Bitcoin (BTC) fell for a fourth straight day, but changed hands well above Monday’s low of around $ 30,000. After rising to a new all-time high of around $ 40,000 last week, prices have fallen 13% since Saturday, the most for a three-day route since March 2020, according to TradingView.
“Volatility is the price you pay for performance,” as investing legend Bitcoin bull Bill Miller said submitted it to CNBC last week.
in the traditional marketsAsian stocks rose on Tuesday and European indices were little changed. US stock futures pointed to a higher opening. The possibility of further economic stimulus and turbulent US politics helped to boost returns in the 10-year US Treasury bills to 1.16%, the highest since March CNBC.
According to Bloomberg newsThis political situation could result in the U.S. House of Representatives indicting President Donald Trump less than ten days before his presidency, as Vice President Mike Pence is unlikely to use constitutional authority to remove the president from office.
Gold rose 0.9% to $ 1,861 an ounce.
A high price does not create a market. But guess what? High trading volume.
One of the most important things to note during this year’s rally on the Bitcoin market is the record amount of cryptocurrencies switching hands. This was true of its rapid rise to new all-time highs above $ 40,000, and so was its decline.
This means that the market remains liquid, which is considered a healthy attribute, especially when prices are moving. You may be a buyer who looks like a nosebleed, but you are not the only one.
As CoinDesk’s Muyao Shen reported on Monday, the trading volume and active addresses for Bitcoin reached their latest highs during the last Crypto Bull Run in 2017.
“This is primarily a sign of how much bigger and more mature the industry is and how much more money is flowing on these exchanges,” Bendik Norheim Schei, research director at Norwegian cryptocurrency analysis company Arcane Research, told CoinDesk. “It’s great to see higher volumes, which makes the market more liquid and efficient.”
According to Schei, the rising volume due to the sale on Monday came in part from newcomers to the market.
“Some of that volume is definitely coming from new and inexperienced investors who are first entering the market and panic when the price starts to fall,” he told Shen. “These corrections are necessary and healthy, even in a bull market.”
And these newcomers are not necessarily rubles. It could even be sophisticated Wall Street gamblers who recently dipped their toes in crypto – a sign of the increasing adoption of Bitcoin by large institutional investors as a means to head for currency deterioration amid trillion dollar central bank money pressures put.
“The retail-driven spot market that was pretty much the entire market three years ago is now part of a much more mature and diverse market that includes derivatives, mutual funds and other institutional holdings.” Sui Chung, CEO of CF Benchmarks, told CoinDesk.
(For what it’s worth, healthy liquidity is seen as such a vital part of any market that the Federal Reserve saw the “smooth” running of Wall Street plumbing last year as a rationale for continuing its monthly bond purchases of $ 120 billion cited monetary incentives that were previously considered an emergency measure but are increasingly seen as normal.)
In addition to the numerous activities on cryptocurrency exchanges, there was also a robust traffic in Bitcoin derivatives – financial contracts such as futures, options and “perpetual swaps” with which traders can bet on the price of the cryptocurrency.
Chicago-based CME announced Monday that its fictitious Bitcoin futures volume rose to a monthly record of $ 30 billion in December, and surpassed the then record high of $ 20 billion in November. The exchange launched its Bitcoin futures contract in January 2018.
At least one industry manager says futures markets may become more critical as more investors hoard their holdings of cryptocurrency while waiting for prices to rise.
“With the disappearance of ‘physical’ Bitcoin, the volume of derivative contracts is skyrocketing,” said Richard Byworth, CEO of the Diginex cryptocurrency exchange, which launched its own last week “Bitcoin Perpetual Futures Contract. ”
There is also a high level of risk: the market was apparently liquid enough that long positions in Bitcoin futures worth USD 410 million (betting on further price gains) were wiped out on Monday after margin calls on the Binance exchange, according to the Data company Glassnode in a Tweet.
All of this only makes it more likely that the Bitcoin market is reflecting the plethora of opinions on where the prices should be for a blockchain-based, 12 year old, peer-to-peer electronic fixed-issue payment system on any given schedule, which is now viewed as a hedge against a possible depreciation of the US dollar.
Simon Peters of the trading platform eToro wrote on Monday: “We can consider the range of USD 70,000 to 90,000 as a target price for the end of 2021.” Henrik Kugelberg, an over-the-counter Bitcoin trader, told Daniel Cawrey of CoinDesk that the latest Sellout “Could just be a dent in the massive bull run – $ 100,000 this year is entirely possible!”
Denis Vinokourov, head of research at London-based prime brokerage Bequant, says there is “a lot of open option rates at a price level of $ 52,000”.
As the volume of trading increases, it becomes easier and easier to place these bets, right or wrong.
Read more: Bitcoin’s active addresses, trading volumes now at all-time highs
Despite Bitcoin’s 20% crash on Monday, some options traders are betting on a sustained price recovery in the coming weeks.
According to the data analysis platform based in Switzerland, around 4,000 call option contracts have been bought in the last 24 hours on the strike of 52,000 US dollars Laevitas. The $ 64,000 and $ 72,000 strike call options have purchase volumes of $ 3,250 and $ 2,000, respectively.
The call options have an expiration date of January 29th, making them a gamble that Bitcoin prices could rise above this level in the next few weeks.
These deep out-of-the-money trades are relatively cheap and tend to appreciate significantly in value when the price rally occurs, resulting in high returns on small investments. Experienced traders with optimistic price expectations therefore often buy call options at higher strike prices in order to have the chance of paying off. The fact that traders are actually using them could indicate bullish market sentiment.
In another indicator from the options market, the one-, three- and six-month put-call skews, which measure the costs of puts in relation to calls, remain in negative territory. This is a sign of call options or bullish bets, which will attract more demand than bearish puts.
Read more: If Bitcoin loses ground again, options traders will bet $ 52,000 move by the end of January
What is hot?
Bitcoin exchange Bakkt Inks are partnering with SPAC Victory Park Capital, which will result in the company becoming a publicly traded company with an enterprise value of $ 2.1 billion. Citigroup’s former consumer banking technology director is hired as CEO (CoinDesk).
Stunning $ 3 Billion Crypto Market Forecast Underpins Bakkt Deal (CoinDesk)
Institutional investors use the refill strategy to avoid exposing large orders for Bitcoin to cryptocurrency exchanges including Coinbase (CoinDesk).
Tether Mints recorded USDT 2 billion in one week, increasing to USD 24.6 billion, a five-fold increase over the previous year (CoinDesk).
The crypto investment company NYDIG acquires Digital Assets Data and brings the co-founders (and brothers) Mike and Ryan Alfred on board (CoinDesk).
Jorge Izquierdo, CEO of Aragon One, resigns in protest against “governance” decisions (CoinDesk)
ICYMI: European eToro Traders Call For Foul Over Closing Leveraged Crypto Contracts (CoinDesk)
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