CoinDesk 20 Index: 2,981.79 +0.61%
Bitcoin (BTC): $93,634.61 +2.04%
Ether (ETH): $3,090.71 -1.65%
S&P 500: 5,916.98 +0.40%
Gold: $2,628.53 -0.15%
Nikkei 225: 38,352.34 -0.16%

A message from Kraken

Bitcoin is eyeing record highs once again heading into Wednesday's U.S. session. The largest crypto is trading just below $94,000, the new record from Tuesday, and leading the broader market with a 2% climb over the past 24 hours. Meanwhile, the broad-market CoinDesk 20 Index was little changed and large-cap altcoins ether (ETH) and solana (SOL) fell. Options on BlackRock's spot bitcoin ETF (IBIT) saw staggering first-day trading activity yesterday, pushing the BTC price higher, analysts noted. Most of the activity focused on calls, representing a bullish view, with some traders betting on a doubling of IBIT's share price. "It’s pretty interesting to see 'professionals' degen into $100 strikes (this effectively means a doubling of BTC prices given IBIT trades near $50)," crypto quant researcher Samneet Chepal noted. Options on other BTC ETFs will follow in the coming days, fueling more activity. It's not only bitcoin where the crypto action is concentrated, though. Trading volumes for popular altcoins dogecoin (DOGE) and XRP surpassed BTC's on South Korean crypto exchanges Upbit and Bithumb.

MicroStrategy (MSTR) broke into the top 100 U.S. publicly traded companies by market capitalization as its share price closed Tuesday's session at a record $430, far above its dotcom bubble highs. The firm owns the largest corporate bitcoin treasury in the world and its shares have rallied 528% this year, outperforming bitcoin and chipmaker giant Nvidia (NVDA). The developments keep coming for the firm, CoinDesk analyst James Van Straten noted. On Monday, it announced a $1.75 billion 5-year convertible senior note issuance at a 0% coupon. "We are waiting on further developments if this convertible note has been oversubscribed, which would increase its issuance by $250 million, for a total of $2 billion," Van Straten said.

Robinhood (HOOD) is poised to benefit the most from crypto deregulation in the U.S. under President-elect Donald Trump, broker Bernstein said in a report. The trading app can drive higher revenues by listing new tokens and introducing new crypto product lines to target the wider opportunity, the report said. Robinhood's acquisition of EU-based exchange Bitstamp and its European platform should "further boost value added crypto services," the authors wrote. Bernstein raised the price target for Robinhood shares to $51 from $30, which would translate to a 45% appreciation from Tuesday's closing price.

Options tied to BlackRock’s bitcoin exchange-traded fund IBIT racked up nearly $2 billion in notional exposure on their debut, a feat some analysts term “unheard of” for those metrics.

"These options were almost certainly part of the move to the new BTC all time highs today," Bloomberg Intelligence analyst James Seyffart said, pointing to bitcoin's move to new record in late U.S. hours on Tuesday.

Using options can open up a plethora of trading strategies for professional investors, which may bring more liquidity to the market and impact the market structure.

Institutions that are particularly averse to trading on offshore unregulated avenues can use IBIT options to hedge bullish exposure while selling calls to generate additional income. Speculators can use IBIT call and put options to benefit from price swings, while bypassing the hassles of owning the underlying asset.

Traders can also sell options and earn premiums, a passive income, which is particularly appealing in a stable or slowly declining market where the options might expire worthless. Such strategies are already popular among traders on the leading options exchange, Deribit.

Speaking of the impact on the market structure, some analysts are of the opinion that the expected overwriting of IBIT calls would dampen the implied volatility over the long term. In the short term, especially during a bull run, investor demand for calls could set the stage for a GameStop-like gamma squeeze.

A message from Kraken

- Omkar Godbole