First Mover: Bitcoin Options Traders Are Taking Bullish Bets on $75K and Higher By Summer

March 2, 2021

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Bitcoin (BTC)

+2.3% $48,690

Ether (ETH)

+3.1% $1,563

(Price data as of Mar. 2 @11:30 UTC)

Good morning. Here's what we're writing about:

Cardano’s ADA Token Tripled in February to Outperform CoinDesk 20

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

Michael Lebowitz, partner at 720Global

MARKET MOVES by OMKAR GODBOLE

Bitcoin Options Traders Are Taking Bullish Bets on $75K and Higher By Summer

Institutional traders look to be positioning for a bitcoin price rally to $75,000 and beyond in coming months, according to options market data.

"On Monday, some block traders took bull call spreads at $75,000 and $100,000 strike call options expiring on May 28 via over-the-counter (OTC) trading and settlement desk Paradigm," Swiss-based options analytics platform Laevitas told CoinDesk. "These could be institutions betting that bitcoin will hit at least $75,000 by summer."

A call option gives the holder the right but not the obligation to buy the underlying asset at a predetermined price on or before a specific date. A bull call spread involves buying call options at/below or above the spot market price and selling an equal number of calls with the same expiry at a higher strike price.

For instance, at 20:23 UTC on Monday, a trading entity bought 100 contracts of the May 28 expiry call option at $75,000 strike and sold 100 contracts of the May 28 expiry call option at $100,000 strike. Bitcoin was trading at $48,721 when the call spread was bought.

Institutions tend to trade through OTC desks to avoid influencing spot market prices. Trades facilitated by Paradigm are automatically executed, margined and cleared at Deribit, the world's largest crypto options exchange by trading volume.

Bitcoin bull call spreads (Source: Laevitas, Paradigm, Deribit)

The trade cost 4.75 BTC, which is the maximum loss the institution would suffer if bitcoin ends at or below $75,000 on May 28.

The initial cost would have been much higher if the trader had only bought $75,000 calls. "The purpose of the call spread is to have a bullish direction but offset the costs of merely buying calls," Laevitas said.

While selling $100,000 calls has bought down the cost, it also limits maximum return possible to 20.25 BTC. The strategy will earn a maximum profit if bitcoin settles at or above $100,000 on May 28. Several other call spreads were bought on Monday at strikes ranging from $52,000 to $100,000.

The data shows institutions remain undeterred by the recent price pullback and foresee a continued rally over the next three months.

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At press time, bitcoin is changing hands near $48,730, representing a 1.8% gain over 24 hours. The cryptocurrency was rejected above $50,000 during Asian hours, according to CoinDesk 20 data.

While the cryptocurrency has bounced up from lows near $43,000 observed over the weekend, some analysts believe the pullback may not be over yet.

"At the moment, we think the biggest risk to bitcoin is the short-term risk associated with a downturn in the U.S. and global equities," said Joel Kruger, currency strategist at LMAX Digital. "We think there's still room for more weakness ahead and would caution against expectations that the bottom is in."

Futures tied to the S&P 500 are currently down 0.23% on the day. Losses may deepen, adding to bearish pressures around bitcoin if U.S. Treasury yields resume their rally.

--Omkar Godbole

Read the original story here:

Bitcoin Options Traders Are Taking Bullish Bets on $75K and Higher By Summer

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COINDESK 20

Cardano, a smart-contract blockchain aiming to rival market leader Ethereum, tripled in February to dominate performance rankings among the CoinDesk 20 digital assets.

The gains came during a bullish month across the board for cryptocurrencies, with bitcoin (BTC), the largest, posting a 36% return. Ether (ETH), the second-biggest and the native token of the Ethereum blockchain, climbed 7.4% on the month.

But it was Cardano and other Ethereum alternatives that topped the rankings. Aside from the 274% gain for Cardano’s ADA token, the ATOM token from Cosmos rose 122%, based on CoinDesk pricing.

Cardano’s gains were so impressive that its market capitalization climbed to about $40 billion, becoming the third-most-valuable digital asset and vaulting past cryptocurrencies like bitcoin cash (BCH) and litecoin (LTC) that had led the industry standings in recent years. XRP, the token used in Ripple Labs' payment network, fell 15% on the month.

ADA climbed to a new all-time high of $1.49 on Feb. 27, topping the peak price of $1.30 reached in early 2018 at the tail end of the last bull market for cryptocurrencies.

CoinDesk 20 returns, February 2021 (Source: CoinDesk Research)

The ebullience in the market for ADA might eventually contend with some of the network’s realities. While touted as an “Ethereum competitor,” Cardano doesn’t as yet have any smart-contract functionality. Input Output Hong Kong (IOHK), the developer team behind the blockchain, has taken a long-term approach to developing the network. For example, Cardano only recently transitioned out of the hands of IOHK and into the community’s control with July’s “Shelley” hard fork.

The "Mary" hard fork scheduled for today will allow users to create new tokens that run on Cardano natively, just as ADA does.

Goguen is the next hard fork on the docket for IOHK CEO and Ethereum co-founder Charles Hoskinson. That upgrade should occur in the first half of 2021 and should introduce smart contracts, the team claims.

That being said, it’s likely that unit bias – when investors buy a cheaper alternative asset given its lower price against more established ones – is coming into play for the cryptocurrency given its low price per unit compared to other cryptocurrencies such as bitcoin, ether or even Polkadot’s DOT.

-- William Foxley

Read original story here:

Cardano’s ADA Token Tripled in February to Outperform CoinDesk 20

BIGGEST MOVERS

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

Gainers:

0x (ZRX): +8.7%

Losers:

The CoinDesk 20 filters from the larger universe of thousands of cryptocurrencies and digital assets to define a core group of 20. These assets constitute roughly 99% of the market by volume at eight of the largest and most trustworthy exchanges.

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BOLO

Be on the lookout for this upcoming event:

ICYMI

In case you missed it, here is yesterday's episode of First Mover:

Bitcoin Rebounds; Citi Report Says Bitcoin ‘at Tipping Point’

Bitcoin off to a strong start this week; What's driving the price activity now? Analysis from guests Max Boonen of market maker B2C2 and Raghu Yarlagadda of crypto trading platform FalxonX. Also, where a central bank digital currency was used for the first time in the Caribbean, a key party to the project explains.

Introducing Coin Toss, debating the future of money on CoinDesk TV

From the world leader in crypto news and events, the all-new CoinDesk TV covers the rapidly evolving world of digital finance and its role in the global economy.

Hosted by CoinDesk Podcasts Managing Editor Adam B. Levine, Coin Toss sets the stage for debate between guests with opposing views on policy and regulation, privacy and data integrity, fraud and crime and more.

Watch Coin Toss Wednesdays at 10:30 a.m. ET on YouTube or CoinDesk.com.

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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