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Institutions help drive rally as Bitcoin ETP volumes surge 50%



Recent research has revealed that institutional grade exchange traded products surged in volume this month.

A report by CryptoCompare delves into some metrics behind Bitcoin’s epic bull run to a new 2020 high of $17,800 and reveals that institutions have been a driver of momentum.

The Digital Asset Management Review found that aggregate exchange traded products (ETP) volumes have surged 53% over the past 30 days. Average daily volumes now stand at $173.5 million compared to $113 million in October. ETPs are types of securities that track underlying securities, indexes, or financial instruments, in this case Bitcoin.

The report cited Grayscale’s Bitcoin Trust product as one of the key drivers of momentum, surpassing $9 billion in assets under management. (However, the latest update from the institutional fund posted on November 18 actually states it has hit a milestone of $10 billion in digital assets under management.) Grayscale now holds half a million BTC.

Grayscale’s Ethereum Trust product (ETHE) followed with assets under management of $1.7 billion, an increase of over 40% on the previous 30 days. The institutional grade fund provider has also been loading up on Litecoin which now represents $58 million in AUM, surpassing the Bitcoin Cash Trust which has $46 million.

The report added that 3iQ’s Bitcoin Fund (QBTC) experienced its highest returns over the last 30 days at just over 49%. 3iQ is Canada’s leading Bitcoin and crypto asset fund manager.

ETC Group’s BTCE product saw the largest percentage increase in AUM which almost doubled to $116 million, a surge of 93% from the previous 30 days. Average volumes for the BTCE product tripled in November to $8.87 million per day, which is over 200% higher than October’s average.

The BTCE fund was launched in June 2020, becoming the first Bitcoin-based ETP to list on XETRA, a trading technology platform operated by the Deutsche Börse Group.

WisdomTree’s BTCW meanwhile experienced a 65% increase in AUM to $79 million over the same period. WisdomTree is a New York-based exchange-traded fund and ETP sponsor and asset manager.

Institutional grade products are playing a far greater role in Bitcoin’s rally in 2020. The last time BTC surged to these prices in 2017, the Chicago Mercantile Exchange and Chicago Board Options Exchange were just launching the first institutional Bitcoin futures products for the asset.

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Bitcoin derivatives data shows pro traders ignored today’s $41K pump




Sometimes all Bitcoin (BTC) needs to pump 10% is a positive remark from someone like Elon Musk.

The Tesla CEO has been pointed to as the culprit for the recent downturn after the company’s May 12 announcement explaining that it would no longer accept Bitcoin payments due to environmental concerns. Musk followed up by saying that he was looking into other cryptocurrencies that required 99% less energy consumption. 

However, on June 13, the situation reversed as Musk reassured the public that Tesla did not sell any additional Bitcoin. The post also said that the electric-car producer would resume taking BTC payments as soon as its Bitcoin mining relied on a minimum of 50% clean energy.

In bear markets, top traders act with caution

While retail investors and algorithmic trading bots jump into action as soon as bullish or bearish signals and news flash, top traders tend to act more with more caution. Those who have been around the crypto markets long enough know that positive news might end up being ignored or severely downplayed in bear markets.

On the other hand, even potentially negative news seems to have little to no impact during bull runs. For example, on Sept. 26, 2020, Kucoin was hacked for $150 million. The following week, on Oct. 1, the United States Commodity Futures Trading Commission charged BitMEX for operating an unregistered trading platform and violating Anti-Money Laundering regulations.

Two weeks later, police reportedly questioned the founder of OKEx, forcing the exchange to suspend crypto withdrawals. Had this series of negative news happened while Bitcoin was flat or in a bearish phase, the price would have undoubtedly have stalled during a bear market.

Bitcoin price at Coinbase in USD, Sept. 2020. Source: TradingView

As shown above, Bitcoin barely had any negative impact in late September and October 2020. In fact, by the end of November 2020, Bitcoin was up 74% in two months. This is the main reason why top traders tend to ignore positive news during bear markets and vice-versa.

The 3-month futures premium is neutral

A futures contract seller will usually demand a price premium to regular spot exchanges. This situation is not exclusive to crypto markets and happens in every derivatives market because in addition to the exchange liquidity risk, the seller is postponing settlement and this results in a higher price.

The 3-month futures premium (basis rate) usually trades at a 5% to 15% annualized premium in healthy markets. When futures are trading below the regular spot exchange price, it signals a short-term bearish sentiment.

Huobi 3-month Bitcoin futures basis. Source: Skew

As shown above, the future basis has been below 11% since May 20 and flirting with bearish territory on multiple occasions as it tested 5%. The current level indicates a neutral position from top traders.

The options skew is no longer signaling fear

The 25% delta skew compares similar call (buy) and put (sell) options side-by-side. It will turn positive when the protective put options premium is higher than similar risk call options.

The opposite holds when market makers are bullish and this causes the 25% delta skew indicator to enter the negative range.

Deribit Bitcoin options 25% delta skew. Source:

The above chart confirms that top traders, including arbitrage desks and market markers, are currently uncomfortable with Bitcoin price as the neutral-to-bearish put options premium is higher. However, the current 7% positive skew is far from the 20% exaggerated fear seen in late May.

Derivatives markets show no evidence of top traders getting excited about the recent $40,000 hike. On the bright side, there is room for leverage buyers to mount positions. Stronger upswings usually occur when investors are least expecting, and the current scenario seems to be a perfect example.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should conduct your own research when making a decision.