Record $6.5B futures open interest signals traders are bullish on Ethereum
The open interest on Ethereum futures hit a record $6.5 billion as ETH rallied to $1,750 and traders increased their leverage.

Record $6.5B futures open interest signals traders are bullish on EthereumMARKET ANALYSIS
Ether (ETH) price has rallied by 33% over the last five days and data shows that as this occurred some buyers began to use excessive leverage.

Although this is not necessarily negative, it should be considered a yellow flag as a higher premium on futures contracts for short periods is normal.


ETH/USD 4-hour chart. Source: TradingView
Although Ether’s upward movement has been going for an extended period, it was only in February that Ether finally broke the $1,500 psychological barrier and entered price discovery mode.

To assess whether the market is overly optimistic, there are a few essential derivatives metrics to review. One is the futures premium (also known as basis), and it measures the price gap between futures contract prices and the regular spot market.

The 3-month futures should usually trade with a 6% to 20% annualized premium, which should be interpreted as a lending rate. By postponing settlement, sellers demand a higher price and this creates a price difference.


ETH Mar. 26 futures premium. Source: NYDIG-Digital Assets Data
The above chart shows the Ether futures premium shooting above 5.5%, which is usually unsustainable. Considering there's less than 49 days to the Mar. 26 expiry this rate is equivalent to a 55% annualized basis.

A sustainable basis above 20% signals excessive leverage from buyers and creating the potential for massive liquidations and market crashes.

A similar movement happened on Jan. 19 as Ether broke $1,400 but failed to sustain such a level. That situation helped trigger the liquidations that followed and Ether plunged 27% over the next two days.

A basis level above 20% is not necessarily a pre-crash alert but it reflects high levels of leverage usage from futures contract buyers. This overconfidence from buyers only poses a greater risk if the market recedes below $1,450. That was the price level when the indicator broke 30% and reached alarming levels.

It is also worth noting that traders sometimes pump up their use of leverage in the midst of a rally but also purchase the underlying asset (Ether) to adjust the risk.

Sellers were not liquidated by the move to $1,750
Those betting on $2,000 Ether should be pleased to know that open interest has been increasing all throughout the recent 33% rally. This situation indicates short-sellers are likely fully hedged, taking benefit of the futures premium, instead of effectively expecting a downside.


ETH futures aggregate open interest in USD terms. Source: Bybt.com
This week the open interest on Ether futures reached a record $6.5 billion, which is a 128% monthly increase.

Professional investors using the strategy described above are essentially doing cash and carry trades which consist of buying the underlying asset and simultaneously selling futures contracts.

These arbitrage positions usually do not present liquidation risks. Therefore, the current surge in open interest during a strong rally is a positive indicator.

https://cointelegraph.com/news/record-6-5b-futures-open-interest-signals-traders-are-bullish-on-ethereum

The Bitcoin-to-gold price ratio could shoot to 100x with the digital asset’s volatility possibly dropping to gold levels by 2024.

Bloomberg's Mike McGlone says BTC could be headed to $50K as gold loses appealNEWS
Bitcoin will continue its bullish push towards $50,000 as investors move funds out of gold and into the digital asset, according to Bloomberg senior commodity strategist Mike McGlone.

By 2024, he believes its volatility could even reach gold levels, driving the price much further.

In a report published on Wednesday, McGlone explained that BTC is showing strong support at $30,000, and “increasing institutional adoption and the potential for the benchmark to become a global reserve asset” could drive the price to $50,000 or higher.

The report cited evidence of funds moving to Bitcoin from gold, highlighting accelerating flows into Grayscale Bitcoin Trust (GBTC) and decline in total known ETF holdings of gold. The investment firm has grown its GBTC fund from 1%, to 10%, of the “$210 billion tracking-gold ETFs” across 2020.

“In a world going digital,” he stated, “it's logical to expect more funds to flow toward Bitcoin and away from precious metals.”

McGlone believes investing up to 5% in Bitcoin is becoming an increasingly wise decision:

“Absent a major technology glitch, old-guard gold allocators are primarily at risk if the crypto becomes a reserve asset and Bitcoin as 1-5% of one's investable assets becomes increasingly prudent.”
A rise in stock-market volatility has boded well for gold and bitcoin in the past the strategist explained, with a combined investment of Bitcoin and gold showing a lower 260-day volatility rate (30%) when compared to the S&P 500 (35%).

Despite this, McGlone believes that the digital asset has the potential for its resistance levels to rise to 100 times the resistance levels of gold. Current resistance levels for BTC ($40,000) are 22 times that of gold ($1,800).

During the 2017 bull run, the Bitcoin-to-gold price ratio shot up from 1x to 15x in a matter of months.

McGlone said Bitcoin was on track to match Gold's level of risk by 2024. In fact, he said Bitcoin could become even less volatile than gold due to its fixed supply.

“To approach this milestone, Bitcoin may have to simply maintain what it’s been doing: appreciating in price and maturing.”
The current 260-day volatility for BTC sits at 50%, which he equates to gold’s 1980 volatility levels.

McGlone also made mention of Ethereum, claiming it is turning the resistance level of $1,000 into a support level that is “unlikely” to break. He likened its trend to that of Q1 2017 in which it rose from $10 to above $40 before shooting up to over $1,000 nine months later.


https://cointelegraph.com/news/bloomberg-s-mike-mcglone-says-btc-could-be-headed-to-50k-as-gold-loses-appeal

Institutional investors are rushing to acquire and add Bitcoin to their portfolio — but is it too late?

Late on crypto? Institutions still at early stage of Bitcoin adoptionANALYSIS
Institutional investors are seen to be rushing toward Bitcoin (BTC) at high speed, with more companies emerging that look to adopt Bitcoin as a way to store their reserves. Recently, Marathon Patent Group, a Nevada-based Bitcoin mining company, has bought $150 million worth of Bitcoin as a reserve asset, a move similar to MicroStrategy purchasing $425 million worth of Bitcoin in September 2020. This purchase made Marathon Patent Group the third-largest holder of BTC among publicly traded companies

In addition to Marathon, BlackRock, the world’s largest asset manager by virtue of assets under management, has stated in its new filings to the United States Securities and Exchange Commission that Bitcoin derivatives now could be a part of the investment schemes of two of its associate funds, BlackRock Global Allocation Fund Inc. and BlackRock Funds. This is bound to set a precedent for other large asset management companies, such as Vanguard, UBS Group, State Street Advisors, etc., to enter into the domain of crypto investments.

According to research done by technology researcher Kevin Rooke, publicly traded companies now hold over $3.6 billion worth of Bitcoin, which is a 400% increase within the last 12 months. In 2019, these companies barely had 20,000 BTC in their portfolios, a number that has now jumped to 105,837 BTC, with the biggest holders being MicroStrategy, Galaxy Digital and Marathon Patent Group. Institutions are now getting involved in the Bitcoin market as some are expecting Bitcoin to become a digital alternative to gold.

2020 BTC bull run brings FOMO to institutional investors
The price of Bitcoin has jumped from around the $7,250 mark at the start of 2020 to its all-time high of $41,940 on Jan. 9 this year. This jump entailed that investors got a 303% return on their investment in Bitcoin over 2020. These returns surpassed the returns of market indicators such as S&P 500, Nasdaq Composite Index and gold by a significant margin.

These abnormally high returns with Bitcoin have led institutional investors to feel fear-of-missing-out, especially since several prominent traditional finance firms have tipped that Bitcoin could hit $100,000 later this year. Scott Freeman, co-founder and partner at JST Capital — a firm specializing in digital assets for institutional investors — told Cointelegraph that “BTC is more broadly recognized as an asset in its own right,” adding: “Funds that missed out on the growth in 2020 are being pushed by their investors to get exposure to this asset.”

In addition to the high returns that Bitcoin and other cryptocurrencies have offered throughout 2020 and continuing into 2021, institutional investors are looking to use Bitcoin to hedge risks from other assets on their portfolios that have a low correlation to the cryptocurrency markets.

Sergey Zhdanov, chief operating officer and chief financial officer of EXMO — a U.K.-based crypto exchange — told Cointelegraph that “cryptocurrencies have a higher practical value compared to gold.” He further pointed out that this “confirms the fact that cryptocurrencies have a chance to develop their applied characteristics (means of payment and circulation) and not only investment ones.”

An instance of institutions using Bitcoin as a hedge for their portfolios is when Ruffer Investment Company announced to its investors that it now holds 2.5% of its portfolio in BTC, stating that “we see this as a small but potent insurance policy against the continuing devaluation of the world’s major currencies.”

Still early adopters or laggards?
With a lot of institutions now buying Bitcoin and other cryptocurrency assets, one could argue that these investors are slightly late to the party and are buying assets at a higher price point than they would if they had adopted the crypto realm merely a year ago. However, Simon Peters, market analyst at eToro — a social trading and multi-asset brokerage company — told Cointelegraph:

“The institutions buying Bitcoin now and holding it as a reserve strategy can still be considered early adopters in a corporate sense. In the coming months and years, investors will look back at the start of 2021 as an opportune moment to get into crypto. Early adopters are opening the playing field for others to join.”
Buying and holding Bitcoin as a reserve currency for their portfolios to complement traditional assets is only the first step to widespread exposure. As these institutions become more familiar with digital assets, they will delve into other ways of utilizing them, such as for payments, remittance and settlement purposes, according to Peters, who added: “We may even see central banks holding Bitcoin if it grows in status to become a global reserve digital currency.”

Earlier this month, eToro released its “Institutional Cryptoasset Trading” report, which shows that one of the greatest barriers to institutional adoption of crypto is the insufficient market capitalization. However, now that the market capitalization has passed $1 trillion, the traditional players coming in are expected to accelerate the growth to $2 trillion in the near future. Peters further outlined how the new incoming administration in the United States responds to crypto will be critical:

“In the world of regulation, the new U.S. administration — including the arrival of a new Treasury Secretary, Head of the OCC, SEC Chairman and CFTC chair — could dramatically affect the evolution of the crypto market and how it links with traditional markets.”
Is the market still reacting to institutional buying?
The market is currently making institutional investors join the market as they are being pushed by their clients who want exposure to this fast-growing asset class. But these investors buying into Bitcoin is not really affecting the price action of the market in the current scenario, as that’s what is expected of them acting as somewhat of a lag indicator for these markets. Thus, it’s questionable whether these investments are actually pushing the market forward.

However, Zhdanov thinks that in the long term, these investments will push the market, as large investors tend to hold on to their positions. Furthermore, the number of new BTC addresses created daily still hasn’t reached the 2017 level, suggesting that the current growth is organic in nature. Freeman added that the entry of these players could benefit the volatility of these assets: “These investors tend to have a longer investment horizon and will tend to counterbalance the short-term volatility that may be caused by typically shorter-term retail investors.”


It’s important to remember that the BTC market is still more speculative than one that follows rules of traditional trading based on the fundamentals and technical analysis. The most recent example of this is Elon Musk, who added #Bitcoin to his bio with a related tweet saying: “In retrospect, it was inevitable.”

Related: Institutional demand for crypto isn’t subsiding, but impact will be gradual

Bitcoin price responded with a surge that was later labeled as the “Elon Candle,” wherein it jumped by 13.9% within the next 30 minutes. This by itself is evidence of how speculative the market is at the moment. However, irrespective of these short term price movements, it is expected that more institutional investors will flock to the crypto markets for the lucrative gains, hedging opportunities and exposure they offer to diversified portfolios, albeit at a slower pace than many would like to believe.


Source: https://cointelegraph.com/news/late-on-crypto-institutions-still-at-early-stage-of-bitcoin-adoption

DeFi is the future of banking that humanity deserves
Public trust in banks and bankers never fully recovered after the Great Recession, and DeFi has ground to cover in this particular area.


DeFi is the future of banking that humanity deservesOPINION
Decentralized finance is a form of finance that does not require traditional intermediaries such as banks, brokerages or exchanges. All of the work that would normally be handled by these institutions is instead performed by technological solutions including smart contracts and blockchain.

The legacy banking system and DeFi are markedly different. While traditional finance is slow to develop and adapt, in just a few years, companies operating in the DeFi sector have built a parallel financial system from the ground up. There are payment systems, lending protocols, exchanges and more. There is also a growing stablecoins market of fiat-pegged assets including Tether (USDT) and USD Coin (USDC).

Improved returns
One of the headline differences for DeFi is the potential returns on capital/savings that retail users can expect. The average bank interest rate for a checking account in the United States today is a mere 0.06%, and the average savings account offers only a marginally improved rate of 0.09%. Compare this with holding your money in a DeFi protocol such as Yearn.finance vaults, and you can expect to receive an 11.4% annual percentage yield on dollar-pegged stablecoins. From the perspective of financial return, DeFi beats traditional banking out of sight.

Slow to innovate
Another key factor propelling DeFi forward is its culture of innovation. The banking sector, on the other hand, is notoriously slow to adapt. Try to think of the major improvements that banks have delivered over the past few years, and you’ll probably draw a blank.

That’s not to say that banks haven’t delivered any innovations. In the last half-century, they’ve incorporated card payment technology, internet banking services, telephone banking and mobile apps. That’s not nothing, but it’s not a very long list either. You may think I’ve forgotten to include ATMs, but those date back to 1967, making that particular innovation more than a half-century old.

Lowering barriers
One of the key differences between legacy banks and DeFi is in how and where they lower barriers. Decentralized finance is focused on lowering barriers for consumers, making banking more inclusive and available to all. At the same time, brick-and-mortar banks are closing down branches in an attempt to save money. In the past five years, 3,500 high-street banks have permanently closed their doors in the United Kingdom, a number that equates to roughly 55 per month.

With in-person banking being eroded by the banks themselves, they have evened the competitive landscape for DeFi to compete. While DeFi attempts to lower barriers for consumers, the legacy banking system has unintentionally lowered the barriers to competition. As Bill Gates said in 1994: “Banking is necessary; banks are not.” Nobody has taken this more to heart than the legacy banking system.

More to do
Although DeFi has made great progress in recent years — with 2020, in particular, being a standout for the sector — there is still a huge amount of work to be done. One of the biggest sticking points for the industry is that it has largely been reliant upon the Ethereum blockchain. Last year, as the popularity of DeFi grew, transaction speeds slowed to a crawl while transaction fees rose.

There are some emerging players reaching critical mass at just the right moment to offer an alternative. Polkadot in particular is often touted as a contender for Ethereum’s crown, with a host of developers now working on products for the network. In the 12 months ending with the second quarter of 2020, Polkadot’s “next-generation network” witnessed a 44% rise in active developers. With over 250 projects now building on Polkadot, it is likely that the upstart could take a significant slice of the DeFi pie. At the same time, there are projects attempting to mitigate Ethereum’s growing pains with sidechain solutions.

Distrust and resentment
The decision of governments to bail out private banks with public money may have kept banking institutions afloat after the financial crisis, but resentment for the failure still bubbles just beneath the surface. That crisis is also intimately tied to the story of Bitcoin (BTC) and decentralized money, as Bitcoin’s genesis block bore the inscription: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”

A DeFi protocol is only as good as the person who programs it. There have been a number of high-profile exploits and hacks of DeFi protocols, which has highlighted weaknesses in the sector. With growth showing no signs of slowing down, it’s clear that the future of banking and financial innovation belongs to decentralization.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.


https://cointelegraph.com/news/defi-is-the-future-of-banking-that-humanity-deserves/amp

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Chainlink and Aave soared to a new all-time high as Bitcoin bulls struggle to hold BTC price above $32,000.

Aave and Chainlink hit new highs as Bitcoin price fights to hold $32KMARKET UPDATE
Bitcoin (BTC) price opened the weekend trapped within the $33,500 to $32,000 range but at the time of writing the digital asset is struggling to hold above $32,000.

A few analysts have warned that the recent price loss of momentum may be a sign of ‘institutional exhaustion’ as selling pressure from Asia has increased since Jan. 19.

Despite Bitcoin’s current downtrend, some institutional investors are sticking to their prediction that BTC price will reach $100,000 before the end of 2021. This suggests that institutions are buoyed by rising investor sentiment and the new proposals for a Bitcoin ETF.


BTC/USDT 4-hour chart. Source: TradingView
While Bitcoin still faces resistance around the $33,000 level, on-chain analyst Willy Woo sees one potentially positive development for BTC. Woo said that the Bitcoin Spent Output Profit Ratio (SOPR), a metric that shows the profit ratio of BTC by dividing the price sold by the price paid, had “a touchdown”.

According to Woo there was a:

“Full on-chain SOPR reset. Coins moving between investors per hour (24h MA) no longer carry profit on average. To push SOPR lower, investors would have to be willing to sell at a loss.”

Bitcoin adjusted SOPR. Source: Glassnode
Woo also suggested that investors are less likely to sell at a loss, an early signal that Bitcoin could be close to finding a bottom.

Altcoins and DeFi tokens soar
DeFi tokens and altcoins continued to forge their own path as Bitcoin searched for support. Polkadot (DOT), AAVE, Curve DAO Token (CRV) and Sushiswap (SUSHI) all rallied roughly 5% to 7%.

The surge in the price of many DeFi-related tokens has in large part been the result of an increase in DEX activity. Data from Dune Analytics shows monthly DEX volumes have increased since July 2020 and currently the total value locked in DeFi is at $23.89 billion.


Monthly DEX volume by project. Source: Dune Analytics
Chainlink (LINK) continued its strong rally, setting a new all-time high at $25.50 and surpassing Litecoin (LTC) in terms of total market cap to become the seventh-largest project listed on CoinMarketCap. Aave price also broke to a new all-time high at $229.39 and the total value locked in the platform is $3.44 billion.

The overall cryptocurrency market cap now stands at $936.8 billion and Bitcoin’s dominance rate is 63.5%.

https://cointelegraph.com/news/aave-and-chainlink-hit-new-highs-as-bitcoin-price-fights-to-hold-32k

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