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Peak fear? Bitcoin futures leverage gets reset by this week’s wild price swings

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The leverage used in the Bitcoin (BTC) futures market has fallen significantly in the past several days. This indicates that traders are generally uncertain about where BTC is heading in the near term.

Estimated leverage on Binance. Source: CryptoQuant

What is leverage and why is this metric crucial for Bitcoin market sentiment?

In the Bitcoin futures market, traders can borrow up to 125 times of their initial capital to trade Bitcoin.

This allows traders to enter into massive Bitcoin positions that are often much larger than the capital that they have.

During uptrends, traders tend to overleverage their positions because they anticipate bigger upside price movements. But, when the market becomes choppy and extremely volatile, traders become fearful.

If the leverage used in the Bitcoin futures market drops, it simply means that traders are borrowing less capital to trade BTC. It shows a sign of fear, which is likely prompting traders to enter into safer positions with a lower risk of liquidation.

There are a few reasons why traders could be fearful in the current phase of the market. First, Bitcoin rejected the $40,000 resistance level after $42,000. Second, the U.S. dollar index (DXY) is recovering. Third, the high selling pressure coming from Asia.

Filbfilb, a pseudonymous Bitcoin trader, referred to the sell-off on Jan. 16 as a “high IQ play.” He noted that the rise of the U.S. dollar gave it momentum and traders continued to buy every dip.

As a result, despite the price of Bitcoin declining, the funding rate of the futures market consistently increased. Filbfilb wrote:

“Today’s sell-off was high IQ play. Embrace the dump dont ignore the dump, you must embrace it. DXY gave momentum, bulls bought it all the way down. They kept selling, DXY provided momentum, Tether FUD provided fear, you couldn’t escape to USDT too scared. Embrace the dump.”

The trader also noted that there was a high level of selling pressure coming from Asia. Hence, he explained that buy bids needed to get filled, which led to a correction. He said:

“Bids needed to be filled, the dump was into the daily Asia close, their candle look extra bad, they dumped more. right into the hands of the clever bull. You cannot stop the high IQ whale play. Swim with whale or roll over and die. Embrace the dump, its always out there.”

What comes next?

After a major shakeout, a bullish reversal typically ensues. Many traders were likely shaken out of their positions in the recent correction, considering that it dropped below $36,000.

The funding rate of the Bitcoin futures market also briefly reset, hinting that the number of long contracts significantly decreased after the drop.

With the derivatives market cooled off, the probability of a reversal to the upside has increased. In the short term, the key resistance area for Bitcoin still remains $40,000, followed by $42,000.

Grayscale premium. Source: Bybt.com

David Puell, a Bitcoin trader, also noted that the Grayscale premium has increased, which is indicative of a bullish uptrend.

Source: https://cointelegraph.com/news/peak-fear-bitcoin-futures-leverage-gets-reset-by-this-week-s-wild-price-swings

Blockchain

World’s First Bitcoin ETF Now Holds More Than 10,000 BTC

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World’s First Bitcoin ETF Records Stellar Growth, AUM Crosses Half A Billion Dollars

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The world’s first Bitcoin exchange-traded fund (ETF) has seen massive success in its first week. It has now surpassed the 10,000 BTC milestone for the first time as data from Glassnode shows. The on-chain data analytics firm has the ETF at 10,064 BTC at press time.

Canadian firm Purpose Investment Inc. became the first company to launch a Bitcoin ETF in the North American market. The ETF trades under the ticker symbol ‘BTCC’ and is trading at the Toronto Stock Exchange. It was an instant hit, recording close to $400 million on its first day. This ranked it as one of the top five ETF debuts in the North American market.

The great demand for Purpose’ BTC ETF is proof of pent-up demand in the market, the company’s chief investment officer believes. Speaking to Yahoo Finance, Greg Taylor claimed his company has an edge as it’s open to ordinary investors. Other similar products, including Grayscale’s Bitcoin Trust, are closed-end, only serving institutional investors. 

He stated, “A lot of people have wanted to get exposure to bitcoin but they haven’t really wanted to go through the hoops of opening up their own accounts or their own wallet to do so or trading some of the other closed-end funds. Having the ETF option I think has always been the holy grail out there and we’re happy to have it trading and we’re seeing some of the results of that pent-up demand.”

Taylor further revealed that the demand for BTCC is spread across jurisdictions. “It’s hard with an ETF to figure out exactly where the inflows are coming from, but we’ve had a lot of people reach out from around the world that want to get access to this product,” he remarked.

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World’s First Bitcoin ETF Now Holds More Than 10,000 BTC
Via Glassnode

First Bitcoin ETF Causing Ripples in the Market

Purpose’s Bitcoin ETF has already started causing ripples in the market, despite being around for just a week. One of the effects has been the cooldown in interest for Grayscale’s Bitcoin Trust. For the first time in five years, shares of the Trust traded at a discount.

GBTC shares plunged by 22% yesterday to close the day 3.8% below the value of the Trust’s underlying holdings. The shares have been trading at a premium since its launch in 2013. This premium shot up to 132% in May 2017 at its peak. As recently as mid-2020, this premium was as high as 40%.

Nate Geraci, the president of the advisory firm ETF Store believes this is due to the rise of competing products. He told Bloomberg, “Since the beginning of the year, we’ve seen the launch of multiple competing products. The unpleasant truth for GBTC investors is that competition erodes demand for the product, which can lead to a collapsing premium or even a discount.”

In Canada, the Purpose Bitcoin ETF’s popularity is forcing its rivals to drop their fees to compete. Evolve Funds Group was the second company to launch a Bitcoin ETF, with its product debuting just a day after that of Purpose. However, as Purpose has soared to over $600 million, Evolve Funds is at a mere $28 million. The latter has turned to lower the fees to attract investors.

Evolve lowered the management fee from 1% to 0.75%. Raj Lala, the CEO commented, “We are very pleased to provide investors with the most cost-effective bitcoin ETF today. Our bitcoin ETF allows investors to access physical bitcoin in a fully-regulated manner in their brokerage account.”


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DISCLAIMER Read More

The views expressed in the article are wholly those of the author and do not represent those of, nor should they be attributed to, ZyCrypto. This article is not meant to give financial advice. Please carry out your own research before investing in any of the various cryptocurrencies available.

Source: https://zycrypto.com/worlds-first-bitcoin-etf-now-holds-more-than-10000-btc/

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Token-based commodities DEX Mettalex launches on Binance Smart Chain and Ethereum

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Mettalex, a DEX focused on token-based commodities trading, announced today the launch of its decentralized commodities exchange on Binance Smart Chain and Ethereum’s Kovan testnet; with 20 available markets for traders to take tokenized long or short positions in using USDT.

Javelin Global Commodities, a leading trading firm of bulk commodities, will be among the first clients to use Mettalex’s platform to manage risk on commodities exposure.

“We understand firsthand the value that Mettalex can provide to derivatives trading in commodities. Mettalex provides a platform to bring transparency and liquidity to these markets which can be used by participants across the commodity value chain.”
– Peter Bradley, CEO of Javelin Global Commodities

On the Mettalex DEX, traders can use stablecoin collateral to open and close positions across eleven commodity markets, seven spread markets, Forex markets, and the top 100 publicly traded companies from the Financial Times Stock Exchange (FTSE) index.

With data-feeds powered by Chainlink and Fetch.ai oracles in addition to the Davis Index, Mettalex ensures that its position tokens track the most accurate reference price in a long (L) or short (S) exposure at settlement.

“The ability to hedge the numerous recyclables grades and specialty finished products that make for most of the infrastructure around us has long been a need in our industry. The current system provides the industry with less than a handful of instruments and the basis risk and costs are just unworkable for most companies. Mettalex is finally answering the call for a decentralized exchange that can list any commodity. We look forward to providing our price benchmarks on the Mettalex platform to give the manufacturing, demolition, and alloy producing sectors the precise hedging instruments they need.”
– Sean Davidson, CEO of Davis Index

All trades on Mettalex happen within a predetermined price band based on the asset’s historical volatility. The band allows getting exposure at only a fraction of the cost of the traded asset, effectively enabling leverage. Unlike other exchanges, on Mettalex, users can create the markets they need.

The prerequisite is a reliable oracle that the platform plans to make fully customizable. At present, the reference asset price is periodically fed into the system from multiple reference exchanges, including 1,400 proprietary price indexes for free-market recyclable metals and secondary alloys will be made accessible to commodity market participants for the first time.

“A critical byproduct of the Mettalex platform is the transparency it will bring to the pricing data around the world’s most valuable commodities. By making this type of market intelligence and the ability to trade more readily accessible, Mettalex aims to bring one of the oldest forms of trade in human history into the present century. With Mettalex we aim to align the incentives of traders, stablecoin liquidity providers, and physical commodity holders to create a one-of-the-kind tool that is accessible to anyone on this planet, 24/7/365.”
– Mettalex CEO, Humayun Sheikh

The markets now on dex.mettalex.com include:

  • Commodities (butter, steel, copper, iron, aluminum, gold, silver, zinc)
  • The Financial Times Stock Exchange (FTSE) index
  • Synthetic CeFi/DeFi index
  • Synthetic AAVE/COMP and LINK/BAND
  • Crypto and traditional baskets like BTC/TSLA and BTC/XAU
Source: dex.mettalex.com

Source: https://www.cryptoninjas.net/2021/02/26/token-based-commodities-dex-mettalex-launches-on-binance-smart-chain-and-ethereum/

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Why Etsy will not accept Bitcoin as payment ‘right now’

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Etsy Inc., which reported a strong revenue growth last year, alongside a surge in e-commerce amid the pandemic, does not intend to accept Bitcoin as payments on the leading e-commerce website, at least for now. According to President and CEO of Etsy, Josh Silverman until more people buy and also use the digital currency, he does not think that the Bitcoin payment integration will be very useful for the website.

However, the chief executive who admitted that he has held Bitcoin for the past six to seven years, believed that the asset can be “an interesting” store of value. In a recent interview with CNBC Squawk Box, Silverman explained his stance on the asset:

I’ve held Bitcoin for 6-7 years now on the theory that I think it can be an interesting stored value. 

It could be an interesting tender some day. We need a whole lot more people to buy it and own it before I think it’s really useful  

Although Etsy does not accept Bitcoins currently, users seem to have found a way around to accept crypto payments. A popular crypto influencer pointed out how some users make use of the ‘Other’ payment method as means to connect with users who will accept Bitcoin. Customers usually mention in a note that they prefer to pay in BTC and contact the customer directly with a Bitcoin payment address and amount. 

This goes to show that if the company were to integrate the asset as a payment option on its website, it could tap into a new market.

Moreover, the user base of cryptocurrencies is only growing, with 106 million global crypto users as of January 2021. A surge in crypto adoption has already influenced some institutions to integrate the payment network. As in the case of one Massachusetts-based hospital that set up a Bitcoin wallet to receive a donation of $800,000 BTC recently. 

In fact, many believe that firms like Tesla, MasterCard and the BNY Mellon Bank, which have already pushed Bitcoin toward mainstream adoption will attract others to mirror the firms’ BTC investment strategies. 


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Source: https://ambcrypto.com/why-etsy-will-not-accept-bitcoin-as-payment-right-now

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