Bitcoin Showing A “Good Risk/Reward Setup,” ETF to Play A “Large Part” in the Market Sentiments

Now that steam has been taken out of the “frenzied” rally, where low spot volumes added to the carnage, crypto prices are back on the move with the fear of Fed withdrawing liquidity dangling on the horizon.

After Tuesday’s flash crash, Bitcoin is now hovering around $45k and $46k and Ether between $3,400-$3,500.

The rest of the crypto market is also back to moving upwards, with Raydium (RAY), Fantom (FTM), Elrond (EGLD), Mina Protocol, Harmony (ONE), and Solana (SOL) leading the gains and sending the total market cap back again past $2.2 trillion.

As we reported, the funding reset after the pullback is healthy for the market and sets a base for further leg up.

After all, Standard Chartered analysts, as we reported, have given a target of $175,000 in the longer term and see Bitcoin to peak around $100k by the end of this year or early next year with the leading cryptocurrency sharing “characteristics with currencies, commodities, and equities.”

As for what caused this crash, which, like always, was exacerbated by the liquidations of leveraged traders, Galaxy Research stated that it was a big BTC seller who dumped on the over-the-counter (OTC) market that led to the largest forced futures liquidations since May 19, 2021.

It is also worth noting that low spot volumes added to the carnage. On Tuesday, BTC liquidations were 34% of total traded spot volume across major exchanges versus the 1y daily average of 12%, the largest since April 18 when liquidations were more than 90% of traded spot volume, which was a day of extreme volatility and an outlier in the dataset.

Meanwhile, ETH liquidations were 23% of total traded spot volume across major exchanges versus the 1y daily average of 8%.

Macro Factor On The Horizon

According to Asian trading firm QCP Capital, it was “strange behaviour for a bullish market.”

“The outsized move seems to have been triggered by regulatory fears, taking the steam out of the “frenzied” rally,” it said. The rally was frenzied in the sense that retail was leveraged all-in on the alts, pushing the funding rates on some of the major alts’ through the roof and deep disbelief that this rally could fail.

Macro factors, however, are not playing a part yet, with S&P still climbing higher, which could change towards Q4 when the FOMC starts to taper.

“Given how far asset prices have diverged greatly from the real economy, our fear is the potential speed of the mean reversion once the Fed withdraws liquidity.”

In the meantime, the US dollar index is trading at 92.48 while the euro gained 0.2% to trade at around $1.1837 as the European Central Bank kept its monetary policy unchanged on Thursday but slowed down the pace of net asset purchases.

Interest rates will remain at their current lowest levels until inflation reaches 2%, reiterated ECB. In August, Eurozone inflation rose to a decade high of 3%, while their own forecasts are currently projecting a spike in inflation this year to 1.9% due to temporary factors before falling to 1.5% and 1.4% in 2022 and 2023, respectively.

ETF to Play A Large Part in Sentiments

Regulator fears emerged in the US in the form of the SEC preparing to sue Coinbase for its lending product. However, with the expectations rising that we may get a Bitcoin ETF soon, industry experts see it happening by October or November, which may help prop Bitcoin prices.

Recently, SEC Chair Gary Gensler signaled openness to futures backed Bitcoin ETF; since then, seven firms have applied for the same.

But Michael Sonnenshein, CEO of Grayscale Investments, which is working on converting its close-ended Grayscale Bitcoin Trust into an ETF, said that “it would be shortsighted of the SEC to allow a futures-based product into the market before a spot product.”

According to Sonnenshein, both the products should be allowed into the markets at the same time, and it should be left to the investors to choose what they want. He further said that if a futures-based ETF comes before GBTC is allowed to convert to an ETF, it can harm investors who have exposure to GBTC inside mutual funds and retirement accounts.

“Going forward, it is clear that news around the ETF will continue to play a large part in the overall sentiment,” said QCP Capital.

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Author: AnTy

Cleansing or Reversal? Over-Leveraged Apes Get Punished and Funding Resets as OI Drops Over 21%

Now that the market has reset, participants are expecting to go higher from here, with funding turning negative and exchanges broken as people try to get their hands on the dip.

The flash crash on Tuesday wiped out more than $380 billion from the cryptocurrency market, with Bitcoin falling to about $42,000 and Ether going under $3k. After bouncing back to $47k and $3.5k, BTC and ETH are now hovering around $46k and $3,400.

According to Delphi Digital, “a negative feedback loop of liquidations seems to be the primary cause, as the market punished over-leveraged apes.”

On Sept. 7, $3.5 billion were liquidated. But with the price not yet stabilized, in the last 24 hours, 353,908 traders have been liquidated for $3.46 billion — the most since May 19.

Bybit accounted for 35.7% of these liquidations at $1.33 billion, followed by Huobi at 23%, $860 million. Binance’s share was 21.3%; however, given that they don’t report the correct numbers, liquidations on the leading cryptocurrency exchange are more than likely much higher than the Bybt recorded $792 million.

The majority of the exchanges had 85% to 99% of these liquidations coming from longs, while only Deribit and FTX had a good 48.32% and 30.37% coming from shorts.

With so much leverage wiped out of the market, open interest on the exchanges also took a hit.

Bitcoin futures contracts saw a loss of $4.18 billion in OI, going back to the early August level. As for Ether, the OI has fallen to $8.37 from the all-time high of $11.62 on Monday.

On CME, OI on Ether is at $709.5 million, a level that was seen on Sept. 1st and still much higher than the May high of $607.88 but down from $860.75 million ATH. As for Bitcoin futures, OI is $1.51 bln, down from $1.88 bln on August 29th and $3.26 bln peak from Feb 26.

As Delphi Digital noted, “High open interest can be seen as traders starting to open more futures positions, most often with some amount of leverage.”

As a result, the long-term funding trend has reset to 0.05%, much lower than the prior peaks of 0.20%. Low funding implies a balanced demand, not skewed towards longs or shorts.

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Before the crypto carnage happened on Tuesday, futures traders were eyeing further upside as seen in rising basis premiums which suggested a growing bullish sentiment among the leveraged traders.

When the $50k breakout occurred, the futures’ basis finally moved upwards last week after more than a month of no developments in the futures market. In the offshore futures market, the basis saw a sharp rise — on FTX, it went to 14% after trailing around 8-10% throughout August, while on CME, it grew far less rapidly.

But now, the liquidation has provided the market with “a meaningful leverage reset.”

Now that the market has reset, participants are expecting to go higher from here, with trader Light saying,

“32% haircut to total derivatives open interest, funding structure reset after an orgy of a long weekend. Buying versus forced sellers is almost always a good strategy. If had to guess, dip feels more like a cleansing than a reversal.”

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Author: AnTy

BTC and ETH Rallies to Confirm Double-Bottom Pattern, Those Sitting in Stablecoins to Take Them Higher

Now that Alameda Research, Tesla CEO Elon Musk, Bitcoin shorts, and speculation over Amazon’s potential involvement in the cryptocurrency sector have done their part. $40k is the point of interest which is the largest OI for the upcoming BTC options expiry this Friday.

In a strong upwards move, Bitcoin has bounced off of $29,350 low last week to $39,800 on Coinbase in the late hours of Sunday or early on Monday.

Up 11% in the past 24 hours and over 21% in the past week, the price of Bitcoin has now reached a level not seen in nearly six weeks.

While Bitcoin has breached the key level of $35,000, Ether also rallied to more than 7% to almost $2,400, a level last seen earlier this month. In the past week, ETH has soared nearly 24%.

With this move, both Bitcoin and Ethereum have confirmed a classic double-bottom pattern. This pattern signals the reversal and the beginning of a potential uptrend.

This uptrend that pushed BTC above the crucial technical level for the first time since early May came in the aftermath of Tesla CEO Elon Musk’s conference with Ark Investment Management LLC’s Cathie Wood and Twitter CEO Jack Dorsey, where he revealed that he himself owns BTC, ETH, and DOGE and his other company SpaceX is also a long term holder of the leading cryptocurrency. And, of course, he only pumps and never dumps.

Interestingly, FTX CEO Sam Bankman-Fried’s quant trading firm Alameda Research put a bottom last week.

Alameda is “buying a LOT more over the past day or so,” shared Sam Trabucco, a trader at Alameda. “We’re continuing to buy down here, because it really just seems like too much points that way.”

From here, those sitting on the sidelines in the safety of the stablecoins are expected to drive the market further. Stablecoin supply on crypto exchanges also remains high.

For BTC, $40k is expected to be the level where taking it out convincingly will mean, “we are heading towards $50K quite quickly as there is a lot of crypto native capital that is still sitting on the sidelines,” according to SpartanBlack of crypto fund The Spartan Group. “If we break this level, the bull market is back, and a ton of capital will pile in.”

$40k is also the largest open interest for the upcoming bitcoin options expiry this Friday, as per Skew.

The short squeeze also drove this rally as 103,889 traders got liquidated for $1.14 billion in the past 24 hours. With Binance no more showing complete liquidations, it is expected to be a much bigger figure.

Total open interest on Bitcoin futures also dropped by more than 50k BTC — currently at 349.7k BTC from over 400k BTC less than a week back.

Interestingly, after a brief jump in funding rate, the highest is currently on FTX at 0.0168% and still negative on the majority of the exchanges. On Sunday, the funding rate on FTX and Deribit also decoupled from the rest of the market by being positive.

Trader CL of eGirl Capital meanwhile noted that almost every FTX altcoin September futures have been in multi-week/month backwardation. These fixed interest rate markets are of importance as they are an approx. Summary of OTC desk rates for borrow, he added.

Additionally, “bybit traders have been selling their spot coins, into USDT, and migrating to USDT futures,” which means these traders that dumped all their coins would have to buy back to take part in this rally, stated CL.

Some also attributed this rally to ongoing speculation over Amazon.com’s potential involvement in the crypto sector.

The tech giant is not only hiring for a cryptocurrency and blockchain lead but also looking to accept Bitcoin payments “by the end of the year” with its very own native token to make payments and earn loyalties in on the cards for 2022 reported a media publication citing an insider.

“This isn’t just going through the motions to set up cryptocurrency payment solutions at some point in the future – this is a full-on, well-discussed, integral part of the future mechanism of how Amazon will work,” an Insider told City AM.

“It begins with Bitcoin – this is the key first stage of this crypto project, and the directive is coming from the very top… Jeff Bezos himself.” The plan, which has been ongoing since 2019, apparently also involves moving to other big cryptocurrencies like Ethereum, Cardano, and Bitcoin Cash once a fast and secure method of Bitcoin payment is established.

“This entire project is pretty much ready to roll,” they added.

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Author: AnTy

Another Ethereum ETF Filed with the SEC

Now, two companies, VanEck and Wisdom Tree, have joined the race for an Ethereum ETF, with a longer coverage of risks, including consensus mechanism shift, energy-intensive mining raising the economic and societal costs of mining, congestion in-network, and more.

  • WisdomTree is the latest one and the second to file for an Ethereum exchange-traded fund (ETF) after VanEck.

According to the filing with the Securities and Exchange Commission (SEC), Wisdom Ethereum Trust has named Cboe BZX Exchange as the exchange to list the ETF under a to-be-determined ticker symbol if approved. The ETF specialist firm hasn’t picked a crypto custodian yet.

WisdomTree has already filed for a Bitcoin ETF, but the US regulator has yet to approve a single one in the country. In Canada, several Bitcoin ETFs and Ether ETFs have been approved and are already demonstrating a spectacular performance making the US companies excited and competitive to be the ones to launch the investment vehicle first to gain the first-mover advantage.

While several, at least nine Bitcoin ETFs have been filed in the US, lately, Ether has also joined the race amidst the bull run as the crypto market matures and the second-largest cryptocurrency grabs the attention.

As we reported recently, JPMorgan, Goldman Sachs, and billionaire investor Carl Icahn have come in support of Ethereum, finding it more valuable as a payments system and a store of value than Bitcoin.

Besides the usual risks, this time, in regards to Ethereum, the firm also covered several more, including hard fork, its energy-intensive mining, raising concerns about climate change that may raise the economic and societal costs of mining, moving from Proof-of-Work (PoW) to Proof-of-Stake (PoS) consensus mechanism, new competing blockchain networks posing a challenge and competition from central bank digital currencies (CBDCs).

Congestion or delay in the Ethereum network delaying purchases or sales of ether by the Trust, scaling challenges and efforts to increase the volume of transactions not turning out to be successful, and miners acting in collusion to raise transaction fees adversely affecting the usage of the Ethereum network, are also covered as potential risks for the loss in the value of the Trust.

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Author: AnTy

A Ridiculously Bullish Chart, Bitcoin Google Search Interest Rise to Mid-2017 Level

A Ridiculously Bullish Chart, Bitcoin Google Search Interest Rise to Mid-2017 Level
  • Now more people searching for “Bitcoin” than during the Bitcoin bubble of 2013
  • Once FOMO hits $10k, $40,000 would be achieved in no time
  • “Striking similarity” in Bitcoin price action between 2011-2015 and 2015-2019
  • Over the Next 24-Months, Bitcoin Price to follow late 2017’s great high

Alistair Milne, the CIO of Atlanta Digital Currency Fund took to Twitter to share what he calls a “ridiculously bullish chart” that shows Bitcoin interest on Google searches rising to great levels since it was created.

As Bitcoin price turns bullish, climbing to $9,100 level in May, the interest in Bitcoin has risen as seen in google trends. The year-over-year google trends data for the leading cryptocurrency has risen for the first time in 12 months.

There are now more people searching for “Bitcoin” than during the Bitcoin bubble of 2013. Additionally, since the world’s leading cryptocurrency was created – on a log scale – the interest in Bitcoin has also risen and gone to the level that hasn’t seen since mid-2017.

Per the chart shared by Milne, the interesting aspect is the fact that event at the lowest point in 2018, we were above the early 2017 levels. The Bitcoin search levels of Bitcoin on log scale remains above 10 since first hitting that in January 2017.

This shows that as Bitcoin price makes upward moves, people’s interest in the world’s top cryptocurrency also rises. Talking about the price, currently, BTC/USD is trading at $7,745 with 24 hours loss of about 2 percent.

Once FOMO Comes, BTC would Hit $40,000 in No Time

In the short term, this month which started at a red note could see more losses, if history is any indication and if June closes in red, July will follow with reds after all. Analyst, Cane Island crypto, shares this interesting observation on Twitter.

In the mid-term, Bitcoin Bull Tom Lee sees Bitcoin going to $40,000 in a few months once we hit $10,000 which is expected to trigger FOMO and drive BTC prices to new highs.

“If bitcoin somehow manages to get to [$10,000], it’s very likely going to make a run to $40,000 within five months,” said Lee in an interview with Binance CFO Wei Zhou.

According to him, once we get to $10,000, every institution will realize we are going back to the ATH. As for the Wall Street, he says:

“if there’s a known asset class and they believe they can have an edge, they’re going to be quite interested in investing in it.” And this will be the right “tipping point,” said Lee.

Over the Next 24-Months, Bitcoin Price to follow late 2017’s Extreme high

Analyst at Canaccord Genuity also sees the history repeating as in their research note, they predicted the return of Bitcoin’s 2017’s stratospheric high over the next 24 months.

In its note, the firm noted the “striking similarity” in Bitcoin price action between 2011-2015 and 2015-2019. Bitcoin actually operates on a sort of four-year cycle as the reward halving occurs about every four years, they observed.

“Bitcoin has started to form the spring 2019 bottom we began mentioning last year, although a close look at the chart suggests the recovery may be slightly ahead of itself. Looking ahead, if bitcoin were to continue following the same trend, the implication is a slow climb back toward its all-time high of ~$20,000, theoretically reaching that level in March 2021.”

It also notes how 7 million bitcoins that haven’t been active for about six months is now back to trading. The increasing interest from Wall Street in terms of Fidelity Digital Assets, Grayscale’s “Drop Gold” campaign and corporate initiatives from the likes of Nike, Facebook, and others are also noted by the authors.

“In any event, bitcoin is so far one of the best-performing assets of 2019,” wrote the firm.

Bitcoin’s price is $7,671.73 BTC/USD exchange rate today. The real-time BTC market cap of $136.17 Billion currently ranks #1 with a chart dominance at 55.84%, daily trading volume of $4.19 Billion and live coin value change of BTC -3.87 in the last 24 hours.

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Author: AnTy