Record $8B open interest on Ethereum futures shows the pros are ‘here’

Analysts say billion-dollar liquidations are less of a risk even as the open interest on Ethereum futures hit a new high at $8 billion.

The price of Ether continues to push higher, and many analysts are calling for $3,000 as a short-term target. All of this “success” takes place in the face of Ether (ETH) being in a bottleneck regarding high fees, network congestion and a tense situation with miners. 

With decentralized finance (DeFi) applications taking center stage and the aggregate volumes at exchanges surpassing $4 billion per day, Ether’s price has rallied over 200% since the start of the year, marking a new all-time high at $2,300 on April 13.

This impressive price surge caused Ether’s open interest to reach a record high of $8 billion. The figure represents 50% of Bitcoin’s (BTC) markets just two months ago.

Some investors might say that derivatives contracts pose a risk for larger corrections due to liquidations, but one must remember that the same instrument can be used for hedging and arbitrage.

Ether futures aggregate open interest. Source: Bybt

Not every short seller is aiming for lower prices

While the typical retail trader relies on perpetual futures (inverse swaps) primarily for short-term leverage positions, market makers and professional traders will tend to seek yields.

This is usually achieved via “cash and carry” strategies that combine options trades. Therefore, to understand whether the current open interest represents a risk or an opportunity, investors must look at other indicators such as the funding rate.

Massive liquidations typically occur when buyers (longs) are excessively optimistic. Hence, a 7% intraday correction forcefully terminates everyone using 15x or higher leverage. Despite making headlines, $1 billion orders would represent a mere 6% of the current average volume.

Ether futures aggregate volume. Source: Coinalyze

As shown above, Ether futures aggregate volumes will climb above $25 billion when additional volatility occurs. This data means the eventual liquidation impact might be even more negligible.

The impact of futures goes in both direction

Analysts tend to ignore a futures contracts’ buy-side impact, especially during a bull run. No one blames derivatives for a sudden 7% price increase, although that might have accelerated the movement. This theory holds especially true considering the steep funding rate charged for longs. Traders should avoid these moments unless they’re confident that the rally will continue.

Ether perpetual futures 8-hour funding rate. Source: Coinalyze

Whenever longs are the ones demanding more leverage, the funding rate will become positive. A 0.15% fee every eight hours equals 3.2% per week. Therefore, arbitrage desks and whales will buy Ether at regular exchanges and simultaneously short the futures to collect the funding rate. This trade is known as “cash and carry,” and it is not dependent on markets moving up or down.

Markets eventually normalize on their own

As the current futures open interest continues to rise, it reflects that markets are becoming even healthier, allowing even larger players to participate in derivatives trading.

Its CME listing was undoubtedly an important milestone for Ether, and this is confirmed by the $8 billion open interest mark.

The funding rate will adjust itself by welcoming more participants on the “cash and carry” side or by positions being terminated due to high costs.

It doesn’t necessarily end with billion-dollar liquidations, but it certainly raises the risk of them occurring. Nevertheless, these same contracts could have been used to drive Ether’s price up, netting the impact over time.

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.

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Bitcoin’s time has come: TIME magazine to hold BTC on balance sheet

TIME magazine has partnered up with Grayscale to drop a series of educational crypto videos, and has agreed to be paid in Bitcoin.

Institutional fund manager Grayscale has partnered with acclaimed New York-based magazine TIME to produce an educational video series on the subject of crypto assets.

The partnership was announced on April by Grayscale’s CEO, Michael Sonnenshein, with Sonnenshein revealing that TIME and its president, Keith Grossman, will receive payment in Bitcoin.

Further, TIME does not intend to convert the Bitcoin it receives through the deal into fiat, and will hold the crypto asset on its balance sheet. No further details of the partnership have been revealed so far.

TIME was first published on March 3, 1923, with the magazine and online publication having been active in the crypto space of late. In March, TIME cashed in on the NFT mania by dropping a set of tokenized magazine covers on NFT marketplace SuperRare, with the “TIME Space Exploration – January 19th, 1959” NFT fetching 135 ETH worth almost $250,000 on March 30.

The company also revealed they were seeking a crypto-friendly Chief Financial Officer in the same month after listing the position on Linkedin.

“The media industry is undergoing a rapid evolution. TIME is seeking a Chief Financial Officer who can help guide its transformation,” the listing said.

According to Bitcointreasuries.com, TIME will become the 33rd publicly traded company to hold Bitcoin on its balance sheet. TIME joins the ranks of top U.S. companies Microstrategy — who have invested billions into BTC from August 2020, Square — who added 4,709 BTC to their treasury in October, and Tesla — which purchased $1.5 billion worth of BTC in January. Multinational investment corporation Blackrock also began dabbling in crypto during February, profiting more than $360,000 from a small long using Bitcoin futures.

This deal marks a significant partnership between giants of the mainstream and crypto worlds. Grayscale was founded in 2013 and has $46 billion worth of crypto assets under management, including roughly 3% of Bitcoin’s total circulating supply.

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Romanian university plans to accept crypto payments for admission fees

The academic institution with a student body of roughly 11,000 said the addition of crypto payments was part of a plan to support local businesses like Elrond.

A public university in the Romanian city of Sibiu in Transylvania has said it will allow students to pay for their admission fees in crypto.

According to an announcement from Lucian Blaga University of Sibiu, or LBUS, on Wednesday, the institution plans to implement crypto payment methods for its more than 11,000 students starting in July. Students will reportedly be able to pay for admission fees — tuition is roughly $1,000 per year for undergraduates — using Elrond (EGLD), which the university will then convert to Romanian leu.

“Our university has been and will continue to be a supporter of the community and local business, and the decision to develop this partnership with Elrond is part of this strategy,” said university Rector Sorin Radu.

Starting as an initial exchange offering from the Binance Launchpad in 2019, Elrond has offices in the Transylvanian town of more than 400,000 people and its team contains many graduates of the local university. The project said it plans to carry out other collaborations with LBUS in the future, including research.

According to legislation implemented in July, exchange providers that monitor the purchase of crypto with fiat currency and vice versa must now be authorized if they operate in Romania. Many crypto users handling digital assets in the country are required to use exchanges that incorporate Know Your Customer requirements and comply with both domestic and foreign Anti-Money Laundering provisions.

Elrond has recently seen some significant changes, including its mainnet swap last year as the ERD token became EGLD. At the time of publication, the price of EGLD is $231, having risen more than 13% in the last 24 hours.

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Bitcoin’s comeback, XRP doubles in a week, Coinbase’s big profits: Hodler’s Digest, April 4–10

Coming every Saturday, Hodlers Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more a week on Cointelegraph in one link.

Top Stories This Week

Bitcoin suddenly hits $60,000 as a new resistance battle liquidates $850 million

A bout of long-overdue volatility has hit the crypto markets, propelling Bitcoin to highs of $61,276.67 on Saturday.

A sudden push allowed BTC/USD to exit the $50,000 price range in the early hours of the morning. This move had been weeks in the making, with the digital asset repeatedly trying (and failing) to break $60,000 for most of March.

Analyst Lex Moskovski said Bitcoin is now grinding up to a new all-time high, writing: Being a bear is expensive.

But its unclear how much staying power this rally has, and as weve seen over recent months, erratic market movements over weekends dont always endure.

The favorable market conditions led to new all-time highs for Ether and Binance Coin on Saturday and another altcoin has also been making a comeback, too.

 

 

XRP surpasses $1 for the first time since 2018: Whats behind the new rally?

XRP has had a remarkable week, and over the past seven days, its almost doubled in price. On Tuesday, the altcoin smashed through the $1 zone for the first time since March 2018, with its price going from strength to strength in the days that followed.

It is currently trading above the next resistance level at about $1.20, prompting some to set their sights on a macro sell-wall of $2 that dates all the way back to December 2017.

XRP has now regained the coveted position of the fourth-largest cryptocurrency by market cap. The uptick in trading volume may have been linked to Ripple unveiling a new acquisition designed to enhance its cross-border payment capabilities.

There was also some upbeat legal news for Ripple this week. Ripple Labs has been granted access to the SECs documents expressing the agencys interpretations or views on the subject of crypto assets.

Counsel representing Ripples CEO, Brad Garlinghouse, believes it may be game over for the SECs suit should they find any evidence that the regulator has deemed XRP akin to Bitcoin or Ether.

Speaking to Cointelegraph, Ripple Labs chief technology officer David Schwartz urged U.S. regulators to look at the rest of the world, warning America risks falling behind when it comes to crypto and blockchain regulation.

 

Coinbases first-quarter revenue hits record $1.8 billion ahead of its Nasdaq listing

Its been a week of upbeat statistics for the crypto sector. We saw the total market cap hit $2 trillion, meaning that the industry is now worth as much as Apple. There was a big milestone as 100 cryptocurrencies all secured their own $1-billion market cap for the first time. It was also revealed that the crypto industry got more funding in Q1 than all of last year.

Next week is also shaping to be a significant one as Coinbase gears up to make its stock market debut. And ahead of Wednesdays direct listing, we got an insight into the companys finances revealing that revenues hit $1.8 billion from January to March.

The exchanges numbers seem very healthy, indeed, undoubtedly because of the bull run that emerged during the first quarter. Net income has been estimated at between $730 million and $800 million for the period with monthly active users now exceeding 6 million.

But not everyone is cracking open the champagne. Some analysts have warned that Coinbases $100-billion valuation is far too high.

David Trainer, CEO of the investment research firm New Constructs, wrote in a note to clients: Its hard to make a straight-faced argument that the firm can justify the lofty expectations baked into its valuation given increasing competition in a mature cryptocurrency trading market and the lack of sustainability in its current market share and margins.

 

 

Paris Hilton drops surprisingly well-informed article about NFTs

Paris Hilton has written an impassioned article about NFTs, declaring that she sees them as the future of the creator economy.

The entrepreneur and former reality star appears to be aiming to position herself as an authority on the NFT space, at least for a mainstream audience, as she readies to release a new drop soon.

Celebrating their role when it comes to digital art and fashion not to mention bringing the world of trading cards into the 21st century she wrote:

Some of these applications might even change the way we live. What if we could use NFTs as collateral for physical items? Or as a way to trade for them?

Hilton sold her first NFT in August 2020 before the mania arrived in 2021 an NFT depicting a painting of her cat, which sold for $17,000. She donated all the proceeds to charity.

 

Couple gets married on Ethereum blockchain for $587 in transaction fees

Coinbase employees Rebecca Rose and Peter Kacherginsky have gotten married using the Ethereum blockchain adding a whole new meaning to the vows for richer or poorer.

In addition to a traditional Jewish wedding ceremony, Kacherginsky wrote an Ethereum smart contract named Tabaat that issued tokenized NFTs, the rings.

The ceremony itself consisted of two transactions: the transfer of the NFT rings from the contract to Rose and Kacherginsky. In total, the ceremony took four minutes to be validated by the Ethereum network and incurred $50 in miner fees.

By contrast, the average physical wedding in the United States costs roughly $25,000.

The NFTs depict an animation of two circles merging to become one and were illustrated by artist Carl Johan Hasselrot.

Rose wrote on Twitter: The blockchain, unlike physical objects, is forever. It is unstoppable, impossible to censor, and does not require anyones permission. Just as love should be. What could possibly be more romantic than that?

 

 

Announcement of the week

 

Markets Pro delivers up to 1,497% ROI as quant-style crypto analysis arrives for every investor

Its now been a month since Cointelegraph Markets Pro launched bringing professional crypto market intelligence to every investor.

New figures this week showed that 41 of the 42 trading strategies tested by Markets Pro are currently beating Bitcoins investment returns, and 36 of them are winning against an evenly weighted basket of the top 100 altcoins.

Two key features are offered to subscribers. The first is the VORTECS Score, which is derived from an algorithm that examines multiple different variables (including sentiment, tweet volume, price volatility and trading volume) and compares those with historically similar marketscapes.

And the second is NewsQuakes: alerts on events that have historically had a significant impact on an assets price over the following 24 hours.

Cointelegraph Markets Pro is available exclusively to subscribers on a monthly basis at $99 per month, or annually with two free months included.

 

Winners and Losers

 

 

At the end of the week, Bitcoin is at $60,531.89, Ether at $2,165.46 and XRP at $1.31. The total market cap is at $2,054,795,567,223.

Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Bitcoin Gold, KuCoin Token and XRP. The top three altcoin losers of the week are Klaytn, Holo and Dent.

For more info on crypto prices, make sure to read Cointelegraphs market analysis.

 

 

Most Memorable Quotations

 

Fascinating to see that since inception ETH has outperformed BTC by 250%. It only fell below its initial price in BTC for the first 5 months of its existence in 2015.

Raoul Pal, Real Vision co-founder

 

The pandemic, quite frankly, was a catalyst for institutional adoption, and specifically Bitcoin and the narrative, or use-case, around digital gold.

Tom Jessop, Fidelity

 

Industries from across the global economy are beginning to decarbonize their operations. We can do the same in crypto. We have the opportunity to decarbonize the industry.

Crypto Climate Accord

 

What we need is for the United States to be the leader here. We need to embrace this, so we need to make sure that we use this technology to continue to be a leader on the global stage.

Anthony Pompliano, Morgan Creek Digital co-founder

 

Even though Im a pro-crypto, pro-Bitcoin maximalist person, I do wonder whether if at this point, Bitcoin should also be thought of in part as a Chinese financial weapon against the U.S.

Peter Thiel, PayPal co-founder

 

Im not using crypto to buy fiat; Im not using crypto to buy houses. I just want to keep crypto. And I dont plan to convert my crypto into cash in the future.

Changpeng Zhao, Binance CEO

 

Not for nothing, $XRP technically has taken all necessary strides to be bullish. After the exchange delistings and write-off by most of CT, this essentially left the market short from both a positional and sidelined standpoint. This can move much higher.

Cantering Clark, crypto derivatives trader

 

If you look at gold as a $10 trillion market cap, Bitcoin is about 10% of that, and if we believe Bitcoin is a 100 times better version than that, then its fairly safe to say that theres a stark chance that Bitcoin captures a lot of gold and market share, and more.

Yassine Elmandjra, Ark Invest analyst

 

Prediction of the Week

Ark Invest and JPMorgan expect Bitcoin to hit $130,000$470,000

JPMorgan Chase expects Bitcoin to reach $130,000, while Ark Invest anticipates the market valuation of BTC to surpass that of gold.

The optimistic macro prediction from both funds revolves around the scarcity of Bitcoin, which has buoyed its popularity as a safe-haven asset.

Bloomberg Intelligence also has high hopes when it comes to the second quarter of 2021. This week, it predicted that the second quarter was more likely to deliver a further surge to $80,000 than a capitulatory move to $40,000.

 

FUD of the Week

 

Bitcoin to zero? Not while this Redditor has $187,000 to spend

There have long been doomsday predictions that well see Bitcoin prices plummet to zero, but one person has vowed that this wont happen, not on their watch.

Reddit user u/Substantial-Ad-5012 wrote: Bitcoin will never go to zero in my lifetime. Because I am willing and able to buy all the Bitcoin ever mined at one cent each.

In the unlikely event that Bitcoin does in fact drop to $0.01, it would cost a mere $187,000 to pick up every coin in circulation not accounting for the fact that up to 20% of all Bitcoin are inaccessible.

Theyre not alone. Binance CEO Changpeng Zhao told his followers last March that they shouldnt be worried about BTC hitting zero. So long as I have a penny left, it wont happen, he wrote.

 

Paxful denies reports of customer data leak

An anonymous online source was recently spotted trying to sell private customer and employee data allegedly obtained from crypto exchange Paxful.

However, a spokesperson from the company has told Cointelegraph that no customer data has been jeopardized.

Explaining that Paxful hasnt fallen victim to a data breach, the spokesperson added: The employee data that the person claims to have was obtained illegally from a third party supplier that Paxful previously used; Paxful terminated its contract with this supplier in September 2020.

The person attempting to sell the information claimed to have phone numbers, names and addresses, as well as other private information belonging to users and the dump purportedly boasted more than 4.8 million entries.

Ledger faces class action from phishing scam victims

Ledger and Shopify have been hit by a class-action lawsuit over a major data breach that saw the personal data of 270,000 hard wallet customers stolen between April and June 2020.

Phishing scam victims John Chu and Edward Baton filed the lawsuit in California against the crypto wallet provider and its e-commerce partner Shopify on Tuesday.

The plaintiffs alleged that the firms negligently allowed, recklessly ignored, and then intentionally sought to cover up the data breach.

The data was stolen when rogue employees of Shopify accessed the companys e-commerce and marketing database for Ledger, with the hackers then selling the data on the dark web.

Had Ledger acted responsibly during this period, much of that loss could have been avoided, they claim.

Chu lost $267,000 worth of Bitcoin and Ether, and Baton lost $75,000 worth of Stellar in phishing scams that impersonated correspondence from the firms.

 

Best Cointelegraph Features

 

DeFis critical missing piece: Credit scores

Traditional finance is built not on collateral but on reputation, and DeFi will grow by following suit, Rafael Cosman argues.

You dont own me: XRP price surge defies SECs clampdown on crypto

Since the start of April, the surge in price of XRP has been backed by high tweet volumes, which approached relative highs.

Crypto at risk after Facebook leak: Heres how hackers can exploit data

Attacks on digital asset exchanges and trading platforms have decreased drastically in recent years, but data leaks still leave users vulnerable.

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SEC approves Exodus wallet for Regulation A stock offering

Exodus shares are now available for purchase through its wallet.

Crypto wallet provider Exodus recently received the green light from the United States Securities and Exchange Commission to sell shares of its operation. 

According to a public statement from Exodus on Thursday: “Exodus Movement, Inc., a Delaware corporation that has developed a leading non-custodial cryptocurrency software platform, received notice that the Securities and Exchange Commission has qualified its offering of Class A common stock under Regulation A.”

The shares hit the market last night in the U.S. and are available through the wallet itself. For many years, Exodus has existed as a desktop wallet for crypto users, compatible with an array of digital assets. The wallet also hosts a feature that allows users to swap between assets within the wallet. Now, according to the statement, users can buy Exodus shares through the app as well.

Exodus filed with the SEC for a Regulation A offering in February, as detailed in its related paperwork. Regulation A offers a form of exemption under which entities can sell unregistered shares, based on information from Investor.gov.

The Thursday statement notes a price of $27.42 per unit of Class A common stock. Buyers can pick up as little as a single share, or as much as 2,733,229 shares. “All investors must be registered with the Exodus transfer agent Securitize,” the statement noted, pointing toward two avenues for registration: through Securitize or in the Exodus wallet itself.

Shares can only be purchased by U.S. residents. Arizona, Florida and Texas folks, however, cannot participate. The statement also added:

“Exodus is currently exploring partnerships with alternative trading systems (ATS) that could potentially expand the availability of Exodus shares. Exodus intends to make the Class A common stock available for trading on several ATS, including the tZERO ATS within nine months of this offering.”

Crypto companies going mainstream has been hot news as of late, with Coinbase’s direct listing on the horizon, expected to occur on April 14.

Quotes in this article taken from previously published sources have been lightly edited.

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