Cboe Planning A Re-Entry Into The Market By Acquiring Regulated Futures Exchange ErisX

Cboe is Planning A Re-Entry Into The Market By Acquiring Regulated Futures Exchange ErisX

Cboe Global Markets wants back in on the cryptocurrency market, and the latest step towards this direction is entering into a definitive agreement to acquire Eris Digital Holdings, a US-based spot exchange, and CFTC regulated futures exchange and clearinghouse.

In May this year, Cboe had filed for investment giant Fidelity’s Bitcoin ETF, saying concerns about potential manipulation of a Bitcoin ETF have been “sufficiently mitigated.”

Cboe had started feeling the FOMO last year when in December, it announced that it would launch a suite of tools, including crypto indexes, real-time ticks, and historical data.

The platform was the first to launch Bitcoin futures, along with CME, at the peak of the 2017 bull market. But after going through the 2018 bear market, in March 2019, Cboe delisted Bitcoin futures, when the price of BTC was about $4,000. Two years later, this March, Chairman, and CEO Ed Tilly said they “haven’t given up on” bitcoin futures.

Today, Bitcoin is trading at an all-time new high above $67,000.

While CME is leading regulated Bitcoin futures space with open interest on an all-time high of $4.77 billion with the first Bitcoin Futures ETF launch, Cboe is making a reentry through ErisX.

It plans to operate the crypto-asset business as Cboe Digital.

“I am confident that together we can not only meet the growing demand for institutional and retail trading solutions but also push the boundaries of digital asset innovation and unlock its next phase of growth.”

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Author: AnTy

Ark Invest Joins the BTC Futures ETF Race, Valkyrie Updates Prospectus for Potential Approval

Cathie Wood’s Ark Throws its Hat in the Bitcoin Futures ETF Ring, Valkyrie Updates Prospectus for Potential Approval This Month

Cathie Wood had joined the race of Bitcoin Futures exchange-traded fund (ETF) with its ARK 21Shares Bitcoin Futures Strategy ETF (ARKA).

The ETF plans to invest Bitcoin futures contracts on commodity exchanges, according to a filing with the Securities and Exchange Commission (SEC).

Alpha Architect, an issuer of ETFs, submitted the filing with Switzerland-based 21Shares AG’s US affiliate listed as the sub-advisor. Ark Investment will provide marketing support for the sub-advisor.

“It’s a no brainer for Ark because they will likely be able to instantly seed it with about half a billion that they currently have in GBTC,” said Eric Balchunas, a senior ETF analyst for Bloomberg Intelligence.

“Ark also has a strong base of younger investors who probably would use this as well. Closest thing to a surefire hit as you’ll see.”

Ark Investment has already given its name for the physically-backed ETF — ARK 21Shares Bitcoin ETF (ARKB) that would track the performance of the leading cryptocurrency as measured by the S&P Bitcoin Index, according to a June filing.

But all the attempts to get a physically-backed Bitcoin ETF since 2013 have failed so far, with the SEC rejecting every one of them. The hope for a Bitcoin ETF has rejoiced this month due to SEC Chair Gary Gensler hinting his support for a futures-backed ETF that offers greater investor protection for months now.

The optimism around the Bitcoin ETF approval is what’s driving the Bitcoin price action right now, which has surged to its highest level since May. Open interest on Bitcoin futures at CME has also hit a new ATH.

Ever since Gensler announced that he would be more open to approving an ETF submitted under the Investment company Act of 1940, nine Bitcoin futures ETF applications have been filed so far.

Everyone in the crypto industry is now eagerly awaiting October 18th, the day the SEC has to decide on ProShares Bitcoin Strategy ETF.

“No news from SEC over the next week is a positive for a potential ETF launch in our view,” said James Seyffart, ETF analyst at Bloomberg Intelligence.

However, only three filings are limited to futures, including Valkyrie Bitcoin Strategy ETF, whose deadline is on October 25th, BlockFi Bitcoin Strategy ETF, whose deadline doesn’t come until the end of the year on December 22nd, five days later, Ark21 SharesBitcoin Futures Strategy ETF.

Ark’s filing is actually the second one after Valkyrie that doesn’t seek to invest in Canadian-listed funds that provide exposure to bitcoin. Bloomberg’s Balchunas said the rumor is that SEC “wants them to be strictly futures,” which puts Valkyrie’s chance of getting an approval higher than ProShares.

On Wednesday, Valkyrie also updated their bitcoin futures ETF to add the ticker BTF, but information on fees still hasn’t been added. These types of updated prospectus filings, Balchunas said, “typically only happens when ducks in row ready for launch.”

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Author: AnTy

SEC Chair Signals Support for BTC Futures ETF, Crypto “Certainly of A Size” to Have Same Safeguards

SEC Chair Yet Again Signals Support for Bitcoin Futures ETF, But says Crypto “Certainly of A Size” to Have Same Safeguards as Banking

“A lot of people are likely to get hurt,” said Gary Gensler, asking crypto platforms that accepted funds from investors and offered returns to “consider the securities laws carefully.”

Hopes for getting a Bitcoin Futures ETF approval this year have further risen with the US Securities and Exchange Commission Chairman Gary Gensler’s latest comments on the investment product, where he reiterated his positive stance on such exchange-traded funds.

In his prepared remarks for the Financial Times’ “The Future of Management North America Conference,” Gensler repeated that there had been several filings under the Investment Company Act with regard to ETFs seeking to invest in CME-traded bitcoin futures.

According to him, the ’40 Act provides “significant investor protections” for mutual funds and ETFs.

“I look forward to staff’s review of such filings.”

Ever since Gensler first made these positive remarks towards Bitcoin Futures ETF in August, several firms, including Valkyrie Investments, VanEck, Proshares, and Invesco, have filed applications for such an ETF.

An ETF makes the product less costly, more transparent, and more tax-efficient than mutual funds for the investors.

Talk to the Agency

Besides supporting Bitcoin Futures ETF, Gensler also continued this criticism of crypto trading and lending platforms that promise returns to investors, which he says won’t avoid the SEC regulation. According to him, these products need the same safeguards against fraud and manipulation as bank depositors or purchasers of mutual funds or insurance policies. He said,

“This crypto space is now certainly of a size that without those investor protections of banking, insurance[and] securities laws [and] market oversight, I do think somebody is going to get hurt.”

“A lot of people are likely to get hurt.”

Recently, Coinbase publicly shared that SEC is threatening to come after it if it launches its Lend product which it at the time decided to postpone to October only to drop it all together later.

Earlier this week, at the Code Conference in Beverly Hills, California, Gensler had declined to comment on remarks made by Coinbase CEO on SEC engaging in “sketchy behavior,” but on Wednesday, he noted that some companies have “said things publicly about some of those conversations.”

Crypto platforms that accepted funds from investors and offered returns “should consider the securities laws carefully and talk to the agency about getting registered,” Gensler said, adding, “Many of them should [register] now — or should have even in the past.”

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Author: AnTy

Even JPMorgan Has Turned Bullish, Now Saying “The Previous Phase Of Demand Weakness Is Over”

“Significant impulse” seen in the futures as a sharp rebound of crypto “caught most investors by surprise,” more so on ETH, whose OI on CME has hit a new peak in USD, all the while on the back of low leverage. At the same time, the long USD continues to soar to new highs.

Bitcoin and Ether are recovering spectacularly from the losses recorded in the second half of May, the entire June, and much of July.

August is finally looking good after nearly three months of red, with BTC almost touching $48,000 on Friday and Ether climbing to $3,330. The total crypto market cap aims for $2.1 trillion, now closer to the $2.55 trillion peak from mid-May.

Interestingly, just like crypto-assets rallied into the end of 2020 to the 2017 ATHs, this time, prices are slowly moving towards their 2021 peaks without the high leverage. FRNT Financial CEO Stephane Ouellette said in an interview,

“Typically, we look at that as more of a strong-handed rally, which implies that the leverage portion of the rally comes later.”

“If that is the case, those $100,000 targets are very reasonable, I’d suggest. The last time we saw a move of this little leverage, we were pointing towards $20,000, and we didn’t really see the leverage come into the market in an aggressive way until we got to $40,000, which took us to $65,000.”

On Binance, BTC’s annualized daily basis is currently 3.56%, down from 41.4% in mid-April, which was a mere 0.2% in late March just before its peak. As of writing, the highest Bitcoin funding rate is 0.0240% on FTX while keeping around 0.1% on the majority of the crypto exchanges, as per Bybt.

As for ETH, it’s 3.72% (7DMA, APY), while in February, it was above 50% on Binance compared to 131% on Bybit and 113.7% on BitMEX. Currently, it is 21% on BitMEX and 3.72% on Bybit.

All the while, open interest on futures continues to climb; on Bitcoin contracts, it is $16.72 bln back to May levels. This OI is up 57.4% from the late June low and still down 39.6% from the April high.

As for Ether, OI is currently sitting at just above $9 bln, up 104% from late June low but down 22% from May high.

On CME, OI on Bitcoin futures is $1.71 bln, down from a $3.26 high on Feb. 21 but up from $1.14 bln on July 1st — accounting for 10.23% of the market share. Unlike BTC, on Eth futures, OI on CME has surpassed the May 14 peak of $607.88 mln to reach $648.5 mln — accounting for a 7.02% market share.

Traders on CME are also closing their short positions, which have hit their smallest since mid-May. Bitcoin net shorts have fallen to 1,104 contracts from 1,290 in the previous week.

Amidst this, US dollar net longs rose again to reach their highest level, $3.08 billion, since early March last year. US dollar positioning has been net long for four weeks in a row now after staying net short for 16 months. JPMorgan strategist Nick Panigirtzoglou wrote in his latest crypto report,

“There are clear signs of demand improvement in futures markets pointing to rising institutional demand for crypto. Momentum traders such as CTAs have likely amplified recent crypto price moves as the shorter lookback period momentum signals shifted from negative to positive territory for both bitcoin and ethereum. Typically this is when momentum traders’ impact is mostly felt as they are forced to exit short positions and start building up long positions.”

According to the strategist, the institutional buying of crypto has reversed and spiked after several months of muted activity.

This is because “the sharp rebound of crypto markets over the past three weeks caught most investors by surprise,” wrote Panigirtzoglou.


JPM now sees a “significant impulse” in the futures. They have now come around on backwardation as well, which they previously saw as a bearish signal. Back in early June, in contrast, trader CL of eGirl Capital had said that longing BTC every time it’s in backwardation has resulted in significant profits.

Now JPM is also arguing “that the previous phase of demand weakness is over.”

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Author: AnTy

Bitcoin Shorts Get Annihilated, OI Drops by 50k BTC from Last Week

While Bybit Bitcoin’s futures had the biggest drop of 15.59% in OI, followed by Binance’s 12% in the past 24 hours, Bitfinex, FTX, and CME had the biggest increase of 12.81%, 11.54%, and 11.86%, respectively.

Bitcoin price surged to nearly $40,000 in a strong upwards move, late on Sunday or early Monday. This represents a nearly 36% jump in price since the $29,300 low last Tuesday.

While several factors like Alameda Research putting in a bottom by “buying a LOT” at the lows, Tesla CEO Elon Musk announced his bullishness for crypto, and speculation over Amazon’s potential involvement in the cryptocurrency sector contributed to this bullish strength, shorts have a significant part to play in this.

As we have been reporting for the past month, the funding rates on the perpetual contracts have been staying in the negative, with the market extremely short on BTC. At the same time, open interest continued to climb sharply.

And finally, an epic short squeeze happened.

In the past 24 hours, 102,558 traders have been liquidated for $1.14 billion, with nearly $945 million of it belonging to shorts, as per Bybt.

The figure is expected to be much higher given that Binance had stopped showing its real liquidation numbers and is currently accounting for less than 20% of all liquidations when it used to be about half, much like Bybit.

“Bitcoin shorts just got blown out. Quarterly basis popped from 5% to >10% briefly,” noted trader and economist Alex Kruger.

Amidst this, Binance and FTX have reduced their leverage offering from more than 100x previously to now only up to 20x. Andrew Kang, Mechanism Capital, said,

“Usually, big short squeezes like we saw on BTC today bleed out, but this continued upward momentum is pretty indicative of shorts/stables being price-insensitive buyers trying to scoop any liquidity they can.”

The result of this short squeeze can also be seen in open interest. Total OI on Bitcoin futures has crashed by 50k BTC — currently at 349.7k BTC from over 400k BTC less than a week back.

In the past 24 hours, OI on Bybit Bitcoin’s futures had the most significant drop of 15.59%, followed by Binance’s 12%, which leads the futures space. OI on Binance is now at 79.1k BTC, down from 101.37k BTC on June 20, which increased 78% in nearly a month as new short positions were opened.

Meanwhile, Bitfinex, FTX, and CME had the most significant increase of 12.81%, 11.54%, and 11.86%, respectively, as of writing.

In the case of Ether, Binance is the only with a decrease, of only about 3.67%, though, in OI. Total Ether OI is now 2.54 million ETH, down from 2.94 million ETH in less than a week. SplitCapital said,

“Make no mistake, the real pain won’t come from shorts rather the absurd amount of people that are parked all in stablecoins. They won’t chase till 40k breaks.”

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Author: AnTy

Binance Bitcoin Futures Skyrockets to $48,000 in a Monster Wick

OI on Binance BTC futures is currently at 78.89k BTC, down from 101.37k BTC from last week, while being the only exchange to have a negative change in ETH futures’ OI in the past 24 hours but still sitting at the highest 627k ETH.

The textbook short squeeze that took place this weekend saw the price of bitcoin going as high as $48,000 on the leading cryptocurrency exchange.

On other crypto exchanges, this short squeeze sent the price of bitcoin to nearly $40,000 and Ether to almost $2,400, with Binance an anomaly.

On Binance itself, while Bitcoin wicked to about $39,800 on spot and on futures, it went as high as $48,168. In response, Binance has reportedly said that “API user place wrong orders, the liquidation price is the marked price, the extreme price will be automatically removed, and the user will not be affected.”

In the past 24 hours, more than 100,000 traders were liquidated for about $1.14 billion, with nearly $950 million being the short positions.

Bybit accounted for a majority of these liquidations at about $440 million, followed by OKEx and Huobi for just under $220 million, according to Bybt.

Binance, meanwhile, is accounting for a mere 11.4% of these liquidations at $129.5 million. However, the leading crypto exchange has stopped showing accurate liquidation for some time now, and these figures are expected to be much higher. Previously, Binance used to lead the market in liquidations.

This can be seen in the second-biggest drop of over 12% in OI on Binance’s Bitcoin futures in the past 24 hours.

Currently, at 78.89k BTC, it is down from 101.37k BTC on June 20, which was an increase of 78% in nearly a month as new short positions were opened. Still, it is the highest OI, accounting for 22.7% of the total BTC futures open interest.

“Binance straight up under-reports liq data, but OI down by ~12k BTC following that move and net buying on that 1m candle was ~12k BTC. Good ol cascade,” commented trader Hsaka. “Around ~$600m of forced buying in under 60 seconds.”

When it comes to Ether futures, only Binance has a negative change of 4.45% in the past 24 hours, now sitting at the highest 627k ETH while others had an increase in OI.

Amidst all this, Binance CEO Changpeng Zhao announced that they have started limiting new users to a maximum of 20x leverage a week ago on Monday.

“In the interest of Consumer Protection, we will apply this to existing users progressively over the next few weeks,” he added.

Meanwhile, several hedge funds have curbed their trading on Binance as the regulatory crackdown on it intensifies, the Financial Times reported.

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Author: AnTy

Ether Futures Debut on CME Group Next Week to Mark a Local Top?

JPMorgan strategist sees the listing of Ether futures result in “negative price dynamics,” but the market is saying something else.

In its price discovery, Ether has hit a new all-time high of $1,700.

Four days into February and the second-largest cryptocurrency has surged 34%. In 2021 so far, Ether is up 120% compared to Bitcoin’s 27%.

Ethereum tends to outperform Bitcoin as it is now doing, as did last year and during the 2017 bull market as well.

With Grayscale back to buying ETH for its clients, having bought 71.8k in just the last two days, it all spells more upward momentum for Ether price.

However, the imminent launch of CME Group futures for Ethereum on February 8 has traders expecting the market to behave like ‘buy the rumor, sell the news.’

“We are pumping into Eth CME…I think that will mark a local top,” said trader CryptoMessia. However, he still expects Ether to pump after the launch, but that might not come without a correction, which could be like the last bull market and be a 30% pullback.

But this pullback is not to come until the local top, which is to be seen where it will be. CryptoMessiah sees Ether above $2,000.

A Repeat of 2017?

Some market participants are also expecting a bearish market structure as a repeat of 2017, when the debut of Bitcoin futures coincided with a peak in the leading digital asset.

JPMorgan Chase strategist also expects something along the bearish lines as Nikolaos Panigirtzoglou, global market strategist with JPMorgan, said the listing of Ether futures may see “negative price dynamics.”

Panigirtzoglou also expects initial volumes to be low.

Vijay Ayyar, head of Asia Pacific with crypto exchange Luno in Singapore, however, is not of the same opinion as he said, “For all you know, major players may be looking to get long exposure through futures, now that there is an institutional-grade product to do so.”

“Smart traders moved to Ether when Bitcoin topped out around $40,000 and have made more money,” added Ayyar.

We’re in Risk-on mode!

Trader and economist Alex Kruger, who sees $1,920 as the next key level for ETH and sees it hitting before the CME launch, doesn’t see the same fate for Ether as BTC in 2017

He points to the market becoming more mature now, the current macro environment is different from 2017, and different players, institutional investors, are involved in the market as the reasons for the same.

Moreover, “ETH remains a high beta asset. BTC determines the market direction, ETH follows,” he said.

But what he does expect is the funding rates to be “up in the clouds” if Ether prices rise to that level by Monday.

Already, in line with the surging prices, the Ether futures are trading higher than the underlying asset, which has the funding rate to keep the prices of perpetual futures closer to the spot market prices, reaching 0.1445% on BitMEX.

Long are paying the shorts the least on Deribit with funding rate on Ether futures at just 0.0016%, as per Viewbase.

For Bitcoin futures, the funding rate is between 0.0416% and 0.1255%. BTC -3.02% Bitcoin / USD BTCUSD $ 30,838.29
Volume 20.44 b Change -$931.32 Open $30,838.29 Circulating 18.76 m Market Cap 578.56 b
7 h ETFs Are Having the Best Year Ever, While SEC Refuses to Give A Bitcoin ETF The Green Light 9 h Green Bitcoin Miner Planning to Raise $200 Million Ahead of Nasdaq Direct Listing This Year 9 h Grayscale to Launch a DeFi Fund and Index for Institutional Investors to Gain Broad-based Exposure

While already hot, there is still room to go for these funding rates, and then price action would get extremely volatile. This “could see a replay of what happened the first time BTC traded 40K. That sort of price action becomes likely when the market gets out of whack,” said Kruger.

But what’s more important is that traditional markets are now in risk-on mode, he added.

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Author: AnTy

Former CFTC Chair Says A Bitcoin ETF Would Be Good For Regulators; SkyBridge BTC ETF Delayed

Timothy Massad, former chairman of the US Commodity Futures Trading Commission (CFTC), has urged the U.S Securities and Exchange Commission (SEC) to approve a Bitcoin exchange-traded fund (ETF).

Massad made his points known in a Bloomberg opinion piece. He said the SEC should look into approving an ETF in a way that would enhance transparency and integrity in the industry.

Bitcoin ETF Would Be Good For Retail Investors

Massad said a Bitcoin ETF would help retail investors invest in digital assets without purchasing them and dealing with the complexities of custody.

He said that while it would be best to have crypto regulations in place before approving a Bitcoin ETF, this may not happen soon. This is why Massad thinks a conditional approval would be best to increase the industry’s transparency, integrity, and investor protection, not just its mass appeal. Massad said,

“Although it would be best to see such ETFs approved only after Congress has strengthened crypto regulation generally, the likelihood of that happening in the near future is low.”

While cryptocurrency exchanges are largely unregulated in the U.S, the former CFTC chair said the SEC could use the ETF listing process to improve the integrity of cryptocurrency exchanges in the absence of comprehensive regulations.

He added that the ETF approval could be granted on the condition that the ETF prices are based on an index of exchanges meeting certain prescribed standards.

Massad’s comments follow similar comments attributed to SEC Commissioner Hester Peirce, who argued that a Bitcoin ETF should have been approved a long time ago.

In an interview with CNBC, Peirce said that she sees the SEC using double standards in approving crypto products. According to her, the SEC applies a heightened standard in filings associated with cryptocurrencies, unlike the standards it uses for traditional, equity-based products.

SEC’s Continuous Delay In Approving ETFs

Over the years, there have been several applications for a Bitcoin ETF, but the SEC is yet to approve any of the applications.

The regulator had previously cited concerns like fraud, market manipulation, and volatility as the reasons behind the rejections or delays.

The latest application facing delay by the SEC is Anthony Scarammuci’s SkyBridge Capital’s application for a Bitcoin ETF. A filing by the regulator shows that the application submitted on May 6 has been extended for 45 days ending in August.

The SEC is currently reviewing many applications and has invited public comment on the Bitcoin ETF filed by asset manager VanEck. The review process has also been extended until August 2021.

Other firms currently witnessing delays from the regulator in approving ETFs include WisdomTree, Kryptoin, and Fidelity Investments.

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Author: Jimmy Aki

Bitcoin Death Cross Confirmed After Latest Sell-off, Biggest Risk Factor is Now a Breakdown in S&P

The extreme divergence between the basis on CME futures and cryptocurrency exchanges has reconverged. September futures, already at 0.1% APR, are expected to get nuked backward.

The crypto market has experienced another rout that started into the weekend and has spilled into this new week.

Bitcoin’s price fell to about $32,100, and Ethereum even lower to $1,945. The total cryptocurrency market cap is now at $1.4 trillion, down more than 46% from May 12 peak. ETH -16.22% Ethereum / USD ETHUSD $ 1,889.83
Volume 33.55 b Change -$306.53 Open $1,889.83 Circulating 116.39 m Market Cap 219.95 b
10 h No Major Inflows Yet But Outflows in Bitcoin Funds Stopped for Now, ETH Holdings ‘Quite Stable’ 10 h Bitcoin Network Can Start Recovering with Hash Rate Dumped 50%, Chinese Miners Already Migrated Overseas 11 h Bitcoin Death Cross Confirmed After Latest Sell-off, Biggest Risk Factor is Now a Breakdown in S&P

The sell-off ended up liquidating 153,599 traders for $1.01 billion in the last 24 hours. With this drawdown, the extreme divergence between the basis on CME futures and futures on crypto native exchanges has now pretty much reconverged.

Could this mean we’re in a bear market, the multi-year downtrends post-blow-off every halving “cycle”? Jason Choi, General Partner at crypto fund The Spartan Group, argued that’s not a good benchmark to go with.

This is because we now have a diminishing impact of supply reductions and a completely different set of market participants which involve institutions. Also, BTC dominance is falling on HTF/ no longer bellwether for future cycles.

Crypto tumbled as Asian stocks dropped on Monday, with investors still mulling the implications of a surprise hawkish shift last week by the US Federal Reserve.

The Treasury yield curve has flattened further, with 30-year yields dropping below 2%, to as low as 1.9990% for the first time in more than four months. Benchmark 10-year U.S. Treasury yields also fell to the lowest since early March at 1.4110%.

After falling to $1,60 per ounce last week, gold is seeing a slight jump today, going as high as $1,780. The US dollar meanwhile hovers near the 10-week high at 92.2.

As we reported, St. Louis Fed President James Bullard further fuelled the sell-off by saying the tapering talks have started and that it was a “natural” response to economic growth quicker than expected inflation.

This week will continue to be a volatile one, with several Fed officials, including Chairman Jerome Powell, to testify before Congress on Tuesday.

The drop in prices came after Bitcoin mining farms in Sichuan were closed down, which sent the hash rate crashing.

While price generally moves Bitcoin’s hash rate and not the other way around, buying into the false narrative that hash drops lead to price drops has made it “come true momentarily,” said trader and economist Alex Kruger.

Based on on-chain data, miners are actually not selling their BTC and continue to HODL the coins. Charles Edwards of Capriole Investments wrote,

“Now that Hashrate drops from bans have more or less played out, the biggest risk factor for further Bitcoin price plunges is a breakdown in the S&P. This is a very real and prominent risk to Bitcoin here.”

Despite the weak momentum in the market and the death cross finally confirmed, which occurs when the 50-day moving average drops below the 200-day, Bitcoin remains in the $32k-$40k range.

According to Jonathan Cheesman, head of over-the-counter and institutional sales at crypto-derivatives exchange FTX, “backtesting isn’t statistically significant” on the signal for Bitcoin.

When bitcoin experienced a death cross in March 2020 that was at the start of a yearlong rally, while that of in 2018, it solidified the bear market. So, it’s to be seen just how things play out.

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Author: AnTy

Goldman Sachs Begins Trading Bitcoin Futures with Galaxy Digital as its “Liquidity Provider”

Goldman Sachs Begins Trading Bitcoin Futures with Galaxy Digital as its “Liquidity Provider”

According to Galaxy co-president, this is about “safety in numbers,” and once one bank joins, the others will have FOMO and will get on-boarded.

Goldman Sachs has begun trading bitcoin futures with Galaxy Digital, a crypto investment firm founded by Mike Novogratz.

Galaxy will basically serve as the investment bank’s “liquidity provider.”

“Our goal is to equip our clients with best-execution pricing and secure access to the assets they want to trade,” which “now includes crypto,” said Max Minton, head of digital assets for the banking giant’s Asia-Pacific region.

With this move, Goldman has taken the step forward to help hedge funds and other big institutional clients gain exposure to cryptocurrencies, reported CNBC.

The trades represent the first time that Goldman has used a crypto assets firm as a counterparty since it first set up its crypto desk last month, according to Damien Vanderwilt, Galaxy’s head of global markets division.

By being one of the first major US banks to start trading cryptocurrency, this will propel others to do the same, said Vanderwilt, a former Goldman partner.

“There’s a whole dynamic with the major banks that I’ve seen time and time again: safety in numbers.”

“Once one bank is out there doing this, the other banks will have (FOMO), and they’ll get on-boarded because their clients have been asking for it.”

Banks will be able to offer clients ways to wager on bitcoin using derivatives, much like traditional finance, he said.

According to Vanderwilt, the involvement of hedge funds, pensions, family offices, and sovereign wealth funds in bitcoin trading will improve the market depth and breadth and ultimately lower the volatility.

This is because, unlike retail which has access to “ridiculous amounts of leverage,” as much as 125x, the institutional community has proper rules and regulations about leverage, asset-liability mismatch, and risk.

As such, the more the activity from the institutional community, the less volatility in the crypto market, he said.

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Author: AnTy