All articles tagged with #derivatives
Bitcoin's recent record rally has led options traders to bet on a potential rise to $140,000, with open interest around that strike price, amid a surge in demand driven by safe-haven demand during a US government shutdown and increased spot market activity. Despite the rally, traders remain cautious about volatility and potential corrections, with some seeing opportunities in overbought conditions.
Bitcoin's derivatives market is experiencing unprecedented activity, indicating market maturity with increased institutional involvement and potentially steadier price movements. Despite lower volatility, historical patterns suggest a possible rally in 2025, driven by veteran holders and cyclical trends following halving events.
Open interest in WLFI derivatives neared $950 million ahead of a partial token unlock, with trading volume surging over 535%, indicating strong market interest. The token's value could place it among the top 10 cryptocurrencies if prices hold, with significant trading activity on Binance and OKX. The unlock involves 20% of tokens purchased by early supporters, and the token is linked to the Trump family, with US President Donald Trump as a key advocate.
Jane Street Group deposited $564 million in an escrow account to comply with India's SEBI amid ongoing investigations into alleged market manipulation related to its options trading, with the firm denying the allegations and considering legal options while its return to the Indian market remains uncertain.
India's SEBI has temporarily banned US-based firm Jane Street from accessing its securities market and seized 48.4 billion rupees ($570 million) due to alleged index manipulation and unfair trading practices, marking a rare regulatory action against a foreign entity in India's growing derivatives market.
Bitcoin's recent surge past $100,000 has sparked predictions of further growth, with a 6% chance of reaching $150,000 by January, according to DeFi derivatives platform Derive. The market has stabilized after initial volatility, with institutional investments, particularly from BlackRock's iShares Bitcoin Trust, playing a significant role in Bitcoin's price dynamics. Analysts suggest that Bitcoin's price could double by 2025, driven by strategic moves from firms like MicroStrategy and potential policy changes under President-elect Donald Trump.
Stellar's XLM cryptocurrency has experienced a significant rally, achieving a 600% increase in November, driven by soaring derivatives demand and news of its support for the Federal Reserve's FedNow system. XLM's open interest reached a historic high of $443.99 million, contributing to its explosive price surge. Despite being overbought, the potential for increased utility and demand suggests further price action could continue into 2025.
Bitcoin's recent surge past $93,000 has sparked discussions about its potential to reach $100,000, driven by four key metrics including derivatives data and US dollar outlook. Despite some miners taking profits, the market remains optimistic, with a 13% futures premium indicating bullish sentiment. The launch of a $54 billion Bitcoin ETF and macroeconomic conditions, such as US Treasury yields and a crypto-friendly US administration, further support the potential for continued price gains.
Chicago Mercantile Exchange (CME) experienced a 35% surge in trading volume in January, reaching $94.9 billion, the highest in three years, following the approval of spot bitcoin exchange-traded funds (ETFs) in the U.S. The rise in futures volume and decline in options volume suggests institutional investors are winding down their positions after the ETF approval. Additionally, the volume of bitcoin futures open interest surpassed Binance but has since fallen, while ether futures and options trading volumes on CME also saw increases.
Chinese brokerages, including state-owned China International Capital Corp (CICC), have restricted domestic investors' ability to undertake cross-border swap transactions, particularly total return swaps (TRS), in an effort to defend the weak stock market. This move comes as the Chinese stock market faces renewed pressure and hits multi-year lows, with the securities regulator vowing to prevent abnormal market fluctuations and crack down on "ill-intended short selling". The restrictions on TRS could thwart domestic fund managers and allow brokers to limit overall exposure to derivatives, as Chinese authorities ramp up efforts to stem the selloff in Chinese stocks.
Chinese retail investors have suffered significant losses in complex derivatives products, known as "snowball," which have been marketed to them by domestic brokerages. These products, which are linked to the performance of stocks and indexes, have caused losses for investors as market volatility has increased. The situation has raised concerns about the risks associated with such derivatives and the potential impact on China's financial markets.
China's stock market decline has led to significant losses on derivatives tied to the country's equity indexes, triggering a cycle of selling in stocks and futures contracts as market participants manage their risks. The drop has hit "snowball" products, leading to forced selling of stock futures contracts and further pressuring the market. Analysts estimate the outstanding notional amount in such products to be around $50 billion, with roughly 40% of knock-ins likely being hit. As knock-in levels are reached, brokers are selling stock index futures to hedge their exposures, and the divergence between futures prices and spot prices is drawing in arbitrageurs.
Bitcoin's recent bull-market surge has been characterized by a series of price gains and horizontal consolidations, with pullbacks of 20% or more remaining elusive. This may be due to the dominance of spot-market buyers and low leverage in the system. The spot market, where assets are traded for immediate delivery, has seen increased activity, while the share of derivatives trading has declined. The use of leverage in derivatives trading is lower compared to previous bull runs, reducing the likelihood of liquidations-induced volatility. Additionally, trading activity is more concentrated in standard futures on regulated exchanges like the Chicago Mercantile Exchange (CME), where extreme leverage is less common. Lastly, the use of coins as margin for trading has decreased, with cash or stablecoin-margined contracts becoming more prevalent.
The recent surge in Bitcoin's price to a 20-month high of $41,130 has led to speculation about the role of Bitcoin futures liquidations. However, data from BTC derivatives suggests that the rally is primarily driven by spot market action rather than futures liquidations. The $100 million liquidation of short Bitcoin futures represents only 1% of the total outstanding contracts, while the substantial trading volume of $190 billion in the same period indicates strong spot market activity. The funding rate and futures basis rate also show no signs of excessive optimism or exhaustion among traders. The surge is supported by spot market accumulation and a decline in the available supply of coins on exchanges.
The price of Ethereum (ETH) surged by 8% to break the $2,000 barrier, reaching its highest level in six months, following news of BlackRock registering the iShares Ethereum Trust in Delaware. This sparked speculation about a potential Ether spot ETF filing by the $9 trillion asset manager. However, with no official statement from BlackRock, investors may have jumped the gun. Professional traders placed bullish bets on ETH using derivatives, while retail indicators suggest a lack of demand for cryptocurrencies. The rally in ETH price and the anticipation of a spot ETF approval have raised concerns and put the $2,000 support level to the test.