2024-03-05 07:10

Memecoin futures took on nearly $90 million in liquidations as prices corrected after a massive rally in the past week. Crypto-tracked futures saw over $550 million in losses in the past 24 hours, with meme coins racking up some $90 million in evaporated bets alone. Leveraged bets on crypto futures increased to over $66 billion in the past week, while funding rates on some tokens have zoomed to over 100% annualized. Crypto-tracked futures amassed over $550 million in losses in the past 24 hours as bitcoin (BTC) jumped, then dumped, from the $68,000 level – sparking volatile price action that stunned bulls and bears alike. Bitcoin and ether (ETH) briefly inched above $68,500 and $3,700, respectively, as euphoria from multiple catalysts continued into its second week. But profit-taking began in early Asian hours, with bitcoin falling to as low as $64,500 before regaining the $67,000 level. The broader CoinDesk 20 index (CD20), rose over 6%. Longs, or bets on higher prices, lost over $240 million, while shorts or bets on lower prices saw $320 million in evaporated positions. Futures tracking dogecoin (DOGE), shiba inu (SHIB) and pepecoin (PEPE) lost a cumulative $90 million across exchanges in a highly unusual move. Bullish bets on DOGE reached a lifetime high last week, contributing to its 110% weekly move. Liquidation is when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin. Large liquidations can signal the local top or bottom of a steep price move, which may allow traders to position themselves accordingly. Traders widely expect bitcoin to cross its lifetime peaks ahead of April’s halving event, while there are also expectations of the approval of a spot ether exchange-traded fund (ETF) in May. As such, some funds expect leverage to increase in the coming days as bitcoin approaches its lifetime highs at $69,000. “Leveraged buyers will likely not relent until we break all-time highs, which could be any time now,” crypto fund QCP Capital said in a Tuesday broadcast on Telegram. “This is a similar magnitude of leverage to what we saw in 2021, pushing the front-end of the curve higher and keeping the back-end elevated.” Leveraged bets on crypto futures to increase to over $66 billion in the past week, data shows, while funding rates on some tokens have zoomed to over 100% annualized. Funding is the amount traders pay when they borrow additional money to place bigger trades. Meanwhile, some analysts consider the unusually large moves in SHIB tokens as a generally bearish signal, as meme coin outperformance has historically marked local tops on bitcoin due to speculative froth. https://www.coindesk.com/markets/2024/03/05/crypto-liquidations-cross-550m-as-bitcoin-remains-volatile-ahead-of-historic-highs/

2024-03-05 06:43

The surging implied volatility has boosted the allure of "call overwriting" strategies that allow investors to generate additional yield on top of their spot market holdings. Deribit DVOL index, a measure of expected price volatility over the next 30 days, has surged to an annualized 76%, the highest since November 2022. The surging volatility has some traders “overwriting calls” to generate additional income. Deribit registers decent trading activity in bitcoin calls at strikes as high as $200,000. Crypto exchange Deribit’s bitcoin volatility index, DVOL, a measure of how much market participants believe prices will move over the next 30 days, has surged. The jump is good news for bitcoin (BTC) holders looking to generate additional income from the options market. The 30-day implied volatility index has risen from an annualized 41% to 76% in one month, reaching the highest since November 2022, per charting platform TradingView. A rise in implied volatility positively impacts the prices of options or derivative contracts that give the purchaser the right to buy or sell the underlying asset later. A call gives the right to buy, while a put confers the right to sell. The greater the volatility, the higher the option premium. Thus, elevated implied volatility often has savvy investors “overwrite” or sell call options to generate additional income on top of their spot market holdings. It is one of the most popular strategies in the stock market. The calls are usually sold at levels higher than the underlying asset’s going market rate. The money received as compensation for selling a call or insurance against price rallies is retained if the underlying asset never rises above the strike level at which the call has been sold. The premium represents the additional yield on top of the spot market investment. If the underlying asset’s price exceeds the strike price, the investor must sell the stock while still pocketing the premium received for selling the call. (Traders with no spot market holdings can sell calls, too, but that’s a risky strategy with limited gain and scope for a considerable loss.) The latest surge in the DVOL seems to have revived interest in overwriting calls. Earlier on Tuesday, someone sold 250 contracts of $75,000 call options expiring in December, according to Deribit’s Asia business development personnel Lin Chen. The seller received a premium of $4.258 million. On Deribit, one options contract represents 1 BTC. “The seller probably has a large stock of BTC in hand and can directly lock in the profit from the selling price of $75,000,” Chen explained. Overall activity on Deribit, which accounts for 85% of the global crypto options market, has picked up, with bitcoin surging 58% this year to trade within striking distance from its record highs near $69,000. The combined notional open interest in crypto futures and options segments has surged to a record high of $32 billion, according to data tracked by Laevitas. The options segment accounts for nearly $30 billion of the total tally. Recently, the exchange has seen decent trading activity in calls at strikes as high as $200,000. Some experts foresee bitcoin’s ongoing bullish trend to peak at around $200,000 by September 2024. “High strikes are being requested for longer expiries but even for March. There is decent trading in the $200,000 calls in June, Sep and Dec expiries,” Luuk Strijers, chief commercial officer at Deribit, told CoinDesk. “The ETF-triggered hype is no longer just about BTC passing $100,000, but now even $200,000,” Strijers said. https://www.coindesk.com/markets/2024/03/05/deribits-bitcoin-volatility-index-signals-further-rally-hits-16-month-high/

2024-03-04 20:55

Ether also hit a new milestone, recording its highest price since January 2022. Bitcoin topped $68,000 on Monday, nearing its November 2021 record around $69,000. It is rapidly approaching silver's nearly $1.4 trillion market capitalization. Ether topped $3,600 for the first time since January 2022 amid strong institutional demand. BlackRock's bitcoin ETF saw another busy trading day, recording over $2 billion in volume before market close. Bitcoin (BTC) continued to knock off $1,000 milestones, surging past $67,000 and nearing not just its own record high of $69,000, but the nearly $1.4 trillion market capitalization of silver. The largest and oldest crypto asset broke out from its week-long sideways consolidation capped below the $64,000 level, hitting $68,800 during early Asian trading hours on Tuesday. It was recently up 8.5% over the past 24 hours, roughly in line with the broad-market CoinDesk 20 Index's (CD20) 8% advance. With this year's meteoric rise, BTC is rapidly becoming one of the largest global assets, and at current levels has surpassed the $1.3 trillion market capitalization threshold. It is now closing in on silver's market cap of $1.4 trillion, according to data compiled by CompaniesMarketCap after earlier in this bull run toppling that of Facebook parent company Meta Platforms (META). Monday's price action also squeezed bitcoin shorts – trading positions betting on lower prices – liquidating some $120 million of leveraged bets during the day, predominantly shorts, CoinGlass data shows. Ether (ETH), the second largest crypto by market cap, rose above $3,600 on Monday for the first time since 2022, but underperformed BTC and the CD20 with just a 4.6% gain. Meme coins are on a tear, with dog-themed cryptocurrencies dogecoin (DOGE) and shiba inu (SHIB) being the best-performing tokens in the CD20, advancing 30% and 100% over the past 24 hours, respectively. Bitcoin ETF frenzy continues The price rally also brought another day of strong trading for U.S.-listed spot bitcoin ETFs. BlackRock's iShares Bitcoin Trust (IBIT) surpassed $2.1 billion in trading volume with still some time before the session close, already recording its third-best day after last Wednesday and Thursday, Barchart data shows. IBIT was the seventh most-traded ETF during the day, toppling the first and largest U.S.-listed gold ETF – the SPDR Gold Shares (GLD) – in volume despite being fifth of its size by assets under management (AUM). Last week, bitcoin-focused exchange-traded products as a group attracted "massive inflows" of $1.73 billion, their second largest week on record, asset manager CoinShares reported Monday. ETH focused funds were also in demand, recording $85 million in net inflows, the report added. Bitcoin all-time high this week? Markus Thielen, founder of 10xResearch, forecasted in a Monday market report that bitcoin's price action will "astonish" this week, suspecting new all-time highs this week as demand expanded to outside of the U.S. and ETF inflows will continue to be strong. Bitcoin is also outperforming the tech-heavy Nasdaq 100 Index (NDX), Caleb Franzen, founder of Cubic Analytics, noted in a Sunday report. He called bitcoin's breakout versus NDX above a key level connecting the first quarter 2021 and last quarter 2021 highs "extremely encouraging." "Bitcoin is about to enter price discovery (again) and people are somehow bearish? Couldn't be me," he said in an X post Monday. Crypto analytics firm Swissblock's Monday market update highlighted bitcoin's strong momentum and the influx of new buyers entering the market. The report said that the current crypto rally is driven by large investors' demand for BTC and ETH amid weakling U.S. regional banks, and rising appetite for meme coins buoyed by FOMO – fear of missing out – sentiment. Swissblock also set that a $70,000 bitcoin price is a "plausible target" in the short-term, toppling its all-time record price from Nov. 2021. https://www.coindesk.com/markets/2024/03/04/bitcoin-tops-67k-nearing-silvers-138t-market-cap/

2024-03-04 20:39

What’s different this time? ETFs, Wall Street and a lack of celebrity influencers — for now. You don’t need me to tell you that bitcoin (BTC) has been on a tear. The first and largest cryptocurrency by market cap is up over 6% just in the past 24 hours, after crossing a supposedly psychologically important threshold of $65,000 according to CoinDesk Indices data. It’s now within striking distance of its all-time high around $69,000, last seen at the end of 2021 — before the bad things happened. Many people, even industry insiders, have been taken aback by the price action, given how bleak market sentiment around crypto was even just a few months ago. Not even a major exchange like Coinbase saw it coming, given that a boost in trading activity caused (another) outage. It’s enough of a surprise that some people feel hesitant to say this is the beginning of another bull run, given that things could fall back as quickly as bitcoin ran up. But there are legitimate differences that already set this cycle apart from the 2020-21 hype cycle — with the bear market washing out some of the worst aspects of the industry. Is it necessarily the case that rising interest in crypto be coupled with fraud, crime and cringe-worthy behavior? Though it’s dangerous to say it, this time could be different. First, there’s the multi-billion dollar question: Will spot bitcoin exchange-traded funds continue to grow and grow. The 10 live funds have seen $8 billion in net inflows so far, which has not only helped re-legitimize crypto given the involvement of trustworthy financial institutions including BlackRock, Fidelity and Bank of America’s Merrill Lynch, but also placed significant buying pressure on the underlying commodity, bitcoin. It’s possible ETFs have changed market dynamics by giving a safer way for people to gain exposure. If anything, these ETFs prove that there was latent demand for bitcoin from all corners of the market, from retail investors to ultra high-net worth individuals asking their banks for crypto exposure. BlackRock’s bitcoin ETF, for instance, is the first fund to reach $10 billion in assets under management this quickly — and some say the next $10 billion could flow in even faster. But TradFi’s attention isn’t fixated solely on ETFs. CME Group’s crypto derivatives products, typically viewed as a proxy for institutional interest, are experiencing record volumes. A similar trend happened last cycle, where interest in crypto begets more and more interest from more and more sectors. The more crypto goes up, the more people want to play with it. Celebrities aren't here Interestingly, the current cycle hasn’t attracted the same level of involvement from celebrities — at least yet. This could be a factor of not having a figure like Sam Bankman-Fried who wanted to buy public trust in FTX by bankrolling celebrity endorsements. It’s possible the SEC suing Kim Kardashian or the cast of characters who allegedly advertised TRON without disclosing it will keep Hollywood at bay. Of course all this could change — Paris Hilton could trot out her Bored Ape again any day — but for now the lack of “influencers” is a positive development considering that research shows how poorly their investment “advice” tends to be. Likewise, the voices that dominated the last cycle — figures like Alex Machinsky, BitBoy, Changpeng Zhao, Do Kwon, SBF, Su Zhu, etc. — largely have been discredited, and it seems like this is a power vacuum crypto is hoping stays empty. That in itself could be wishful thinking, and it’s worth considering why influencers emerge in the first place. One theory is that crypto has influencers because crypto prices are self-reflexive (aka “number go up technology”), and someone tends to emerge to coordinate attention towards one project or another. This is amplified, as Bloomberg notes, by the ability for traders to load up on borrowed funds, gaining leverage to try to max out trading profits. Given the amount of credit already building up in crypto markets (open interest in bitcoin futures is up 90% since last fall on platforms like Binance, OKX and BitMEX, which can be leveraged up to 100x) and the tremendous amount of capital flowing into meme coins like DOGE and SHIB, it’s clear enough people are looking to gamble big this time around, too. Institutional lending While the laws in the U.S. haven’t yet changed, over the past few years notable advancements including the E.U.’s MiCA, UAE’s digital asset trading licensing program and lobbying efforts in places like Canada mean more traders could soon have more regulated means of gaining access to crypto derivatives. There’s a hope that the crypto lending sector won’t take as nasty a turn as last time, given that it ended up being dominated by a handful of now bankrupt “hedge funds” like Alameda Research and Three Arrows Capital, which were supposed to be generating the yield paid to customers of now bankrupt lending platforms like Celsius, BlockFi and Genesis. For instance, tokenization giant Securitize, recently spun up an “Earn” program that offers yields via over-collateralized loans and tokenized funds for financial titans KKR and Hamilton Lane. For now, while still assessing demand for the product, Securitize itself will be paying for it is billing as “sustainable” yield to users off its balance sheet, Reid Simon, Securitize's head of credit, told CoinDesk in an interview. This in itself is an interesting move, signaling how important lending programs are as one of the few ways to put digital assets towards productive use. “It’s a business we want to get into,” Simon said, noting that it’s “unclear” how well the crypto-native firm's brand has resonated with crypto. “I don't necessarily think of Securitize and bitcoin together,” he said. Other crypto lending operators have spoken at length about the ways things went off the rails last time, and others have noted there are ways for the industry to self-regulate, like by separating crypto trading from custody and advocating for proof-of-reserves. There’s no guarantee the same mistakes won’t be made again (or that bitcoin will continue to climb if it regains its all-time high at all). It’s worth noting the recent rally has come alongside significant advancements on the S&P 500 and Nasdaq indexes and renewed growth in the U.S. tech sector, surprising many on-lookers who thought raised interest rates would keep capital out of risk-heavy sectors. It’s possible that crypto is doomed to Sisyphean cycles of rising rates of illicit use, fraud, speculation, cringe-inducing endorsements and greed every time prices boom, simply by nature of how these hype cycles unfold. But, for now, with the worst aspects of the industry washed out, and many wanting to do things differently (read: legitimately), it’s worth hoping things won’t take a turn for the worse. Must everything that goes up turn down? Is this time really different? https://www.coindesk.com/consensus-magazine/2024/03/04/what-happens-if-bitcoin-reaches-an-all-time-high/

2024-03-04 17:46

The cryptocurrency hit an all-time high against the euro on Monday and is nearing a record in U.S. dollar terms. Bitcoin (BTC) will reach an all-time high before the week ends, according to Markus Thielen, head of research at 10x. “Price action during the weekend is always important to follow and while attempts have been made to [liquidate] leveraged long positions, there are no sellers,” said Thielen in a note titled, "Everybody Will Be Astonished by Bitcoin’s Price Action This Week." The cryptocurrency reached an all-time high in euro terms on Monday and at press time was trading just above $67,000, up 6% over the past 24 hours, less than 3% shy of its all-time USD high of $69,000 touched in November 2021. The broader CoinDesk 20 Index (CD20) was higher by 5.5%. Among other bullish signs, Thielen noted a sizable decline of 63,000 bitcoins held on exchanges over the past 30 days. Coinbase alone, he said, has seen its balance fall from 400,000 to 372,000 in just one month. It's not all about U.S. ETFs either, said Thielen. BlackRock, he reminded, just launched a spot ETF in Brazil last week, and volumes in Korea have exploded to $8 billion per day for five straight days versus less than $1 billion previously. While outflows out of Grayscale’s GBTC product spiked last Thursday and Friday and inflows into BlackRock's IBIT slowed, Thielen expects movement into the BlackRock product to resume in force this week. “The flows are not drying up as investors feel more confident the higher price appears to go." "If Grayscale’s flows drop to less than [a] $100m outflow, bitcoin will make a big move up," said Thielen. https://www.coindesk.com/markets/2024/03/04/bitcoin-price-action-will-astonish-this-week-analyst/

2024-03-04 17:13

Despite years-long scrutiny over Tether's stability, USDT saw a rapid resurgence in 2023 benefiting from its close competitors' troubles. Tether's USDT touched the $100 billion market cap threshold Monday for the first time in its history, CoinGecko data shows. USDT grew by $2 billion over the past week, benefiting from increased demand for liquidity for crypto trading. USDT, a stablecoin issued by Tether, briefly hit $100 billion in market capitalization for the first time in its history, according to CoinGecko data, as the rally on crypto markets expanded. While the number of USDT tokens stood at around 99.5 billion, according to Tether's website, a slight price premium over the token's $1 price peg on some exchanges was enough to push the market cap above that level for a short while. USDT is on track to decisively surpass the threshold again soon if it continues its current growth trajectory, having added $2 billion to its supply over the past week, as it benefits from the crypto trading frenzy that's driving bitcoin (BTC) nearer to a record high. USDT is the most popular stablecoin, or crypto token whose value is pegged to another asset, and a key piece of plumbing in the digital asset market. It serves as a bridge between traditional (fiat) money and blockchain-based markets providing market participants with liquidity for trading and lending. It is also increasingly used for transfers and savings in developing regions to access dollars outside of the traditional banking system. Tether’s history dates back to 2014, when it first issued a dollar-backed digital currency called "realcoin" on the Bitcoin network to help transfer fiat currencies on the blockchain. Later that year, realcoin was rebranded to tether (USDT). Since then, USDT has expanded to numerous blockchains and Tether has launched stablecoins pegged to gold and other currencies. USDT's market value skyrocketed during the 2020-2021 crypto bull market, growing to $83 billion from $4 billion by mid-2022, and has become the go-to trading pairing for cryptocurrency prices on centralized exchanges. The company has, however, received a fair amount of scrutiny over the years for its opaque reserve management, having at one point risky backing assets like Chinese commercial paper and credit to now-bankrupt crypto lender Celsius, and a lack of independent audits – a deeper financial analysis than attestations. It now says it is backed mainly by more secure investments such as U.S. Treasury bills, repurchase agreements and deposits in money market funds. Despite mounting concerns about Tether's stability during the brutal 2022 bear market in crypto, USDT saw a rapid resurgence last year grabbing market share from close competitors after a regulatory crackdown on crypto exchange Binance-branded BUSD and the regional U.S. banking crisis in March, which heavily affected Circle-issued USDC. USDT's share of the $140 billion stablecoin pie is now more than 70%. The company has also become very profitable by benefitting from rising U.S. interest rates, reporting $2.85 billion in profit in the last quarter predominantly from yields on its massive U.S. Treasuries holdings. https://www.coindesk.com/markets/2024/03/04/tethers-usdt-stablecoin-touches-100b-market-cap-benefiting-from-crypto-trading-frenzy/