Analytical review. Weekly 18.10.2021
The previous week impressed us with a 10% growth from local lows, as a result, the total capitalization exceeded the highs of the spring growth cycle and was $ 2.46t.
One of the most important growth drivers in the total crypto market capitalization was Bitcoin, which added about 14% on the approval of an application for the start of ETF trading on futures. As a result, the price of the main cryptocurrency has come close to all-time highs and was 62 000.
The price of the second largest cryptocurrency by capitalization Ethereum followed the general trend, adding 13% and fixxing at 3 800 by the end of the week.
Despite the overall positive news, the funds’ movement dynamics between the wallets of the exchanges and external addresses is rather contradictory. The outflow of Bitcoin from exchange balances has slowed down significantly, the dynamics have decreased by about five times — if earlier it took up to 100 000 BTC per day, now this value is less than 20 000 BTC. Ethereum is in a similar position — the outlined net withdrawal of tokens to third-party wallets has slowed down and is close to zero. At the same time, the dynamics of replenishment of balances with stable coins also stopped growing — for USDC, and for USDT, the dynamics are still in the negative zone, for the third week in a row.
The volume of open interest on the Bitcoin and Ethereum markets continues to grow, reaching record levels in the entire history of observations. Despite a slight stagnation in the last three days and maximum marks, the launch of the futures ETF is able to increase the trading volume even more.
A truly epochal event for the entire crypto community was the official approval and registration of the first ever Bitcoin futures ETF (ProShares was the first company to register its Bitcoin ETF). Influenced by the event and its expectations, the BTC price chart showed the largest weekly “candle” of growth in its history.
The news of the first Bitcoin ETF also sparked an unprecedented rise in open interest in Bitcoin futures. The dollar equivalent of open interest on the CME (Chicago Mercantile Exchange) was $ 3.64 billion on Friday, more than doubling in a month, according to data provided by bybt. The previous high of $ 3.26 billion was recorded in February.
According to analytics from Cambridge Center for Alternative Finance, the United States has become the leader among all countries in terms of aggregate mining equipment capacity. One of the main prerequisites for this, as expected, was the complete ban on mining and any operations with cryptocurrency in Mainland China.
The International Monetary Fund has released the 2021 Global Financial Stability Report. The largest international financial organization summarized that cryptocurrencies “do not yet pose a threat to the international financial system.” However, the report emphasizes that in order to avoid problems in the future, it is necessary to create “global standards for crypto assets”.
The Swiss bank Seba announced the launch of the Seba earn platform, an institutional-grade solution that allows clients to generate profitability from owning cryptocurrencies. Staking services will enable institutions to earn rewards based on Proof-of-Stake protocols including Polkadot, Tezos and Cardano
Ripple has partnered with the non-profit Digital Pound Foundation to create the digital pound sterling. The DPF was launched in June 2021 and has proposed a model where the public and private sectors can work together to drive the UK’s transition to a digital economy. Ripple’s Susan Friedman will join the board of directors of the non-profit organization.
Bakkt, a digital asset marketplace and crypto wallet provider, closed its merger with VPC Impact Acquisition on Friday (via the SPAC deal). The combined company will operate under the name Bakkt Holdings, and its Class A shares have begun trading on the New York Stock Exchange under the ticker BKKT. The merger generated approximately $ 448 million in gross revenues for Bakkt. The proceeds will be used for capital investments in the development of the company’s platform capabilities and marketing, as well as for facilitating partnerships.
Grayscale Investments plans to apply to convert the world’s largest bitcoin fund to a spot ETF early next week. According to an anonymous source, the investment company intended to file an application with the Securities and Exchange Commission as soon as the agency allows competitors to create a Bitcoin futures ETF (which has already happened at the moment). After filing the application, the SEC will have 75 days to review it.
The trading volume for options with an expiration date at the end of October increased by 23% at the end of the week and was 45 327 BTC. The ratio of Call and Put options have shifted towards Put.
For options with an expiration date in December 2021, the open interest rate increased by 9% to 77 932 BTC. The largest increase is observed at the 80 000 and 120 000 Call levels.
March options were already traded much more actively than last week: the increase in open interest was 26.5% and reached 16 790 BTC in total. The increase was observed in the range 25 000–50 000 for Put options and 100 000–150 000, 300 000, 400 000 for Call options.
At global levels, total activity increased by 18% up to 200 546 BTC. The ratio of Call and Put options remained the same (the former are still more than twice as large as the latter in terms of trading volume).
For short-term options with the execution date of October 29, 2021, the trading volume increased by 14.1%, which is almost double the result of the previous week. More Put options were traded than last week. Max pain price has shifted from 3200 to 3300.
For options with the expiration date on December 31, the trading dynamics are still relatively low, the level of open interest increased by only 3% and was 512 898 ETH. The gain was evenly distributed between the Call and Put options (the volume of the former is exactly twice the volume of the latter, which indicates a “bullish” vision of the fourth quarter by traders).
Trading in options with execution dates following the results of the first quarter of 2022 was much more active this week, increasing by 13.5% to 203 964 ETH. The main increase fell on the levels of 10 000 and 15 000.
As for the level of general interest, it increased by 9.5% and was 1 309 137 ETH. The main increase in Put fell at the level of 3000.
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.
The news of the approval of a futures ETF application rocked the spot market, leading to a spike in price and historically high activity in the options market. The dynamics of short-term options were rather controversial — after the first messages appeared, the activity of traders was focused around put options at levels 45 000 and 50 000, after confirmation, the focus shifted to the level of 60 000 and Call options. As a result, the ratio curve remained almost unchanged, despite the fact that trading volume broke a historic record.
Options Trading map
The map of trading activity over the past week reflects the main market trends. The main focus among options traders has been in 46 000 and 48 000 Put zones with the strike date of October 22 and 54 000 and 60 000 for options with the strike date of October 29. For Call options, the largest volume was at 65 000 and the execution date of October 29, 75 000 and the execution date of November 28, and 80 000–120 000 for December 31.
MarkIV for short term ETH options
In the absence of an informational driver similar to that of BTC, volatility in the torch in ETH options was much calmer. Despite this, the curve of the ratio of Put and Call options in the short-term period has shifted in favor of Call options is the same for all expiration dates, which may indicate an outstripping positive evaluation of Ethereum.
Options Trading map
The main trading activity was concentrated between the two price levels — 4 200 and 5 000 for Call options with the strike date of November 28. It is likely that options traders expect Ethereum to continue to rise, especially given the logical possibility of extending ETF approval practices beyond BTC.
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