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Bitcoin Hits New All-Time High, Supersedes $70kBitcoin (BTC) price has now soared to an all-time high (ATH) above $70,000 as spot BTC ETF sentiment continues to impact investor mood For the first time in its more than 14-years, Bitcoin’s ( CRYPTOCAP:BTC ) price has surpassed the $70,000 mark in a massive All-Time High (ATH) debut. Bitcoin's Inevitable Rally Bitcoin ( CRYPTOCAP:BTC ) price is now changing hands for $70,083.05, according to CoinMarketCap, up by 2.62% in the past 24 hours. The growth of the digital currency has been on a consistent parabolic surge since the start of the year. Bitcoin ( CRYPTOCAP:BTC ) price has now crossed two ATHs hence, this week as it previously traded at $69,170 amid the hype in the spot Bitcoin ETF market. In the close to 2 months since the product started trading in the United States, the combined trading volume has now surpassed $100 billion. The intensity of the Bitcoin ( CRYPTOCAP:BTC ) accumulation from spot BTC ETF issuers has helped spurred the supply and demand imbalance of the cryptocurrency, pushing it to an unprecedented high at the moment. BlackRock, Fidelity Investments, and Grayscale Investments sit at the forefront of the liquidity boost from the spot Bitcoin ETF market. To boost the overall growth, BlackRock recorded more than $788 million in inflow, amassing a major record since inception. With Bitcoin’s ATH now bridged, the digital currency is currently in price discovery mode with no idea where it might end up. Expert's Opinion for Bitcoin ( CRYPTOCAP:BTC ) The break of a new ATH has shifted the paradigm for Bitcoin ( CRYPTOCAP:BTC ) price with many industry leader’s projections about to become validated. Public figure like Robert Kiyosaki is unrelenting in believing that Bitcoin’s price could soar as high as $1 million sometime in the future. Drawing on Dollar Cost Averaging (DCA), Bitcoin( CRYPTOCAP:BTC ) growth proponents are optimistic that the continuous accumulation of Bitcoin by spot ETF issuers will solidify the growth prospects of the asset in the long term. Though the certainty from these projections is unreal, there may be corrections along the way as the industry experienced with the mega selloff recorded this week.
BINANCE:BTCUSDLong
by DEXWireNews
BTC Futures: What Does the Recent Surge in Open Interest Means The dollar-value locked-in open futures and perpetual futures contracts for Bitcoin ( CRYPTOCAP:BTC ) have recently crossed $21 billion, marking the highest value since November 2021. Despite the surge in notional open interest, the overall leverage in the market remains low, indicating that the chances of sudden liquidations-induced price volatility are also low. According to CoinGlass, the notional open interest, which refers to the dollar value locked in the number of open or active Bitcoin ( CRYPTOCAP:BTC ) futures contracts, has reached a 26-month high. As of now, the open interest in perpetuals and standard futures has crossed $21 billion, with Bitcoin trading at $51,831 in the spot market. The open interest has surged 22% this year and is nearing the record of $24 billion seen in mid-November 2021 when Bitcoin traded above $65,000. The renewed interest in leveraged products like futures, coupled with a price rise, confirms the uptrend and represents an influx of new money on the bullish side. Bitcoin ( CRYPTOCAP:BTC ) has rallied 29% in just over three weeks, mainly due to strong inflows into the recently launched spot ETFs in the US. However, leverage magnifies both profits and losses, so a notable rise in futures open interest is often seen as a warning of price volatility. The overall leverage in the market is still low, indicating a low probability of sudden long (buy positions) liquidations leading to a price crash. Liquidation refers to the forced closure of bullish long or bearish short positions by exchanges due to a margin shortage, and mass liquidations are known to inject bullish/bearish volatility into the market. Bitcoin's ( CRYPTOCAP:BTC ) estimated leverage ratio has recently ticked slightly higher from 0.18 to 0.20, but it is nowhere near the levels seen in August last year, as per data from CryptoQuant. Additionally, at 430,500, futures open interest in BTC terms still remains well below the peak of 660,000 reached in October 2022, according to CoinGlass. Noelle Acheson, the author of the popular Crypto is Macro Now newsletter, confidently stated in Tuesday's edition, "The leverage build-up is still relatively low, judging by the CRYPTOCAP:BTC futures open interest in BTC terms (to remove the price effect) – it’s climbing fast, but it’s not at frothy levels yet."
BINANCE:BTCUSDLong
by DEXWireNews
Extracting Arbitrage Yields In Bitcoin Carry TradeBitcoin is known as digital gold. It is treasured as an investment asset. Much like the famous yellow metal, bitcoin (“BTC”) does not offer income through dividends or interest. This poses a challenge for investors seeking regular cashflows and income. One strategy that skilled investors use to turn BTC into an income generating asset is the cash and carry trade (“carry trade”). This paper describes mechanics of carry trade and the attendant risks. It also highlights that the introduction of spot ETFs has created a secure infrastructure for harvesting carry yields using a regulated platforms such as the CME. INTRODUCTION TO THE CARRY TRADE The carry trade is an arbitrage strategy that benefits from the differences in futures and spot price of an asset. It is a delta neutral strategy. In other words, the returns are not price dependent once the carry trade is profitably set up. To illustrate, consider the forward curve of CME Bitcoin futures which shows futures prices at different expiries. Bitcoin futures with later expiries trade at a premium to near term ones and this type of market structure is referred to as contango. In a trade that involves simultaneous acquisition of BTC and selling a BTC futures contract expiring later, investors can lock in the price difference as profits. Once established, this trade’s profit is unaffected by price moves enabling investors to harvest carry yield at the futures expiry. The pay-off from this trade is driven by convergence of futures and spot prices. Convergence is the movement of a futures price closer to spot price at expiry. Once futures and spot price are sufficiently close, the trade can be unwound by simultaneously exiting both positions. For CME Bitcoin and Micro Bitcoin futures, convergence occurs because the futures contracts settle to a robust price benchmark known as the CF Bitcoin Reference Rate (“BRR”) which includes price quotes from major crypto exchanges. BTC FUTURES CONTANGO TERM STRUCTURE AND PREVALANCE OF CARRY TRADE Carry trades can be executed in both contango and backwardation term structures. While the carry trade can technically be executed in backwardation (where later expiries are cheaper), doing so involves high borrowing costs for the short spot leg. Hence, BTC’s contango term structure is beneficial for extracting arbitrage yields from carry trade. Factors driving BTC contango term structure are multi-faceted. Simply put, during bull runs, investors anticipate higher prices for contracts maturing later. Furthermore, high demand for spot BTC and limited availability on the sell-side can exacerbate forward premiums. Additional factors resulting in contango include cost of funds, insurance premiums, and custodial charges that are higher for later expiries, and a convenience yield of holding BTC. Convenience yield represents returns from holding BTC through activities such as lending. BTC futures term structure has shown both contango and backwardation during different periods. Current term structure indicates bullish sentiment fuelled by spot BTC approval in January and the next halving event expected in April. Term structure shifts can result in outsized returns at times. Notably, the switch from contango to backwardation can offer outsized returns on the carry trade, exceeding the difference between futures and spot price as observed at trade inception. The carry trade has been a popular strategy, especially during periods of significant volatility and during bull markets when BTC contango structure widens. Even sell-offs provide compelling trading opportunities as the carry trade is directionally neutral. Carry trades have lower risk relative to an outright long position. For reference , during 2021, LedgerPrime’s quant fund was able to beat BTC returns using, among others, the carry trade during a large selloff. RISKS OF THE CARRY TRADE The carry trade neutralises market risk but is still subject to counterparty risks and liquidity risks when spreads diverge and tear. Largest risk factors associated with the carry trade is the counterparty risk . While CME futures are regulated by the CFTC, spot crypto exchanges are not subject to similar regulations. This poses significant risk for investors if they opt to hold their BTC on such unregulated exchanges. Such risks arising from trading on unregulated platforms is most exemplified by the collapse of FTX. FTX was a popular exchange for executing carry trades as it offered dated futures, perps, and spot BTC on its platform. The dramatic collapse of FTX highlighted counterparty risk as a major concern. Self-custody of spot BTC has its own risks including transfer costs and cybersecurity risks. Another risk factor is early liquidation. As the futures leg of the trade is a short position, where prices rally sharply, the short position may be at risk of liquidation despite a proportional gain on the long leg of the carry trade. SPOT BTC ETF HELPS REDUCE COUNTERPARTY RISKS The rollout of spot BTC ETFs reduces counterparty risk. Unlike unregulated crypto exchanges, spot ETFs are regulated by the SEC, listed on regulated exchanges with investor protection. With both the futures and spot leg now available through regulated platforms, investors have access to secure infrastructure for executing the carry trade. The table below provides details of approved spot ETFs including AUM, expense ratio, and the benchmark index. Carry trade using spot ETFs with CME CF Bitcoin Reference Rate (CME BRR) enables greater precision in extracting arbitrage yields. Seven of the eleven approved spot BTC ETFs use the CME BRR. Still, there are downside to using spot ETFs for long BTC exposure in carry trades. For one, ETFs are only tradeable during market hours (9:30AM to 4:00PM US Eastern Time not including extended trading hours) whereas cryptocurrency exchanges and even CME futures trade for longer hours. Moreover, expense ratios and premium/discount to NAV for ETFs will erode already thin profits. Spot BTC ETFs are currently offering discounts on expense ratio for a fixed period. CARRY TRADE ILLUSTRATION To illustrate a hypothetical carry trade, consider the following setup comprising long BITB ETF and short CME Bitcoin futures (BTCH2024). BITB references the same CME CF Bitcoin Reference Rate as CME futures and its premium/discount of -0.07% (as of 09/Feb) offers a beneficial entry point for this trade. Moreover, the premium/discount on the ETF has been tight. Source: Bitwise The premium for MBTH2024 over spot reference rate as of close on 9/Feb was 2.83%. Taking seven basis point discount to NAV, this results in total return of 2.90% over 48 days resulting in an annualized arbitrage return of 22%. As the trade is required to be directionally neutral, notional value on both legs needs to be balanced. CME Micro Bitcoin futures (“MBT”) offers exposure to 0.1 BTC. Notional on short BTCH2024 futures leg: 0.1 BTC As of close 09/Feb, BITB market price: USD 25.95 CME CF Benchmark BTC price: USD 47,614 Each share of BITB offers exposure to 0.000545 BTC 184 shares of BITB provide exposure to 0.000545 x 184 = 0.100280 BTC The payoff from the trade consisting of 184 x long BITB and 1 x short MBTH2024 would be 2.9% of notional value = 2.9% x (0.1 x 47,614 USD/BTC) = USD 138. The trade requires margin of USD 980 on the short futures leg and notional of USD 4,775 on the long leg for a total capital requirement of USD 5,755 (as of Feb 2023) which translates into ROI of 2.4%. Still, as mentioned, liquidation risk remains a concern. Hence, it is prudent to maintain higher margin on the short futures leg which would lower the ROI. Note that timing this trade better can improve the odds and in case Bitcoin’s term structure switches from contango to backwardation, payoff would be higher. MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
CME:BTC2!Education
by mintdotfinance
Something to Watch!Traders, Per usual, I am a little ahead of the crowd here. But I feel it's better to have all perspectives in mind and to be prepared for multiple scenarios than to have never seen it coming. With that being said, here's is a potential future pattern on the BTC daily that may be developing and is something we should all be watching carefully because if it plays out, Bitcoin will go to 31,600 (Yes, I am almost that confident). Here's what we have to watch: First of all, watch where our daily candle closes. It appears to be forming a bearish shooting star. Where the price closes today will be critical and is our first big clue as to what might occur next. But also, if we fail to break above that RED descending TL, more selling may still ensue. Thirdly, if we sell back down to our neckline, it could spell trouble as a small H&S pattern will have completed. The probability of the pattern playing out and further selling to continue will now be around 85 percent. But, fourthly, we will have to break that neckline (PURPLE descending TL). If that neckline is broken and price confirms with another candle open and close below it, we are most likely going back down to that 31,600 price level I have referenced so many time in past posts. Again, this post is very premature, but it is something that I think we need to keep on our radar. As you can see, quite a few indicators must trigger prior to this type of selling occurring but with each occurrence we can grow more confident in Bitcoin's future movement. Should any of the above fail, we would then have to re-evaluate the chart as it may invalidate the pattern or greatly decrease the likelihood of a 31,600 retest. Stay tuned here and I'll keep you all up to date on this developing pattern.
INDEX:BTCUSD
by stewdamus
CBOE Approves Multiple Spot Bitcoin ETFs for TradingMultiple spot Bitcoin ETF applications has gotten the greenlight to trade on the CBOE BZX Exchange per a recent announcement. The Chicago Board Options Exchange (CBOE) has approved four potential spot Bitcoin ETFs for trading on its platform, pending the greenlight from the United States Securities and Exchange Commission (SEC). Spot Bitcoin ETF Almost a Done Deal The push to launch spot Bitcoin ETFs is almost at its tail end as CBOE has unexpectedly filed a notification to inform the public that its affiliated platform, BZX Exchange has greenlighted the proposed fund offerings from Ark 21Shares with the ticker symbol ‘ARKB’, the Invesco Galaxy Bitcoin ETF ‘BTCO’, the VanEck Bitcoin Trust ‘HODL’ and Fidelity Wise Origin Bitcoin Fund ‘FBTC’. According to the CBOE filing for these products, the trading platform is pushing for expedited registration of these products in a bid to facilitate their readiness for trading. This move from the CBOE, according to market experts is not expected until much later in the day as it signifies the final stages of the potential spot Bitcoin ETF approval phase. The move is unique to the CBOE and it comes following the meeting the trading platform, alongside other named trading platforms for the spot Bitcoin ETF products like the Nasdaq Composite and New York Stock Exchange (NYSE), had with the officials of the SEC. This move to approve the spot ETF products from the four applicants underscores the positivity of the discussion between the market regulator and the trading platforms. In like manner, the Nasdaq and the NYSE may also publish related approval updates for the ETFs they plan to list as well. Is Official Approval In? The move from CBOE is not expected until after the SEC has given its official approval to the respective spot Bitcoin ETF products. While this move might not be made if the end-game is a rejection of the numerous applications, investors are not to confuse this CBOE move as an official approval. With the US SEC’s official X account hacked on January 9 to post fake news stories about spot Bitcoin ETF approvals, extra caution is advocated in order to manage expectations and risks appropriately. The crypto market is currently on the edge as Bitcoin ( CRYPTOCAP:BTC ) is changing hands at a price of $46,563.79, up by 0.90 % in the past 24 hours. Should official approval be granted, the cryptocurrency may reverse its losses in the race for new highs.
BINANCE:BTCUSDLong
by DEXWireNews
Now is the Perfect Time to Invest in BitcoinSeizing the Opportunity: Why Now is the Perfect Time to Invest in Bitcoin In the fast-paced world of cryptocurrency, an exciting development is on the horizon that could reshape the landscape of Bitcoin investments. With the spot Bitcoin ETF amendment deadline for S-1 filing just days away, the anticipation of regulatory approval is sparking a significant surge in Bitcoin prices. As the market braces for a potential breakthrough, seasoned investors and industry experts alike are urging buyers to seize this golden opportunity to invest in Bitcoin. The ETF Deadline Drama The United States Securities and Exchange Commission (SEC) has set December 29 as the deadline for spot Bitcoin ETF applicants to submit the final amendments to their S-1 filings. Those who fail to meet this deadline risk missing out on the first wave of potential approvals. Notably, major players like BlackRock, Grayscale Investments, and Fidelity Investments are among the frontrunners in this race, having recently resubmitted revised filings in preparation for a possible green light. BlackRock's Bold Move BlackRock, the world's leading asset management firm, has made a significant move by proposing a $10 million seed funding injection for its spot Bitcoin ETF, scheduled for launch on January 3. This strategic move underscores BlackRock's confidence in the imminent approval and signals a strong commitment to the success of their Bitcoin ETF. Investors looking for a game-changing opportunity should take note of this bold initiative. Market Leaders Taking the Plunge The recent filing amendments by Grayscale Investments and ARK Invest 21Shares further highlight the industry's eagerness for regulatory approval. Despite chairman Barry Silbert's departure from Grayscale's Board of Directors, the company continues to pursue its Bitcoin ETF dreams. ARK Invest 21Shares, having submitted its fifth amendment, reflects a steadfast determination to navigate the regulatory landscape. These market leaders are paving the way for a new era in cryptocurrency investments. Experts Optimistic Amidst Bitcoin Price Surge As the Bitcoin price skyrockets to nearly $43,000, experts are overwhelmingly optimistic about the potential approval of spot Bitcoin ETFs. Renowned investor and advisor Mike Alfred puts the odds of approval at a staggering 98.7%, considering recent trends. Bloomberg ETF analyst Eric Balchunas echoes this sentiment, suggesting that the upcoming amendment deadline may not be the last. With such positive indicators, now is the time for investors to position themselves for potential gains. The Countdown to January 10, 2024 Industry insiders, including Sam Enzer, partner at law firm Cahill Gordon & Reinel, anticipate the SEC giving the green light to a slew of spot Bitcoin ETF applications before January 10, 2024. This timeline adds urgency to the investment opportunity, as the market could witness a surge in demand following regulatory approvals. In the ever-evolving world of cryptocurrency, opportunities like the current Bitcoin surge and the impending ETF approvals are rare. As the market continues to show bullish signs, investors are urged to act now and position themselves strategically to capitalize on the potential gains. With industry giants like BlackRock leading the charge, the time is ripe for buyers to enter the Bitcoin market and ride the wave of optimism towards a new era of cryptocurrency investments. Don't miss out on this historic moment – the future of Bitcoin awaits, and the time to invest is now.
BINANCE:BTCUSDLong
by DEXWireNews