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The institutional herd is here: Bitcoin volume on CME, LMAX hits new records

The institutional herd has arrived to the Bitcoin market as institutional platforms see record-high volume.

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The daily volume of the CME Bitcoin (BTC) futures market and LMAX achieved a new all-time high on Jan. 4. The data show that the institutional demand for BTC is rapidly surging as major public funds continue to accumulate.

Institutional appetite for Bitcoin is accelerating

According to analysts at Arcane Research, the daily volume of LMAX Digital reached a record-high at $2.62 billion.

Bitcoin daily volume on LMAX Digital. Source: Arcane Research

LMAX is a trading platform that tailors to institutional and accredited investors, unlike retail-focused platforms such as Coinbase and Binance. Arcane Research’s head of research Bendik Norheim Schei wrote:

“Want another ‘Institutional investors are here’ chart? Here’s the daily volume on the institutional platform LMAX Digital. New all-time high volume of $2.6 billion yesterday.”

During the same period, the CME Bitcoin futures market also achieved an all-time high volume at $2.7 billion in dollar terms.

On CME, traders use Bitcoin-backed contracts and as such, when the price of Bitcoin increases, so does the value of contracts.

The massive increase in the trading volume of institutional platforms comes as funds are aggressively investing in Bitcoin.

On Jan. 5, Anthony Scaramucci, the former White House Director of Communications, said his hedge fund SkyBridge entered a $300 million Bitcoin position from November to December of last year. He said:

“We @SkyBridge entered the #bitcoin market in Nov/Dec with a now ~$300mm position, and today launched a #bitcoin fund offering for accredited investors. We believe we’re in the early innings of a new asset class with tremendous upside.”

With SkyBridge’s investment in Bitcoin, nine funds now hold $23 billion worth of Bitcoin, according to technology researcher Kevin Rooke.

Grayscale still holds the most Bitcoin at $19 billion through its flagship product the Grayscale Bitcoin Trust (GBTC).

GBTC is an alternative to an exchange-traded fund, or ETF, in the U.S. in that institutions and accredited investors can gain exposure to Bitcoin through a strictly regulated vehicle.

What’s next for BTC?

Despite the massive inflow of institutional capital into the Bitcoin market, the price of BTC sharply corrected on Jan. 4.

The Bitcoin price dropped by over 15% on a single day after more than $2 billion worth of futures contracts were liquidated.

Ki Young Ju, the CEO of CryptoQuant, said that derivatives traders are now uncertain and fearful, based on the declining leverage across major exchanges. He said:

“This indicator is better than the Fear & Greed index. $BTC derivative traders are uncertain about the next move, and scared.”

In the near term, this could result in a consolidation period, where Bitcoin sees lower volatility following a massive uptrend.

In the last 48 hours, Bitcoin has still been able to remain above the $30,000 support level, which is an optimistic sign of positive momentum.

Whale clusters suggest that the next major support area is $29,300, which would be a crucial technical level to defend for the ongoing rally to see renewed momentum.

Source: https://cointelegraph.com/news/the-institutional-herd-is-here-bitcoin-volume-on-cme-lmax-hits-new-records

Blockchain

Aave hits record $288 high as demand for flash loans and staking increases

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Aave (AAVE) price has been on an absolute tear for weeks and today the DeFi-token rallied to a new all-time high at $288.90. 

The decentralized finance protocol is one of the most popular in the market and the recent rally in the DeFi sector is one of the driving forces behind AAVE’s rally.

AAVE/USDT 4-hour chart. Source: TradingView

At the start of 2021, AAVE price was trading at $83 and the recent rally appears to have bolstered the protocol’s surging total value locked, increasing buy volume on spot and derivatives exchanges and the continued development of Aave’s lending platform and flash loan issuance.

TVL soars to a new high

Data from DeFi Pulse shows that Aave’s TVL rose from $2.03 billion on Jan. 1 and as (BTC) and Ether (ETH) price went parabolic Aave’s TVL also surged.

Total value locked on AAVE. Source: DeFi Pulse

Currently, Aave’s TVL sits at a new all-time high of $3.75 billion, making the platform the second-largest DeFi platform by TVL behind Maker (MKR).

The steady addition of new tokens to the lending and borrowing protocol increases the likelihood that its TVL will continue to rise and help AAVE retain its standing as one of the top DeFi projects in the cryptocurrency space.

Staking drives demand for AAVE token

AAVE’s trading volume also surged at the beginning of 2021, increasing from $200 million on Jan. 3 to a high of $928 million on Jan. 16.

AAVE price vs. Reported trading volume. Source: TheTIE

As AAVE price reached a new high, it’s 24-hour trading volume notched a record $1.06 billion. This volume surge is partially driven by investors acquiring more tokens for staking, with 26.8% of the total supply of AAVE currently staked on the platform earning an APY of 6.1%

Flash loans attract investors

Another reason for AAVE’s recent surge is the growth of its flash loans.

Flash loans allow cryptocurrency holders to collatoralize their portfolio to fund other purchases or new crypto purchases. The loans also help investors utilize the value in their tokens without the need to sell see them and create a taxable event.

Since launching flash loans less than 12 months ago, more than $1.7 billion have been issued and it’s expected that this figure will increse as the crypto bull market progresses.

Total flash loan issuance to date on AAVE. Source: Messari

As can be seen in the chart above, the most dominant token requested for flash loans is the DAI stablecoin, followed by USDC and ETH. Data from Messari shows that Aave issued $25 million in loans in the first half of 2020, $500 million in Q3, and nearly $1 billion in Q4, including $450 million in December.

The expansion of the flash loan concept will likely attract more users to Aave, especially since they can be used for arbitrage opportunities between DEXs, collateral swaps, self-liquidations and a variety of other applications within the DeFi sector.

Source: https://cointelegraph.com/news/aave-hits-record-288-high-as-demand-for-flash-loans-and-staking-increases

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Blockchain-based-video-game

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Ethereum and the broader cryptocurrency market have seen mixed price action over the past few days and weeks. Ethereum Price is Surging Despite the selling pressure it has experienced at $1,200, ETH beat all odds and surged beyond $1,400, recording a new all-time high at $1,423.38.  At press time, the…

Source: https://btcmanager.com/Blockchain-based%20video%20game%20community%20and%20development%20platform,%20Enjin%20(ENJ)%20witnesses%20the%20launch%20of%20the%20highly-anticipated%20dark%20sci-fi%20action-adventure%20game,%20Age%20of%20Rust./

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Cryptocurrency makes World Economic Forum’s Davos Agenda

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The World Economic Forum’s upcoming Davos Agenda will feature two separate sessions on cryptocurrency, offering another compelling sign that digital assets have permeated mainstream consciousness. 

The sessions, titled Resetting Digital Currencies, will be held on Monday and Thursday. The first session will feature five public speakers, including Bank of England Governor Andrew Bailey and Hikmet Ersek, president and CEO of Western Union.

Thursday’s group features four speakers, including Tharman Shanmugaratnam, a senior minister for the government of Singapore, and Zhu Min, chairman of the Beijing-based National Institute of Financial Research.

“COVID-19 has accelerated the long-term shift from cash,” reads the prospectus for both sessions. “Meanwhile, central bank digital currencies are emerging, potentially transforming how people use money worldwide.”

It continues:

“What policies, practices and partnerships are needed to leverage the opportunities posed by the rise of digital currencies?”

Davos Agenda is a five-day summit featuring some of the world’s leading figures in finance and government. The cryptocurrency series falls under the summit’s “Fairer Economies” theme. Other themes include “Tech for Good,” “How to Save the Planet” and “Healthy Futures.”

The World Economic Forum is devoting more resources to understanding blockchain technology and cryptocurrency. The Geneva-based organization has even created a cryptocurrency working group, which only last month published its inaugural review focusing on the various use cases for digital assets “beyond price and speculation.”

The Forum’s research has cited blockchain technology as a key driver of “sustainable digital finance.” Blockchain and smart contract capability, the Forum’s researchers argue, can unlock “hidden values of legacy digital systems.”

Central bank digital currencies, or CBDCs, are one area of research the Forum has delved into over the past 18 months. In Jan 2020, the Forum announced it had developed a framework to help banks “evaluate, design and potentially deploy CBDC.” The framework was developed in conjunction with over 40 central banks, financial institutions and academic researchers.

Source: https://cointelegraph.com/news/cryptocurrency-makes-world-economic-forum-s-davos-agenda

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