Analytical review. Weekly 15.11.2021
The past week was indeed historical. One of the most significant milestones was the achievement of the total capitalization of $3T. There was also a slight correction, but the indicator is still not far from the historical maximum.
This was largely due to the new BTC all-time-high, which reached a record of $68,500 (at the moment the price rose above $69,000), having grown by 9.2% since the beginning of the week. The subsequent drop was caused by another portion of negative news about the debt of the Chinese developer Evergrande.
ETH also hit its all-time high reaching the $4,850 level. Now the second cryptocurrency is trading at $4600.
The volumes of BTC and ETH withdrawal from exchanges slightly decreased after the prices correction for these assets, but the decline is small. Exchange users are still set to rally despite slight market confusion.
In the case of USDT, there is a sharp increase in the volume of inflows to exchanges over the past week, reaching $1.5 billion. For USDC, a decrease in withdrawal volumes.
The volume of open interest in BTC and ETH futures this week broke another record of all time, but then adjusted in parallel with the price. The update to the Bitcoin Taproot network has so far not had a dramatic effect on either the asset’s price or the amount of open interest. Despite the high indicators, the rate and dynamics of the growth in the volume of open interest are slowing down, which allows us to speak about the achievement of local highs.
There are several more parameters that allow us to speak about the achievement of a certain growth threshold by the market. The dynamics of trading on the spot market differ significantly in the spring period. While the size of open interest in options and futures has beaten past highs, spot volumes are more than double their April levels.
It is also worth considering that with the launch of bitcoin ETF, albeit futures, trading activity on the Chicago derivatives exchange has greatly increased. Due to regulatory requirements, it publishes weekly reports, where it indicates how much the market is for which category of customers. Based on the latest data, over the last month the category of “fund managers” was one of the most active buyers, while hedge funds were actively selling, net sales at the moment are about 3 billion and are at the April highs.
The total volume of Grayscale crypto funds surpassed the volume of SPDR Gold Shares last week — the world’s largest gold ETF. Grayscale has already filed an application with SEC to change its structure from a trust fund to ETF. This growth in volumes and interest in funds focusing on crypto assets indicates the growing popularity of the latter as a means of hedging inflation and other risks.
Ethereum supply is no longer increasing after the London update, according to a Cryptoquant report. After the introduction of the mechanism of “burning” tokens, the rate of the second cryptocurrency has grown significantly, having updated its historical maximum last week reaching $4,850.
According to the Wall Street Journal, Binance could be valued at $300B if it decides to go public. But given the fact that its closest competitor Coinbase is priced at $75B, its cost could be much higher. However, Coinbase lags behind in terms of retail customers and global reach.
Despite the SEC’s refusal to register the VanEck spot bitcoin ETF, the regulator approved the company’s bitcoin futures ETF (VanEck Bitcoin Strategy ETF), which it was also applied for. Trading on the Chicago Board Options Exchange (CBOE) begins on November 16 (ticker #XBTF). VanEck markets its product as the cheapest BTC-related ETF.
The Joint Commission of the United States Congress will hold a hearing on the role of the United States government in regulating cryptocurrencies on November 17. Upcoming topics for discussion include the regulation of cryptoassets, their use cases, reporting, and potential taxation.
According to a Protos report on the structure of USDT stablecoin owners, about 55% of all USDTs ever issued were bought by two companies: Alameda Research (FTX exchange) and Cumberland Global (DRW crypto trading company). “They are injecting liquidity into the leading exchanges in the ecosystem based on their trust in Tether, which in turn gives the confidence of the market that 1 USDT is equal to 1 US dollar.” — the report says. This concentration of the asset in the hands of a small number of market makers and traders is hardly a positive factor, but so far it does not prevent USDT from being the number one stablecoin (at least as long as Alameda and Cumberland believe that USDT is fully backed by fiat dollars).
For options with the execution date in December 2021, the open interest increased by 7.1% and was 93 788 BTC. This group of options is the “hottest” one since it contains almost half of all open interests. The ratio of Call and Put options remained unchanged. The Max Pain price increased by 2000 and reached 46 000. The end of the year is still viewed by traders as bullish.
The growth rate of open interest for March options increased by 5.8%, reaching 20 894 BTC. The increase was largely due to PUT options — it is noticeable at the levels of 30 000 and 50 000. For Call options, it is noticeable at the level of 120 000.
At global levels, total activity rose by 4.4% to 195 478 BTC. The ratio of Call and Put options remained unchanged. For Call options, an increase is noticeable at the levels of 60 000 and 72 000.
For options with the expiration date of December 31, the open interest level increased by only 1.3% and was 579 396 ETH. PUT options versus CALL options are trading slightly more intensively than the last week. An increase in PUT options is noticeable in the range of 1040–3200.
Trades on options with execution dates in the first quarter of 2022 increased by 9.31% to the level of 316 585 ETH. The gap between CALL and PUT options has narrowed, but the difference remains almost fivefold.
The total open interest increased by only 2.2% and was 1 456 587 ETH. No significant changes could be observed.
PRO MODE
In addition to the standard parameters of market analysis, such as the volume of open positions in futures and options available to a wide range of readers, under the new PRO MODE subheading, we provide an overview of a number of market parameters that require special expertise or experience.
MarkIV for short term BTC options (via Derebit&GVOL info)
The spot price was in a narrow corridor for most of the last week, which allowed some traders to hedge their positions by buying put options. At the moment, the volume of trading in put options has grown significantly, as many market participants use this mechanism to fix the price level and insure against price reversals.
Options Trading map
The pattern of trading activity last week and the week before differs significantly. After new highs were reached, the options market generally followed the spot market. For call options, the most traded levels were 62 000–70 000 in the short term and 80 000–120 000 in the medium term. For put options, these are 58 000–64 000. The main difference was the execution time — last week the bulk of trading was concentrated on expirations at the end of November, while earlier traders were more active in trading on longer dates — December and January.
MarkIV for short term ETH options
Options Trading map
ETH options trading last week was concentrated in a narrow range of execution dates, with one notable exception. While most of the call options traded in the range of 4500–5500 and on the execution dates during November, 12 500 put contracts were traded on the OTC market with the execution date of March 26 and a strike of 3000. In addition to this, a significant amount was traded. Call options with the same expiration date but at the levels of 8000 and 9000. And if the trading of call options fits into the picture of long-term trading prevailing in the market, then a trade with put options is rather atypical.
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