherBears have absolute control of Friday’s expiry and they have sufficient incentive to keep pressuring the price below $2,800. However, one must consider that during negative price trends, like now for Ether, a seller might cause a 2% negative move by placing large offers and making aggressive sales.On the other hand, bulls need a 7% positive price swing taking Ether above $3,000 to balance Friday’s options expiry. It is impossible to calculate how much a trader needs to spend to drive the market that way, although it seems a colossal task. If no surprises come before Oct. 1, Ether’s price should keep trading below $2,800.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.

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