Tuesday, 19 October 2021

Market Summary

Market Summary 19 October 2021

Crypto On a Roll as Macro Backdrop Heats Up

  • BTC just recorded its highest weekly close on record last week; let’s let that sink in.
  • BTC ended the week at $63K on Sunday, topping the $61.5K weekly close on Apr. 6. Looking at the 1-year chart in weekly candles, last week was one of the most decisive uptrends since January 2021.
  • Weekly opens/closes tend to act as magnets for key price support and resistance levels. We’re already seeing a slight pullback to the weekly close in April and could see some deviation below to wipe out over-leveraged participants in the short-term.
  • Open interest in BTC futures is nearing its all-time high, which has been a cause for concern for commentators on Twitter. Open interest growth reflects an increase in leverage. However, when the price of an asset is increasing, open interest measured in USD is bound to go up. Rising open interest as BTC closes in on its all-time high is only natural, as, quite obviously, the unit price of BTC causes the notional amount of positions to rise.
  • We should expect funding to rise as the market continues to trend. But we haven’t reached the threshold where it costs an arm and a leg per day to be long BTC. This suggests worries about excessive leverage may be premature.


Arbitrum extends lead over Optimism as Uniswap posts record volume on L2

  • The world’s most popular decentralized exchange, Uniswap, is seeing layer two volumes surge as Ethereum transaction fees surge once again.
  • On Oct. 19, Uniswap founder Hayden Adams tweeted that daily volume across v3 deployments of the decentralized exchange on layer-two networks has pushed into record levels. Adams estimated that Uniswap v3 processed an unprecedented $115 million in combined daily volume across the Arbitrum and Optimism networks without providing a source.
  • Data sourced from analytics provider Nomics at the time of writing (3 am UTC) suggests that Uniswap v3 drove $80 million in volume on Arbitrum and roughly $14 million on Optimism over the past 24 hours respectively.


Analysts predict Valkyrie will launch Bitcoin Futures ETF this week

  • Commentators are predicting that a second futures-based Bitcoin exchange-traded fund (ETF) will go live by the end of the week following the launch of ProShares’ Bitcoin Strategy ETF later today.
  • On Oct. 19, Bloomberg’s analyst Eric Balchunas predicted that Valkyrie’s Bitcoin (BTC) futures-based ETF is “likely” to launch in the coming days after being certified for listing on the Nasdaq exchange last week.
  • If true, the milestone would make Valkyrie’s fund only the second Bitcoin ETF to launch in the United States, with ProShares’ futures-based ETF slated to begin trading on the New York Stock Exchange under the ticker $BITO on Oct. 19.


Binance destroys nearly $640 million worth of BNB tokens in its largest-ever burn

  • Crypto exchange operator Binance announced Monday that it has burned nearly 1.4 million BNB tokens (worth about $640 million at current prices) in its largest-ever burn.


Interactive Brokers Group Launches Crypto Trading for U.S. Financial Advisors

  • Global brokerage firm Interactive Brokers Group is bringing crypto trading to Registered Financial Advisors (RIAs) in the U.S. today. Through Paxos Crypto Brokerage, RIAs resident in the U.S. can now trade and custody Bitcoin, Ethereum, Litecoin, and Bitcoin Cash for their clients. 
  • This isn’t the first time Interactive Brokers has struck a deal with Paxos to facilitate public crypto trading.
  • Last month, the firm rolled out crypto trading for U.S. clients under the custodianship of Paxos. Paxos is also the broker behind PayPal’s new crypto-trading offering for U.K. users, launched back in August. 


Grayscale confirms Bitcoin ETF plans and adds exposure to Zcash, Stellar Lumens and Horizen to its trusts

  • Institutional asset manager Grayscale has announced it will be converting its GBTC Trust into an exchange-traded fund (ETF) once the United States Securities and Exchange Commission (SEC) has “comfort” with recently-approved Bitcoin futures ETFs.
  • In a Monday Twitter thread, Grayscale communications director Jennifer Rosenthal said the asset manager would proceed with offering an ETF when “the SEC has formally expressed their requisite comfort with the underlying Bitcoin market.” The offering would convert the asset manager’s Grayscale Bitcoin Trust (GBTC), first listed in 2013, into an ETF.


New York joins crackdown on crypto lending, seemingly targeting Nexo and Celsius

  • On October 18, the New York Attorney General Letitia James announced cease and desist letters to two cryptocurrency lending firms. Another three firms received requests for information on corporate ownership and handling of user deposits.
  • The Office of the Attorney General (OAG) redacted the names of the firms under scrutiny. However, the cease-and-desist retained the names “Nexo Letter,” while the request for information was labeled “Celsius Letter” upon initial publication, though the OAG subsequently corrected its files. The names implicate two of the largest lending platforms.

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