Bitcoin Again on the Move Amidst “Increasing Market Demand”

Bitcoin is back on the move today. Volatility has been expected as options for 67,700 Bitcoin worth $745 million are expiring today.

Currently, the largest cryptocurrency is trading just under $11,400, up more than 3%, with over $2 billion in trading volume. In the past ten days, BTC has surged 24.5% that has resulted in the number of bitcoin addresses holding 1 million USD spiking by 38% to about 18,000.

Also, a whopping 93% of bitcoin’s supply is at a profit with the price at $11k.

Interestingly, BTC deposits at major exchanges continue to drop, which has been falling since March after the digital asset crashed along with the other asset classes. The deposits have currently reached the low-levels, last seen in May 2019, which suggests users prefer to store their BTC in private wallets. Moreover, it “may lead to a lower selling pressure the upcoming months.”

“Despite BTC’s recent surge to $11k, there are currently no signs of weak hands from long-term investors,” noted Glassnode. “Hodler Net Position Change remains positive since the end of March, with hodlers currently accumulating more than 50k BTC each month.”

However, Ki Young-ju, the CEO of on-chain analysis firm CryptoQuant, said whales have started to send Bitcoin and stablecoins to exchanges. He said,

“BTC whales are sending Bitcoins to exchanges. Stablecoin whales are sending stablecoins to exchanges as well. This week will be a battle between Stablecoin and Bitcoin exchange inflows. These inflows indicate potential buy/sell pressures.”

So Much HODling & Accumulation

Bitcoin gains are recorded amidst the amount of USDT flowing into exchanges spiking to yearly high. All the while, Tether continues to mint millions more USDT that “hints at increasing market demand and could potentially support further Bitcoin price appreciation,” states OKEx.

The exchange’s one-month futures annualized basis has also surged to as high as 27.67%, its highest level since late February. “Values above 20% indicate that traders are paying a very high premium on spots and using high leverage,” OKEx said.

Just this week, Bakkt recorded peak volume twice in a row while CME saw its open interest making new highs. Regarding the slow adoption of its bitcoin options product, CME Group continues to “work with both brokers and platforms to get them connected and up and running to facilitate trades with customers.”

Another bullish development seen in the market is the 1-year HODL wave, which has been unmoved on the blockchain over the last 365 days.

Additionally, this Bitcoin 1-year HODL wave has hit a new all-time high of 63%, up 1% since the start of July.

The fact that an increasing number of bitcoin investors are HODLing with no pressure from any sell-side in the form of deposits to exchanges speaks well for the world’s leading digital currency.

At this point, if bitcoin closes above ~$14,300 on the 12 Monthly charts, that would be one of the most bullish developments in this new cycle, said analyst Rekt Capital.

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Author: AnTy

Crypto Market is ‘Extremely Greedy’ for the First Time in 2020

Before bitcoin started up-trending last week, its volatility fell below 25%, a level rarely seen in BTC’s history, which had the market expecting a big move. Coin Metrics notes,

“Prolonged periods of low levels of volatility encourage market participants to take on greater position sizes, engage in increased leverage, set tighter stops, and reduce the thresholds upon which they will respond to new information.”

In the crypto market, this phenomenon is even stronger due to the amount of leverage present.

Digital assets started showing signs of life as bitcoin burst over the weekend, breaking through the psychologically important $10,000 level.

The erratic price action of bitcoin, however, resulted in the futures curve steepening aggressively, “encouraging further leverage flow and stablecoin carry trade-related flow.”

During this price action, bitcoin futures on Bakkt registered record trading volume while the open interest on CME hit an all-time high of $724 million.

Similarly, the options market indicates, market participants are turning more bullish, leading to a degree of position scrambling and short positions getting squeezed. Denis Vinokourov of Bequant said,

“The downside to this parabolic rise is the so-called liquidity vacuum and “gaps” in price discovery (…) this temporary liquidity drainage in the small and mid-cap sector creates an opportunity to pick up bargains.”

The real test, according to him would be if bitcoin can hold on to the key $10,500 and $10,000 levels once this rally runs out of steam, with worrying signs of elevated funding rates in perpetual contracts.

All the Bullishness

The gains this week has people turning extremely greedy for the first time in 2020, “showing signs of an exuberant market sentiment.” The last time the Fear & Greed index was at these levels was during the peak of euphoria in July 2019 when BTC hit the yearly high of $13,900.

Interestingly, these gains came amidst a decline in the US dollar and gold, making a new all-time high, which reinforces its safe-haven properties.

In the current world of low minimal interest rates for the foreseeable future on top of inflation expectation, non-yielding assets like bitcoin and gold become increasingly attractive.

However, it is “Unfortunate for BTC longs to see precious metals print a major top at the same time BTC starts being driven by the same factors and price just starts to take off,” said trader and economist Alex Kruger.

Bitcoin and gold’s 30-day correlation is returning to all-time highs, set in March when all risk assets sold off.

The monetary and fiscal response to the coronavirus pandemic has only increased the uncertainty of the future path of inflation and monetary policy, which is supportive of BTC prices. Today, the Fed extended its lending program until the end of the year.

Also, Goldman Sachs analysts said there are “real concerns around the longevity of the US dollar as a reserve currency have started to emerge.”

Other bullish facets this time involve a record percentage of bitcoin supply, 62% amounting to 11.4 million BTC, not moved in at least a year.

Moreover, during this ongoing rally, peer-to-peer volume in many countries has hit an ATH this week. Both Nigeria at $10.3 million and India at $3.8 million made new peaks breaking the ones made just a week before that.

Kenya ($2.5M), South Africa ($2.2M), Ghana ($1.9M), and the Philippines ($1.1M) also made new highs.

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Author: AnTy

Markets Flip from Bulls to Bears, Even a 40% Drop isn’t Unlikely

After keeping steady for weeks, bitcoin volatility is back.

On June 10th, Bitcoin had a fake breakout only to drop to $9,000 yesterday. The digital asset moved downwards in line with the US stocks that posted losses of at least 5.3%, the biggest one-day losses since mid-March.

The heavy losses came despite the Federal Reserve’s dovish tone while the same day coronavirus cases surpassed 2 million in the US.

Even the traditional safe haven asset gold failed to hold onto its gains. According to trader and economist, Alex Kruger, the correction could be driven by FOMO or the increase in new COVID-19 cases but the fact is “market was experiencing peak euphoria and was due for a pullback.”

“Given the magnitude of the rally, it would shock me if we had a one day sell-off and that’s it,” said Morgan Stanley Investment Management’s Andrew Slimmon.

Today, US stock futures are bouncing and bitcoin is also moving towards $9,500 on a ‘real’ volume of $2.75 billion.

This means, the two markets might take time to decouple from one another. But the good thing is, Bitcoin, the risky asset reacting at all to the Fed, is a clear sign that “either institutional money is playing a much larger role in the market these days, or retail traders are getting more savvy and reacting more to their surroundings,” wrote analyst Mati Greenspan.

“Retraces are short and vicious”

Currently, BTC/USD is trading at $9,465, with a loss of 3.25%. Following the leading digital currency, altcoins crashed even harder.

Despite the correction, the price is not really looking good. Those who feel bitcoin going down to support is unlikely because that would be too big of a drop, “that’s not how Bitcoin works. Retraces are short and vicious. Crashes even more so,” said trader DonAlt.

Even a 40% drop isn’t unlikely “it’s happened before, it’ll happen again,” he said.

During the bull run of 2017, while making its way to the all-time high of $20,000, the flagship cryptocurrency recorded several pullbacks between 36% to 47%.

In the bear market of 2018, bitcoin registered a correction of 45% to 50%. In 2020 itself, we had a 67% drawdown.

“Highest probability long play buy pullback 9370 to 9580-9600. Highest probability shorts 9580- 9700…H1 under both 50 and 200 ema so bears in control on lower time frames. Expect a lot of range and fakeouts before price decides a clear trend one way,” said Trader Arjun.

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Author: AnTy

After The Stock Market, Now Oil ETF Volatility Eclipses That of Bitcoin

At the end of March, the stock market volatility surpassed that of Bitcoin as Wall Street saw more turbulence than the digital asset’s average volatility. The realized volatility of bitcoin took a big jump in March but it has already reverted.

Now, with the oil prices in free fall, the volatility of oil ETF has exceeded Bitcoin’s. Crypto data tracker, TradeBlock reported,

“USO Oil ETF volatility has surpassed that of bitcoin, as oil prices declined sharply in recent days. In the figure below we diagram price volatility over the past one year period between USO and TradeBlock’s XBX Bitcoin Index.”

Source: TradeBlock

US crude oil prices plunged this week that has renewed worries over the troubled shale oil industry. The price of Brent crude, the international oil benchmark, fell under $16 a barrel for the first time since 1999 as markets continue to struggle with oversupply while demand remains low due to coronavirus lockdown.

The market panic caused US oil prices to tumble into negative territory for the first time as with a lack of storage space, oil producers are paying customers to take their barrels from next month.

Restrictions on travel and the broader economy due to lockdown have caused demand to fall at its fastest rate in 25 years. Now, unless there was a “massive shock” such as oil well shutdowns, cutting millions of barrels from global production, the oil may even get cheaper.

“It’s not a panic. The move is completely rational,” said Howard Marks, co-founder of Oaktree Capital Management.

“The ultimate complication is that storing oil costs money, and storage facilities aren’t unlimited. Right now storage is scarce and thus expensive, so it’s not worth it to buy oil today and store it. The cost of storing exceeds the value today; thus the price is negative.”

These losses came despite the OPEC and its oil producing allies finalizing a historic agreement earlier this month to cut production.

US President Donald Trump said earlier this week that he would consider preventing incoming Saudi Arabian oil shipments and top up the country’s emergency fuel storage of petroleum.

Now that the storage tankers are full, May won’t be any different. “Yes, eventually demand will gradually pick up again. However, until that happens, watching producers continue to pump oil out of the ground is ludicrous,” said analyst Mati Greenspan in his daily newsletter Quantum Economics.

However, if oil producers start shutting down wells, it can physically damage reservoirs and threaten the future prospect of reviving the output.

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Author: AnTy

Grayscale Now Holds 1.7% of All Bitcoin; Reports Record Growth in Q1 2020

In Q1 2020, which was characterized by significant volatility, Grayscale Investments saw continued demand and that too at a “record pace.” This is because “investors are tactically using drawdowns to increase their exposure to the asset class, even in a “risk-off” environment.”

Strong and sustained interest in Crypto

The new decade had a turbulent start with coronavirus pandemic induced sell-off triggering a huge drawdown in nearly all risk assets and currencies. But despite the drawdown this quarter, Grayscale continues to hit all-time highs.

For the first time, the inflows into Grayscale products over a 12-month period surpassed $1 billion, “showing strong and sustained evidence that investors are increasing their digital asset exposure at current levels.”

The digital currency manager which has over $2.2 billion in assets under management as of March 31, 2020, had its largest quarterly rise of $503.7 million in 1Q20 in its history.

Both its Bitcoin Trust and Ethereum Trust saw record quarterly inflows of $388.9 million and $110.0 million, respectively. The demand for Grayscale Products ex Bitcoin Trust also grew a whopping over 260% from last quarter.

Not just the assets under management but Grayscale’s market share also spiked to a new high.

“Grayscale’s ten funds now hold 1.2% of ALL crypto in circulation and 1.7% of bitcoin in the world,” said Barry Silber, founder, and CEO of Digital Currency Group, the parent company of Grayscale.

Source: Grayscale Q1 2020 Investment Highlights

Grayscale investors are seeing digital assets as a medium to long-term investment opportunity and using the drop in price as the way to do so at the fastest pace in its history.

Most of the company’s investors allocate into Bitcoin via Grayscale Bitcoin trust or Grayscale Digital Large Cap Fund that accounts for 80% of Bitcoin. However, now 38% of investors, up from 29% in 1Q19, have invested in multiple Grayscale products.

Other cryptos covered are Bitcoin Cash (BCH), Ethereum (ETH), Ethereum Classic (ETC), XRP, Stellar Lumens (XLM), Litecoin (LTC), Zcash (ZEC), and Horizen.

This demand for Grayscale Products is primarily from institutional investors at 88%. These investors are dominated by hedge funds, registering a jump of 9% from the past 12 months. New investors meanwhile accounted for $160.1 million in inflows.

Source: Grayscale Q1 2020 Investment Highlights

The new investment capital this time was more heavily weighted to offshore investors than the rough split between the U.S. and offshore investors.

Now, large capital inflows can be taken as a sign of perceived value and “potential future price momentum.” Grayscale also found that “large increases in dollar-denominated inflows relative to Grayscale AUM have historically preceded market rallies.”

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Author: AnTy

Kraken Report Reveals April is Bitcoin’s Second Best Performing Month; Will BTC Price Jump?

Bitcoin’s annualized volatility broke a 9-month downtrend in March, states crypto exchange Kraken in its latest report.

Last month, we saw one of the biggest one-day drops in Bitcoin’s history. On March 12th, with a 39% drop, this second worst day in BTC’s history was in line with S&P 500’s 9.5% drop in response to the spreading coronavirus pandemic which was declared a pandemic by the WHO.

This has the 30-day correlation of Bitcoin and S&P 500 peaking. As such, Bitcoin’s poor performance can be explained by the weakness in the US equity and market participants chasing volatility in traditional markets, states the report.

Bitcoin’s price movement has the annualized volatility rising 178%, making it the most volatile March and the 8th most volatile months since January 2011.

April performance could be better but even more volatile

The world’s leading cryptocurrency’s performance in March repeated history and underperformed February for the 6th time in a row making it the second worst March on record.

Now, looking back as far as 2011, April has been historically the second best performing month for bitcoin. On average, Bitcoin posts +53% return and highest median return at +27%.

April is also on an average 48% more volatile than March, meaning an implied annualized volatility of 263%. Typically the most volatile month, Kraken points out that this month has an average monthly annualized volatility of 102%.

What to watch for?

When it comes to bitcoin fundamentals, the hash rate of the network dropped 45% last month before closing out the month down by 20%. This decline had unprofitable miners squeezed out of the market.

“Miner exits would result in the liquidation of assets, bitcoin included. Bitcoin’s halving in May could exacerbate this dynamic should price fail to trend higher.”

Before the halving next month, there are several “upcoming notable catalysts” such as US Federal Open Market Committee Minutes, ECB Monetary Policy Meeting Accounts, Bank of Japan Monetary Policy Meeting, US Reports Weekly Jobless Claims, and China Reports 10 Gross Domestic Product (GDP).

Besides these catalysts, we need to watch for the recession which the global economy remains at risk of, heightened market volatility in the traditional market, growing unemployment, falling asset values, illiquidity, worsening credit conditions, and fear that could “drive cash-strapped market participants to sell bitcoin.”

Amidst all this, long term holders remain largely unphased as over 58% of the BTC supply, accounted for in unspent transaction outputs (UTXOs), haven’t moved in more than a year.

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Author: AnTy

Bitcoin Miner Fees Jumps a Whopping 196% YTD while Indicators Turning Bullish

  • Bitcoin price and volume is down while volatility jumps above 9%
  • Long-term velocity turned bullish while MVRV Z-Score indicates market bottom

It’s just another day in the crypto market with Bitcoin down 6.36% trading at $6,225. The market doesn’t seem to decide on where it wants to head right now, as the market records double-digit percent changes in both the directions.

The crypto market started climbing this week after the stock markets found a temporary bottom. Given that cryptocurrencies are acting like risky assets in line with stock markets, it’s no surprise that the momentum has been positive throughout this week.

But the 7-day average real trading volume has dropped down after the volatile period for the past two weeks but still higher than the average recorded earlier in 2020. And increasing prices on decreasing volume is usually a bearish signal.

The 30-day volatility for the BTC price that has been extreme these days meanwhile has jumped above 9%. As Arcane Research notes, “with the global turmoil and volatile stock markets, it doesn’t look like the bitcoin price movements will settle down either.”

The rise in BTC’s price has the world’s top cryptocurrency leading the way with an increase in its dominance. While Bitcoin is closing up on Small Caps ahead of both Large and Mid Cap crypto indexes, Mid Caps continue to be the worst performer, down 34% this month.

However, despite the price boost, bitcoin is up 70% from its $3,850 bottom, the market sentiments are still reflecting “extreme fear” in the market with the Fear & Greed Index having a reading of 14. The last time the market stayed in “Extreme Fear” this long was in December 2018.

The Bitcoin Network

As we reported, mining difficulty for bitcoin declined by almost 16%, which has been the second biggest drop in its history. The largest drop was on October 31, 2011, of 18.03%. The network difficulty adjusts every 2016 block or 2 weeks in order to ensure that the network continues to mine new blocks every 10 minutes.

This decline came on the back of a drop in the hash rate following the crash in price two weeks ago. This decline indicates that fewer miners are competing to solve the math problem to mine the block and win freshly minted BTC.

Mining fees meanwhile jumped 47.8% since last month and a whopping 196% YTD, as per Glassnode.

Amidst this, the bullish metric is a long-term velocity that measures the speed at which bitcoin is moved through the network. A velocity of 600% means, active coins move six times per year and it has yet again turned bullish last week after being below 600% since August 2019.

Yet another bullish indicator is MVRV Z-Score which is used to assess when Bitcoin is under or overvalued relative to its fair value. It dropped under and then promptly bounced back over 0 in a space of two weeks and “historically, falling into the green zone has indicated market bottoms.”

Latest Bitcoin Price News and Crypto Market Updates

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Author: AnTy

Neither Bitcoin Nor Gold; Is Cash the Only Safe Haven During A Panic?

  • Bitcoin volume skyrockets amidst the worst sell-off in 7 years
  • A major volatility spike was also recorded that was last seen in 2014
  • Only cash is the safe haven during the time of crisis and panics

Bitcoin had its worst sell-off in 7 years as it dropped to $3,850 and even lower at $3,600 on BitMEX that resulted in only 44% of Unspent transaction output (UTXOs) in profit. Bitcoin’s market value to realized value (MVRV) has also fallen below 1 while Net unrealized profit/loss (NUPL) has dipped into capitulation. Bitcoin and USDT exchange inflows meanwhile surged during this sell-off.

A drop of about 66% from 2020 high of $10,500, saw a reshuffling of bitcoin ownership as a lot of bitcoin changed hands this week. The daily trading volume skyrocketed amidst the sell-off, going to the level last seen in 2019.

A whopping $4.2 billion changed hands on March 12 with the 7-day average real trading volume spiking to $1.5 billion, more than double the volume we recorded at the beginning of the week.

Such a big move has the 20-day volatility jumping above 7%, not seen since 2014. The futures market for bitcoin also turned extremely volatile, with the premium rates on futures gone. Most of the contracts are now trading below the spot price.

The March contract on deribit is trading $300 below spot price “implying an astonishing -80% annualized premium.” The bearish sentiment can be seen in the futures market as contracts for September expiry are also trading below spot.

It was Panic Selling Not Institutions Behind Bitcoin’s Crash

The crash in bitcoin price also recorded the highest correlation with the stock market in BTC history, going from 0.1 to over 0.5.

“Today proves that institutions buying Bitcoin has a flip side,” commented bitcoin developer Jimmy Song.

However, billionaire investor Mike Novogratz of Galaxy Digital believes that isn’t the case.

“That wasn’t institutions. That was a leveraged washout. Institutions aren’t fast enough to sell like that. That was panic selling from people who bought on margin,” said Novogratz.

We have been seeing the same sell-off even in gold, a traditional safe-haven asset which during the times of emergency had its worst weekly drop since 2013.

As Ari Paul says, “during standard panics, *everything* sells off except cash. That’s because people want the stuff that lets them buy food and pay rent. Fear = everything falls except cash.”

On BTC as a safe haven, he said the deflationary crypto asset “does well when people *fear cash* – when they fear inflation/depreciation,” and not economic turmoil. Bitcoin was introduced as a censorship-resistant way to exchange value.

“I’d argue it’s more valuable as a seizure resistant asset. Live in a place where a bank or thugs or the government might confiscate your money? It’s very useful to you,” said Paul.

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Author: AnTy

There’s Never Been This Many Addresses Ever HODL BTC in the History of Bitcoin

  • Do not mistake volatility for meaning
  • ~4.87% of all BTC addresses have a non-zero balance

This entire week Bitcoin has been constantly on the up and down. We started December at about $7,500 only to fall to $7,070 level in the following days.

At the time of writing, BTC/USD has been trading at $7,540 with 24 hours gains of 2.52% as per Coincodex while down by nearly 19% in the past month. Volume, however, is still extremely low just like the rest of the week at $270 million.

The lack of volume behind this surge is why there is no confidence in this move. It also means any large transaction is having an outsize impact on price.

“I get it, price has moved up. But It seems like everyone is immediately hyper-bullish. First 7800, then 8200. Until then you are mistaking volatility for meaning,” says trader Cantering Clark.

~4.87% of all BTC Addresses have a Non-zero Balance

However, while the price may have yet to give any strong bull signals yet, there is one chart that is painting a very bullish picture.

The total number of Bitcoin addresses that hold some amount of BTC, are non-zero, has hit an all-time high at more than 28 million addresses, surpassing the previous record made in early January 2018.

As Glassnode puts it, “There have never been this many addresses holding btc in the history of Bitcoin.”

When non-zero addresses hit ATH, BTC price was around its peak at about $20,000. But in the next two months, these addresses reduced by about 7 million while the price dropped to $8,800 level.

Ever since then, these addresses have been on the rise and hit an ATH recently while the price is trading around $7,500.

“~4.87% ( ~28.3M out of ~586M) of all BTC addresses have a non-zero balance,” notes on-chain data platform TokenAnalyst.

This metric is one of the best ways to provide us with the total number of Bitcoin users. However, it has its limitations in the way that one user can have many wallets, one wallet can hold many addresses, and one address can hold many UTXOs.

Also, many users keep their BTC with exchanges and custodian meaning one single address is holding the funds of many customers.

But they both kind of offset each other because while the first point gives us with more addresses, the second one undercounts the actual numbers.

So, this metric gives us the nearest if not the best idea of the Bitcoin adoption growth.

Addresses with a Balance of more than 0.1 BTC, 1 BTC & 100k BTC Slightly Down

Meanwhile, addresses with a balance of more than 0.1 BTC have are down to 2.817 million from its peak of 2.847 million addresses in mid-October. The same is the case for addresses with more than 1 BTC, they are down to 778k BTC from all-time of 788k from late October, this year.

Those that have over 10 BTC have taken a dive to 152.6k address from 157k in September. There are just over 16k addresses that has more than 100 BTC which is down from 18.5k in July 2017.

Interestingly, addresses that are holding over 100k BTC have risen to its ATH at 2,187 on Sept. 28, 2019, and are currently at 2,135.

The richest bitcoin address — a lot of which are exchanges, custodians, and OTC — that have over 10k BTC is currently at just 107, down from its ATH of 125 in Nov. 2018, from where it took a drop to 97 BTC in mid-December 2018 when the price hit its bottom at $3,200.

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Author: AnTy

Traders Improve Their Hedge Against Price Risk As Bitcoin Implied Volatility Is Dropping

  • The volatility of the market dropped below 60% for the first time since May.
  • The average price change was about 8% daily for Bitcoin in December last year.

Bitcoin has spent about ten years around the public, and the price has gone through a lot of change in that time. The Skew blockchain research boutique in London recently posted to Twitter about their Bitcoin research, shedding light on the token’s volatility.

While the market has been historically volatile, the changes of the term structure through this final quarter of the year shows that the market may finally reaching a potential level of sophistication, at least with hedging price risks.

Ever since the price of Bitcoin reached $13,700 in July – the peak of 2019 so far – the volatility of the asset has been decreasing. This implied volatility is a necessary metric for options contracts pricing.

Presently, Bitcoin is still driven by the traders that go for massive gains when they bet on the asset, but the increased stability of Bitcoin is reducing the volatility that makes it a challenging asset. The realized volatility peaked at the end of December last year, which happened at the same time as a massive price rally, though the average price change was about 8% a day.

The at-the-money implied volatility (ATM IV) dipped below 60%, which hasn’t happened since May. With that, Bitcoin made a sudden upside move, which happened the same day.

In a research paper published by Skew last year, the writers stated that the market for BTC options will need to become more established before the curve stops steepening. The main source of buying flows will continue to be the crypto miners in the market, which is relatively normal for major commodities.

Bakkt’s Bitcoin options are planned for launch on December 9th, though CME Group also plans to launch their Bitcoin options. The launch of Bitcoin options by CME Group won’t happen until the first quarter of 2020. While options and futures with Bitcoin can come with a massive risk, traders continue to turn to these derivatives for their potential for higher gains.

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Author: Krystle M