Bitcoin's CME Futures Premium Spikes

The latest moves in crypto markets, in context

Edited by Omkar Godbole

October 6, 2021

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Bitcoin (BTC)

+3% $51,390

Ether (ETH)

-2% $3,382

(Price data as of October 6 @ 12:00 UTC)

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Good morning, and welcome to First Mover. Here's what's happening this morning:

Market Moves: Bitcoin's CME Futures Premium Spikes

And check out the CoinDesk TV show "First Mover," hosted by Christine Lee, Emily Parker and Lawrence Lewitinn at 9:00 a.m. U.S. Eastern time. Today's show will feature guests:

Nathan Geraci, The ETF Store

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– Omkar Godbole

Biggest Movers

These are the biggest movers in the CoinDesk 20 over the past 24 hours:

Gainers:

Bitcoin (BTC): +3%

Losers:

The CoinDesk 20 are 20 digital assets filtered from the larger universe of thousands of cryptocurrencies and constitute roughly 99% of the market by volume at eight of the largest and most trustworthy exchanges.

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Market Moves

by Omkar Godbole

Crypto markets are trading mixed, with bitcoin steady above $50,000 and dog-themed tokens like dogecoin and Shiba Inu seeing buying pressure. Meanwhile, native coins of smart contracts and decentralized finance protocols are nursing losses.

In traditional markets, concerns of economic fallout from soaring energy prices continue to weigh over stocks and power inflation expectations and bond yields higher. Futures activity suggests the U.S. stocks are likely to track their European peers lower later Wednesday.

Bitcoin's CME Futures Premium Spikes, Downside Fears Ebb

Institutions seem to have made a comeback to the bitcoin market. Bitcoin's front-month futures contract listed on the Chicago Mercantile Exchange (CME) is currently trading at an annualized premium of 12.8% to the spot price – the highest spread since mid-April. A week ago, the same futures contract was trading at a discount of less than 1%, according to data provided by Skew.

"The front-month contract on CME is by far the most frequently traded BTC futures contract on the exchange, and right now, bullish tendencies seem to be brewing on the institutional platform," Arcane Research's weekly note said, adding that the demand would rise further if the U.S. regulator approves a futures-based exchange-traded fund (ETF) later this month.

The CME futures premium spikes as bitcoin rallies (Source: Skew)

A futures-based ETF would gain exposure to bitcoin via regulated futures like those offered by the CME rather than buying the actual cryptocurrency.

While the crypto community is cheering prospects of a futures-based ETF approval later this month, some observers are taking a more cautious stance.

"An ETF backed by futures will simply by the nearest dated futures contract and roll it at expiry. A physical ETF on the other hand, is backed by physical coins and would be required to buy BTC from the open market for new participants," Stack Funds' COO and co-founder Matthew Dibb said, implying that the futures-based ETF could have a significantly less bullish impact on the market than many expect.

Presently, the options market does not reflect any of these concerns and remains decisively bullish, as evidenced from the positive one-, three- and six-month put-call skews.

Bitcoin exchange futures rankings (Source: Skew)

The put-call skews measure the cost of puts or bearish bets relative to calls or bullish bets. The one-month gauge has declined sharply from 10% to -3% since Sept. 29 as fears of an extended move to the downside faded with bitcoin rallying to $50,000.

Bitcoin's daily chart shows the cryptocurrency has crossed above the downtrend line from April highs, confirming a breakout. Observers say a move above $52,000 is needed to strengthen the upward bias.

"We do not see this [trendline break] as a major breakout, unless there is a firm break above the $52k handle. It has been a good rally so far into Q4 and its definitely one step in the write direction," Stack Funds Research Head Lennard Neo said. "However, we are still seeing investors making cautious plays, as they digest the mixed sentiments between crypto and traditional markets."

Read the original story here:

Bitcoin Futures Premium on CME Surges as ETF Speculation Grips Market

Technician's Take

by Damanick Dantes, CMT

Bitcoin Approaching Resistance Near $52K

Bitcoin (BTC) has entered an initial resistance zone near $52,000 and could face a short-term pullback toward $48,000-$52,000 support.

Bitcoin's four hour chart with RSI (Source: TradingView, CoinDesk)

The cryptocurrency appears overbought on intraday charts after a near 20% rise over the past week.

Buyers will need to defend lower support above the 200-day moving average, currently near $45,000, in order to resume the price recovery since July.

Read the original story here:

Bitcoin Approaching Resistance Near $52K; Support Between $48K-$50K

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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.

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