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3 Bitcoin price indicators prove pro traders are still bullish on BTC

Bitcoin futures and options indicators remained stable during the 26.5% crash, a signal that the harshest part of the BTC correction may be over.

Republished by Plato

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This week’s $11,000 drop occurred in just 32 hours and this definitely an important milestone for Bitcoin (BTC) price. 

Many mainstream media outlets perceived the correction as the start of a new bear market but data simply does not support this line of thinking.

Bitcoin price may have corrected 26.5% as if dropped to retest the $30,300 support but it has since shown significant strength amidst a record-high $160 billion in derivatives volume.

BTC futures daily volume, in USD. Source: coinalyze.net

Spot exchanges also outpaced their previous record high that was set just three days ago on Jan.9 as BTC soared to a new all-time high at $41,950. The incredible $27.7 billion in volume seen on Jan.11 was 60% higher than the previous peak.

By itself, Binance exchange-traded $9 billion worth of BTC, which is more than double the entire industry average seen in December 2020.

The infamous 50% intraday crash on March 12, 2020, resulted in $8 billion volume on spot exchanges. To put things in perspective, Ether (ETH) traded $16 billion volume on Jan. 11.

BTC spot exchanges daily volume, in USD. Source: Messari Screener

Despite the recent bearish price action and this week’s $1.5 billion in long liquidations, Bitcoin has bounced back by over 13% from the $30,300 bottom.

Even though the price failed to sustain the $36,000 level seen in the early hours of Jan. 12, investors seem relatively tranquil and trading volumes are not pointing toward further correction.

GBTC still has a noticeable premium

Although this event might have spooked some buyers, looking under the hood, it is a very healthy sign. Another factor to consider is that Grayscale’s GBTC funds added 72,950 BTC in December but suspended new shares issuance on Dec. 24. Meanwhile, Bitcoin almost doubled from $23,200 to its $42,000 peak.

Grayscale Bitcoin Trust premium. Source: TradingView

The fund manager has now resumed its regular activity for most crypto trusts, raising the question of whether initiated institutional inflow can be attributed to BTC’s bullish price action. What is clear is that institutional investor interest and demand is still there. Even though Bitcoin price dropped by 26.5%, the GBTC premium stayed above 14%.

Fixed-calendar futures premium held steady

Professional traders tend to dominate longer-term futures contracts with set expiry dates. Thus, by measuring how much more expensive futures are versus the regular spot market, a trader can determine how bullish the market is. The 3-month fixed-calendar futures should usually trade with a 1.5% or higher premium versus regular spot exchanges.

Whenever this indicator fades or turns negative, this is an alarming red flag. Such a situation, also known as backwardation, indicates that the market is turning bearish.

BTC perpetual futures funding rates. Source: NYDIG Digital Assets Data

The above chart shows that the futures premium held levels above 3.5% throughout the storm.This is equal to an annualized 14.5% level and indicates that there is optimism from professional traders.

The options skew is at bullish levels

Reviewing the put/call ratio will assist with determining whether the recent bearish price action polluted Bitcoin’s bullish standing among pro investors. The current skew level provides a real-time fear and greed indicator based on options pricing.

Skew indicators will shift to negative when call (neutral/bullish) options are more costly than equivalent puts. A 10% level signals that call options are trading at a premium to the more bearish/neutral put options. On the other hand, a negative skew translates to a higher cost of downside protection, indicating bearishness.

BTC options 30% to 20% skew. Source: genesisvolatility.io

The chart above shows just how quickly the negative sentiment was overturned in the options market. After shifting sharply in both directions due to increased volatility, the indicator has now returned to 10, reflecting moderate bullishness in options pricing.

Bitcoin firmly held the $30,000 support and bulls showed their confidence by adding positions during this dip. This shows that at the moment, there are no signs of market exhaustion or worrisome signals from derivatives indicators.

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

Source: https://cointelegraph.com/news/3-bitcoin-price-indicators-prove-pro-traders-are-still-bullish-on-btc

Blockchain

$250M Fund to Invest in Polkadot and Cardano Launched in India

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FD7 Ventures, the cryptocurrency-oriented fund that recently vowed to dispose of its BTC holdings for ADA and DOT, has set up a $250 million micro-fund focusing on investments in teams working on the ecosystems of Polkadot and Cardano.

FD7 Goes to India for DOT and ADA

Based in Dubai, UAE, FD7 is a crypto-oriented investment fund with over $1 billion in assets under management (AUM). The firm recently announced somewhat bold plans to dispose of $750 million of its BTC holdings and allocate the sizeable amount into ADA and DOT.

At the time, the company’s Managing Director blasted the primary cryptocurrency and highlighted the potential for Cardano and Polkadot to further rise in popularity and utilization.

FD7 Ventures doubled-down on its belief in the two projects, according to a more recent press release. It reads that the firm has opened an office in Bangalore, India, with the primary focus of offering financial assistance to Polkadot and Cardano.

To do so, FD7 has established a micro-fund targeting $250 million to invest in teams working on the two projects. The statement described this move as part of the overall “strategic road map to build its presence in Bangalore” and further reaffirm its support for Polkadot and Cardano.

“Positioning our new location where we have in Bangalore gives us a home-field advantage to tap into some of the world’s best future talent in blockchain and cryptocurrency development.” – commented Prakash Chand, Global Managing Director at the company.

The new venture plans to invest $1-5 million across 50 companies yearly, with about “thirty percent of those Polkadot and Cardano ecosystem-based companies receiving secondary investments of $5-20 million.”

NFTs Are the Future

The statement also touched upon the growing craze of non-fungible tokens (NFT) and Polkadot’s role in some particular cases. More specifically, it breached the recent partnership between the famous YouTuber Paul Logan and Bondly, which resulted in an impressive popularity boost.

“Just look at Bondly, which is built on Polkadot. It literally blew up overnight when YouTuber Paul Logan sold more than $5 million worth of NFTs in just 24 hours. This is not just a space to watch but one which is proving its investment-worthiness with almost daily records being set with increase use cases for non-fungible tokens that support cryptographic art, collectibles, gaming, and more.” – said Chand.

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Source: https://cryptopotato.com/250m-fund-to-invest-in-polkadot-and-cardano-launched-in-india/

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Blockchain

China restricts crypto mining in Inner Mongolia

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China has been at the forefront of developing its digital yuan or DECP [Digital Currency Electronic Payment] but has continued to maintain a distance from the cryptocurrency ecosystem. The growing crackdown on Bitcoin mining firms in China has been impacting the sentiment in the area and according to reports, it has now extended a ban on mining projects in Inner Mongolia.

The country will end all cryptocurrency projects associated with mining. This decision followed China’s effort to meet energy efficiency targets. The large amounts of energy consumed by crypto and other industries like steel, coke, and methanol production have resulted in the government’s stringent decision to ban mining activity in the region.

The autonomous region of Inner Mongolia has been a hub for cheap power due to which the mining industry was drawn to it.

The aim of the region has been to cut emission per unit of gross domestic product by 3% this year and gradually control the massive boom in the consumption of standard coal. Although small, the region accounted for 8% of global Bitcoin mining hash power.

China has a 65% hold of the total network hash power allotted to Bitcoin and the above map highlighted that among other regions Xinjiang was the highest contributor to the hash rate in a month.

The abundant supply of coal and the relative remoteness of the region made it more convenient and cheap for miners to set base here. However, no strict actions have been taken to curb this problem by the Chinese government. If the country continued its mission to become more energy-efficient, it won’t be long before miners have to find alternatives to cheap electricity available in various regions in China.


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Source: https://ambcrypto.com/china-restricts-crypto-mining-in-inner-mongolia

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Central bank digital currency a mixed blessing, says RBI

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India’s central bank has recognized the potential benefits of central bank digital currencies but not without including a few pitfalls.

The Reserve Bank of India offered its assessment of CBDCs as part of its report on currency and finance issued on Feb. 28.

As part of the report, the RBI noted that several countries are exploring the creation of their own sovereign national digital currency.

According to the central bank’s report, CBDCs can help to promote financial inclusion and transactional transparency. The RBI also stated that national digital currencies could be useful as an instrument of monetary transmission by helping to engineer public consumption towards specific categories of products and services.

Detailing the benefits of CBDCs, the RBI also remarked that digital counterparts to sovereign fiat currency could be used by central banks to pump “helicopter money.”

In its analysis, the RBI also expressed concerns about the potential negative impacts of CBDCs on the legacy financial system, noting:

“CBDC is, however, not an unmixed blessing — it poses a risk of disintermediation of the banking system, more so if the commercial banking system is perceived to be fragile.”

For countries with significant credit markets, the RBI argued that CBDCs could threaten the primacy of commercial banks as the primary channel for the transmission of monetary policy.

As previously reported by Cointelegraph, India is looking to emulate China in creating its own CBDC. According to RBI governor Shaktikanta Das, the central bank is “very much in the game” of developing a digital rupee.

However, the RBI report did not include any details about the central bank’s digital rupee project. In another portion of the document, the central bank did concede that internationalization of the rupee was inevitable but added that such a move would complicate monetary policy formulation and implementation.

With several countries looking to create their own sovereign digital currencies, CBDC interoperability is becoming a concern among stakeholders. Meanwhile, reports indicate that China’s digital yuan will have a more domestic focus.

Source: https://cointelegraph.com/news/central-bank-digital-currency-a-mixed-blessing-says-rbi

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