Bitcoin Is Becoming Illiquid at 147K a Month in Signal of Steady Accumulation
"The market appears to be in a period of quiet accumulation, which suggests an undercurrent of demand," one analyst said.
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Bitcoin (BTC) is flowing into wallets controlled by illiquid entities, or network participants with little-to-no spending history, at the fastest rate in six months, indicating a bias for accumulation from long-term investors.
Glassnode's illiquid supply change metric, which measures the number of coins held by illiquid wallets on a specific date compared with the same day the previous month, rose to 147,351.58 BTC ($3.9 billion) on Monday, the most since Dec. 19. The total held by illiquid entities has jumped to a record high 15,207,843 BTC, with the tally increasing by 215,000 BTC in the past four weeks alone.
The data shows investors remain confident of bitcoin's price prospects despite continued macroeconomic uncertainty and heightened regulatory risks.
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Powell’s comments to the House Financial Services Committee also included a discussion on cryptocurrencies, with the Fed Chair noting that the central bank’s staff has been in talks with lawmakers from both parties on the crypto legislation members of the committee have been working on. Crypto prices received an extra boost Wednesday after Powell said the industry “appears to have some staying power.”
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Volatility Shares’ 2x Bitcoin Strategy ETF (BITX) will become the first leveraged crypto ETF available in the United States after the U.S. Securities and Exchange Commission (SEC) let it go effective on Friday, an executive at the company told CoinDesk.
The regulator has not denied the application for the 2x ETF, Volatility Shares Chief Investment Officer Stuart Barton said, paving the way for its launch this upcoming Tuesday.
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... While a few countries have completely banned crypto assets given their risks, this approach may not be effective in the long run. ...
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On Friday at 08:00 UTC some 150,633 bitcoin options contracts worth $4.57 billion and 1.23 million ether contracts valued at $2.3 billion will expire on Panama-based Deribit exchange, which controls over 85% of the global options activity. The bitcoin contracts due for settlement account for 43% of the total open interest, according to Amberdata.
In bitcoin's case, investors have recently bought call options with strike prices at and above $30,000. As a result, that level has the highest open interest – or the number of active contracts – and market makers/dealers, who create order book liquidity by taking the other side of the investors' trades, hold a significant amount of "negative (short) gamma" exposure.
Options are derivative contracts that give the purchaser the right to buy or sell an asset at a predetermined price at a later date. A call gives the right to buy, a bullish position, and the put confers the right to sell, a bearish position. Being short (negative) gamma means holding a short or sell position in the call or put options.
The large build up of open interest at $30,000, means the spot price could gravitate to around that level in the lead up to the expiry. Bitcoin is currently trading just above $30,000, according to CoinDesk data.
Meanwhile, dealers' negative gamma positioning means a slight move away from $30,000 could translate into an explosive rally or price slide. That's because, dealers, when holding net-negative gamma exposure, "buy high and sell low" when the underlying picks up a bullish or bearish momentum in order to maintain a neutral market exposure.
In other words, if bitcoin builds momentum above $30,000 as expiry approaches, dealers will buy the cryptocurrency in the spot and futures markets. That, in turn, could lead to an exaggerated price rally, often called a gamma squeeze, or sling-shot effect. On the flip side, dealers will be forced to sell on a potential decline below $30,000.
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HSBC Hong Kong has enabled the trading of bitcoin and ether exchange-traded funds (ETFs) listed on Hong Kong's stock exchange.
The news was first reported by Colin Wu of Wu Blockchain on Twitter early Monday morning. “HSBC, the largest bank in Hong Kong, today allows its customers to buy and sell Bitcoin and Ethereum ETFs listed on the Hong Kong exchange, and is also the first bank in Hong Kong to allow it,” he wrote. “The move will expand local users’ exposure to cryptocurrencies in Hong Kong.”
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BlackRock helped spark a revival in the cryptocurrency market when it filed for a spot Bitcoin (BTC) exchange-traded fund (ETF) on June 15. Now another major investment manager is looking to follow suit with reports that Fidelity is preparing to file an application with the U.S. Securities and Exchange Commission (SEC).
According to The Block, a source familiar with Fidelity’s plans says the application has been completed and could be submitted as early as Tuesday as firms race to get in line behind BlackRock.
Invesco, WisdomTree and Bitwise have all re-filed for spot BTC ETFs in the wake of BlackRock’s filing, and Fidelity is the latest to join that list, as this will be the firm's second attempt at gaining approval. The company filed for its Wise Origin Bitcoin Trust in 2021, but that application was denied by the SEC in early 2022.
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While BlackRock’s filing has been credited with the turnaround in the crypto market, reports now suggest that Cathie Wood’s ARK Investment Management is actually first in line for approval of such a product.
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Yassine Elmandjra, an analyst with ARK, noted that while the BlackRock filing has set its application apart with the addition of “unique” exchange surveillance-sharing agreements intended to help prevent market manipulation, “other applicants will be able to amend their filings with similar agreements at little cost.”
Because of the ability to amend the application filed in April, ARK’s Bitcoin ETF application is “now the only one ahead of BlackRock’s,” and could become the first one to be granted approval, Elmandjra said.
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... Ledger is entering the institutional trading technology market with the first open network to enable custodial trading via exchange and custodial partners. This solution will provide unparalleled control, security, flexibility, and transparent governance over an enterprise’s digital asset trading. With its technology foundation and security infrastructure at its core, Ledger is developing a more secure and regulation-friendly environment for institutional trading, enhancing control and ownership, while significantly diminishing the risk of counterparty failures.
In the current crypto landscape, there is a growing need to mitigate third-party risk exposure amidst security and regulatory concerns. Ledger is rolling out a solution designed to meet this need with flexibility, risk management, and regulatory compliance at the forefront. Ledger’s technology eliminates network lock-in risks, granting enterprises access to Ledger’s extensive global network of custodians and exchanges – or allowing seamless integration with preferred counterparties. With this, Ledger is empowering asset managers, custodians, and exchanges to navigate the ever-changing regulatory and overall market landscape with confidence.
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Bitcoin (BTC) and ether (ETH) kept trading within recent price ranges as the expiry of quarterly options and a strengthening dollar index failed to unsettle investors.
At 08:00 UTC, around 150,000 BTC options contracts, worth around $4.5 billion, and 1.2 million ether contracts, worth $2.3 billion, expired on Deribit, the world's leading crypto options exchange. Deribit controls over 85% of global crypto options activity.
The expiry was pivotal, considering market makers in BTC options were "long gamma" and could have added to spot price moves with their hedging activities. The largest cryptocurrency by market value, however, traded listlessly between $30,000 and $31,000 in days leading up to the settlement and remained locked in the narrow range afterward, recording just a 1% gain on the day to $30,700 as of 10:40 UTC, CoinDesk data show.
The so-called max pain point for the June bitcoin options was $26,500. That is the level at which option buyers stand to lose the most at expiration.
Popular theory says the price acts as a magnet in the lead-up to the expiration, with option sellers – usually large traders – trying to push prices to that level to inflict maximum loss on buyers. During the bull market of late 2020 and early 2021, bitcoin consistently gravitated toward max pain point ahead of expiries and resumed gains after the settlement.
With the expiry over, the magnet is gone. So, the cryptocurrencies could resume their upward journies if other factors stay unchanged.
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What Prometheum has that the others don’t is its recent registration as a “special purpose broker-dealer” for digital assets, allowing it to take custody of future customer’s crypto. It’s also one of the few crypto firms to register with the SEC as an “alternative trading system” (ATS), which is a less oversight-burdened version of a national exchange.
Industry figures and lawyers have stepped forward eagerly to explain why Prometheum’s plan to handle the trading of registered or exempted crypto securities won’t work. The SEC requires Prometheum, as a broker-dealer, to “conduct and document an analysis of whether a digital asset is a security offered and sold pursuant to an effective registration statement or an available exemption from registration.”
That demand makes Prometheum’s status “meaningless until there are enough crypto assets to trade“, said Ji Hun Kim, general counsel and head of global policy for the Crypto Council for Innovation. Its special, new broker-dealer registration “is the equivalent of an empty vending machine.”
But the company says tokens that have been issued under arcane securities-law exemptions are fair game, and it’s already presented a short list of examples to the SEC of securities it can handle. In earlier statements, the company had said its ATS could offer Flow (FLOW), Protocol Labs’ Filecoin (FIL), The Graph (GRT), Compound (COMP) and the Celo platform’s CELO, for starters. Prometheum submitted those names to the regulator as assets it intended to support, and the SEC had an opportunity to reject them.
“There was no objection made,” Kaplan said.
Prometheum is waiting to leap one last SEC hurdle: Official sign-off to be able to clear and settle transactions, which Kaplan said he expects to come soon. Such an approval could represent a moment in crypto history in which the industry finds out if there’s a form of digital assets platform that will be allowed to operate under existing U.S. oversight.
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According to Eric Balchunas, Senior ETF Analyst for Bloomberg, Fidelity has re-filed its spot bitcoin ETF application, specifying Coinbase as the exchange it partnered with for the surveillance sharing agreement.
A follow-up tweet from Balchunas indicates that ARK, WisdomTree, VanEck and Invesco/Galaxy have all also re-filed their spot bitcoin ETF applications, naming Coinbase as the exchange.
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Ether is trading hands above $2,000, a three-month high, as the market picked up renewed optimism after a U.S. court found that sales of Ripple’s XRP tokens on exchanges and through algorithms did not constitute investment contracts.
The token for the world’s computer is up 7.4% and is trading at $2,010 during the Asia morning. Various Layer 1 tokens, such as Solana’s SOL, which has been accused by the SEC of being a security, have also seen their tokens gain double digits since the ruling was published.
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... “It still wouldn't be a big weighting in a normal portfolio for somebody who is a casual investor, but even like 1 or 2% of $30 trillion is a lot of money. That's why it's a big deal, it's what the ETF represents. It's a bridge to all this wealth.”
When asked how much capital a spot BTC ETF would attract, Balchunas speculated that there could be “$10 billion [worth of inflows] in the first week.”
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PayPal on Monday launched a U.S. dollar-backed stablecoin to help facilitate payments as its latest addition to its suite of crypto services. It's the first such move from a major U.S. financial institution.
The new asset, called PayPal USD (PYUSD), was designed to address the "emerging potential" to "transform payments in Web3 and digitally native environments." Its launch comes as market participants await a vote in Congress on a key stablecoin bill, which has just advanced to the House with three other crypto bills for the first time.
PayPal said the stablecoin's function is to reduce friction for in-experience payments in virtual settings and allow direct flows to developers. It's redeemable for dollars and backed by dollar deposits, short-term U.S. Treasurys and similar cash equivalents.
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It is essential to have exposure to real assets in this uncertain macro environment, according to Hugh Hendry, Founder of Eclectica Macro. But Hendry still prefers to hold four times more Bitcoin than gold, and here's why.
From real assets Hendry's top pick is gold. "I would have 5% of my portfolio [in gold]," Hendry told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News. "Why gold? Because for the last 12 years, gold has kept hitting this $2,000. It feels like there's a price barrier, and a lot of people want to own gold, but there's not enough economic stimulus or data to sponsor a consistently higher gold price."
In the months and years ahead, gold will move above this $2,000 an ounce resistance, which is when Hendry will start increasing his 5% position.
"When it gets to $2,000, it fades, and it falls away. But one of these days, maybe, it is going to go $2,100, $2,200, $2,300," he said. "When it breaks the barrier to the upside, I'm buying it."
At the time of writing, December Comex gold futures were trading at $1,923 an ounce and spot prices were at $1,894,50 an ounce.
Despite Hendry's positive outlook on gold, he is more bullish on Bitcoin — with a 20% allocation.
"I've got 20% of my portfolio in Bitcoin. Not crypto, Bitcoin," he said. "The reason being … Bitcoin is the new kid on the block … and it's shown a proof of concept."
After correcting from a record of nearly $70,000 in 2021 to under $30,000, there is a lot of upside potential in Bitcoin.
For a full breakdown of how Hendry would invest $1 million, watch the video above.
Bitcoin below $30k vs. Gold below $2k
For Hendry, it all comes down to market capitalization. He compared Bitcoin's total market cap of $500 billion to gold's market capitalization of $12.6 trillion, stating that Bitcoin has a much higher chance to triple in price than gold.
"Can gold triple in price? Let's say gold is at $2,000. Can gold trade at $6,000? I don't know. I can't imagine. At $6,000, gold would [have a] $30-$50 trillion [market cap]. So gold would be valued more than all United States equities. And that's a really hard one for me to imagine," he noted. "Whereas if Bitcoin tripled, it'd be the size of one large U.S. stock — it'd be the size of Meta. That can happen."
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Grayscale, the manager of the Grayscale Bitcoin Trust (GBTC), has secured a second landmark win for the crypto industry against the U.S. Securities and Exchange Commission (SEC), following Ripple’s favorable ruling last month, broker Bernstein said in a research report Tuesday.
A federal court ruled on Tuesday that the SEC must review its rejection of Grayscale’s attempt to convert the GBTC into an exchange-traded fund (ETF).
The ruling “likely clears the path for a spot bitcoin ETF,” and increases the chances that the SEC might approve all the current applications together, analysts led by Gautam Chhugani wrote.
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The number of bitcoin (BTC) held in addresses tied to centralized exchanges slid to the lowest level in more than five years, partially reflecting a growing market sophistication.
The so-called exchange reserve dropped 4% to 2 million BTC ($54.5 billion) this month, the fewest since early January 2018, according to on-chain data analytics service CryptoQuant.
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One interpretation of a dwindling exchange balance is that it indicates investor preference for taking direct custody of coins to hold them for the long term in anticipation of a price increase. In other words, it shows investor confidence in cryptocurrency's long-term prospects. ...
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Ether (ETH) is poised to outperform bitcoin (BTC) in September and October as it benefits from stronger momentum related to a likely exchange-traded fund (ETF) listing, crypto market analytics firm K33 Research said Tuesday in a report.
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does anyone know if the Volcano Bonds are available to purchase by the general public yet?
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While there’s no official launch date for Volcano Bonds yet, their regulatory framework has already been passed since January 2023. The Bitcoin-backed Volcano Bonds have been postponed twice, while BTC price plunged below $20,000. Currently still in a 36% deficit, Bukele’s Bitcoin stash now holds $76.4 million, according to NayibTracker.
Meanwhile, Bukele’s Head Advisor & Chairman of the Volcano Energy Project, Max Keiser, paints a bright picture for the future of the Volcano Bonds. “The good times are just getting started”, – declares Keiser, as El Salvador continues to DCA (Dollar Cost Average) into Bitcoin. ...
From 8/22/23:
I imagine that Max Keiser's Twitter/X account would be a good follow if you want to keep tabs on the Volcano Bonds.
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