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| Everything you need to make sense of the crypto markets and beyond By the CoinDesk Markets Team Edited by Lawrence Lewitinn, Managing Editor, Global Capital Markets August 6, 2021 Sponsored by Bitcoin (BTC) +7.1% $40,690 Ether (ETH) +5.7% $2,760 (Price data as of August 6 @11:00 UTC) If you were forwarded this newsletter and would like to receive it, sign up here.
Good morning, and welcome to First Mover. Here's what's happening this morning: Market Moves: Ether Options Activity Increases as London Hard Fork Goes Live, $50K Call Most Popular"There was a flurry of call buying and put selling after the London fork," one trading firm said. Technician's Take: Bitcoin Returns Above $40K; Faces Resistance at $45K-$50K
Strong overhead resistance could limit price rallies into next week.
And check out the CoinDesk TV show "First Mover," hosted by Christine Lee, Emily Parker and me at 9:00 a.m. U.S. Eastern time. Today the show will feature guests: Warren Paul Anderson, Findora Henrik Johansson, Crypto.comJohn Aristotle Philips, PredictIt – Lawrence Lewitinn
Biggest Movers These are the biggest movers in the CoinDesk 20 over the past 24 hours:
Gainers: Uniswap (UNI): +9.7% Filecoin (FIL): +8.0%Bitcoin (BTC): +7.1% Ethereum (ETH): +5.7% The Graph (GRT): +4.9% Litecoin (LTC): +4.7%Losers: None of the digital assets in the CoinDesk 20 is down today.The CoinDesk 20 are 20 digital assets filtered from the larger universe of thousands of cryptocurrencies and constitute roughly 99% of the market by volume at eight of the largest and most trustworthy exchanges.
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Market Moves by Omkar Godbole Ether Options Activity Increases as London Hard Fork Goes Live, $50K Call Most Popular The level of activity in the ether (ETH) options market is picking up as traders speculate on the impact of Ethereum’s London hard fork. The bulk of the activity is concentrated in the higher strike, longer duration calls, or bullish bets.
Data provided by Switzerland-based Laevitas shows ether volumes on Deribit, the largest crypto options exchange, have increased by more than 50,000 ETH to 153,000 ETH ($424 million) in the past 24 hours. That takes it to the highest level since the end of May. On Deribit, one ether options contract represents 1 ETH.
Activity at the over-the-counter (OTC) desk Paradigm has also doubled to 42% of the global market share in the past 24 hours, co-founder Anand Gomes told CoinDesk in a Telegram chat. “London hard fork is driving this activity, it’s mostly institutional,” Gomes said.
Deribit and Paradigm introduced an institution-focused block-trading service two years ago. Trades facilitated by Paradigm are automatically executed, margined and cleared at Deribit. Ether options volume on dominant exchange Deribit (Source: Laevitas, Deribit) Overall, call options have registered higher activity than puts, and the most popular options have been calls expiring March 2022 with strike prices of $50,000 and $40,000.
A call option gives the purchaser the right but not the obligation to buy the underlying asset at a predetermined price on or before a specific date. That means call options offer insurance against bullish moves while puts offer insurance against a price drop. Call and put option volume by strikes (all expirations) (Source: Laevitas, Deribit) The data show 12,790 contracts of the $50,000 call expiring in March have changed hands in the past 24 hours. The $40,000 call has seen a volume of 12,520.
Bullish flows
Most of the volume came through Paradigm, where someone, mostly an institution, traded 12,500 contracts of $40,000 and $50,000 calls.
“There was a flurry of call buying and put selling after the London fork,” said Darius Sit, CEO of Singapore-based QCP Capital. “Of particular note was large buying interest in tail strike calls such as a $40,000/$50,000 ETH bull call spreads that were traded with us. A total of 12,500x contracts were traded. We had to take a second look at the screen to make sure those were ETH strikes and not BTC!”
A bull call spread involves buying call options at, below or above the spot market price and selling an equal number of calls with the same expiry at a higher strike price.
In this case, the market participant took the bull call spread by purchasing 12,500 contracts of the March expiry $40,000 call and simultaneously selling 12,500 contracts of the $50,000 call. QCP Capital was the market maker.
The bull call spread is a limited-risk, limited-reward strategy designed to benefit from an increase in the price of an asset. The maximum profit is earned if the asset expires at or above the short call’s strike price, that is $50,000 in this case, on the settlement day. Ether is currently trading near $2,750, and would need to surge 1,718% to hit $50,000. The maximum loss is limited to the net premium paid while setting the strategy.
The bullish mood is also evident from the negative one-week, one-, three- and six-month put-call skews, which measure the cost of puts relative to calls. Ether put-call skews (Source: Skew) The data show investors are buying the narrative that the London hard fork implemented on Thursday will curb supply growth over time, yielding a price rally.
According to ethburned.info, around 10,000 ETH have been mined and 4,400 ETH have been burned or destroyed since the hard fork implementation, leading to a net supply reduction of 40%. Read the original story here: Ether Options Activity Increases as London Hard Fork Goes Live, $50K Call Most Popular
The CoinDesk DeFi Index (DFX), benchmarking the investable DeFi sector, is now available for investors watching decentralized finance, the first true "sector" in cryptocurrencies. It is the latest index by CoinDesk Indexes, the market standard for crypto assets since 2014. The DFX provides a market-cap-weighted benchmark for a representative basket of DeFi-sector cryptocurrencies, composed of assets suitable for long-term holding. Find out more at coindesk.com/indexes/dfx, or email [email protected].
Technician's Take by Damanick Dantes, CMT Bitcoin Returns Above $40K; Faces Resistance at $45K-$50K Bitcoin (BTC) is testing resistance near $40,000 after several breakout attempts over the past three months. The short-squeeze rally lost some momentum this week, although downside appears limited around the $34,000 to $36,000 support zone.
The next level of resistance is seen at the 200-day moving average near $45,000. A successful breakout would yield an initial upside target towards $50,000-$55,000.
Bitcoin was trading around $40,600 at press time and is up 6% over the past 24 hours. Bitcoin daily price chart shows support and resistance levels with RSI (Source: TradingView) The relative strength index (RSI) is declining from overbought levels, which could encourage some profit taking around resistance levels.Bitcoin’s intermediate term trend is improving after holding support above $30,000 over the past three months. A decisive move above the 200-day moving average would clear the downtrend since April, although strong overhead resistance could limit price rallies into next week.
Read the original story here: Bitcoin Returns Above $40K; Faces Resistance at $45K-$50K
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ICYMI In case you missed it, here are the most recent episodes of "First Mover" on CoinDesk TV:
"First Mover" looks into Ethereum's London hard fork activated just moments ago. This comes as the community seeks to reduce Eth supply and improve gas fees. What does that mean for Ether's price in the short and long term and the wide industry as a whole? Plus, the discussion around the crypto tax rules included in the new infrastructure bill continues. Blockchain Association Executive Director Kristin Smith, Fairlead Strategies Founder and Managing Partner Katie Stockton and CoinDesk's Christine Kim join the discussion.
The dynamic crypto mining industry has been even more active following China's crackdown. The global hashrate has largely shifted to North America, making the U.S. a key mining hub where institutions now take central stage. In this sponsored webinar on Aug. 10, Foundry CEO Mike Coyler explains how this new demographic of miners have special requirements, which the company has been catering to through its rapidly growing Foundry USA Pool and other services. Register for free.
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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.
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