First Mover Americas: Bitcoin Hits $25K But Fails to Hold, Galaxy Digital Scraps Plan to Buy BitGo

Price point

Bitcoin (BTC) is down 2% after failing to hold a crucial price point of $25,000. The world’s largest cryptocurrency by market capitalization briefly hit the psychological threshold in the early hours Monday but has since fallen to $24,200.

Liquidations over the weekend were very high as BTC’s total liquidations totaled $205 million, compared with the prior weekend's figure of $15 million.

After both bitcoin and ether (ETH) reacted positively to lower-than-expected U.S. inflation last week, ether is down 5% on the day to about $1,900. The cryptocurrency briefly hit $2,012 Monday, its highest price since May.

Altcoins also were mainly down on the day apart from crypto exchange Bitfinex’s token, unus sed leo (LEO), which was up 5%.

In traditional markets, U.S. stock futures, crude prices and other commodities fell after new data showed China’s economic activity slowed across the board in July, including factory output, investment and consumer spending. China’s central bank cut key lending rates to revive demand after the weak data was released.

In crypto news, Galaxy Digital has abandoned its plan to buy BitGo, saying the crypto custody specialist had failed to provide financial statements by an end-of-July deadline. The $1.2 billion acquisition was announced May 2021 and was expected to close by the end of that year.

European digital bank Revolut has been granted authorization by the Cyprus Securities and Exchange Commission, allowing it to offer crypto services across the European Economic Area. The authorization will enable Revolut to offer crypto services to its 17 million customers.

And Singapore's High Court granted beleaguered crypto exchange Zipmex more than three months of creditor protection so that Zipmex can devise a funding plan, Bloomberg News reported on Monday.

Market Moves

Institutional Investors Are Increasingly Using Crypto Options Trading to Hedge Their Bets in Bear Market

In the current bear market, crypto options trading has been a rare bright spot, building momentum even as crypto prices have plunged.

A number of crypto exchanges have noted increasing trading volume after low volume earlier this year. Options strategies have figured prominently among institutional investors and even miners as they try to weather crypto’s usual volatility and a downturn that could last for months, or longer, despite recent hopeful macroeconomic signs.

More recently, traders have been using the crypto options market to bet on ether and hedge positions as the Ethereum blockchain’s highly anticipated Merge approaches. Panama-based derivatives platform Deribit, which is among the world’s largest exchanges for crypto options trading volume, told CoinDesk demand is surging ahead of the Merge.

Last week, in a disappointing second-quarter earnings report, crypto exchange COINBASE (COIN) alluded to traders migrating to derivatives-focused platforms as a reason for declining trading volume on its exchange. Coinbase’s lower volume in the second quarter led to a 30% decline in revenue.

“A larger amount of trading volume took place at offshore exchanges in Q2,” Coinbase said in its report, adding: “The sequential decline in Q2 institutional trading volume was primarily driven by lower market maker volume on our trading platform. These market participants gravitate towards products such as derivatives and financing products, which are areas we’re continuing to invest in, but we don’t currently have product parity with offshore exchanges.”

A young market?

Bitcoin options trading accounts for only 2% of open derivatives contracts across exchanges trading the cryptocurrency, whose market cap is about $462 billion, according to structure product provider Enhanced Digital Group (EDG).

By comparison, traditional options trading of stocks accounts for 20% of the market cap of the S&P 500 at the Chicago Board Options Exchange , EDG said.

“When you think of all the other [S&P 500]-like products, including [exchange-traded funds], SP Minis, etc., you can see that bitcoin options have multifold growth ahead of it,” EDG quant developer Marcin Maksymiuk told CoinDesk.

Delta Exchange CEO Pankaj Balani said that sudden market shocks, technological improvements and a maturing futures market will all contribute to the growth of options.

Delta generates over $200 million in options trading volume per day, and Balani said that “options provide a way for people to get engaged with the market even in a sideways environment.” He foresees options eventually accounting for 60% of the crypto trading market.

Peter Wisniewski, managing partner of crypto-focused alternative investment fund Europa Partners, told CoinDesk the firm expects “the market to continue to mature with greater price efficiency and liquidity.” Wisniewski said the markets will likely tie options to a widening range of digital assets.

“Currently, the only crypto derivatives markets with significant liquidity are priced to bitcoin and ether, but we expect to see a continual increase of derivative instruments priced to other types of digital assets, reducing volatility and driving more investment into the space,” Wisniewski added.

Read the full story here.

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