Cointelegraph By Marcel Pechman
Bitcoin’s (BTC) abysmal December 2017 futures launch quickly fell short of investors expectations and even though the CME BTC market has surpassed $2.5 billion in open interest, the initial launch has reinforced the narrative that this week’s CME ETH futures launch will be equally bearish in the short term.
Prior to the CME BTC futures launch, Bitcoin had already gained 1,900% for the year, a rally which some analysts argue was propelled by the expectation of regulated futures.
Now that the CME ETH futures have launched, investors are watching closely to see if Ether (ETH) will face a similar situation as it has already gained 600% over the past year.
To date, there is no way to estimate how Bitcoin would have fared without the existence of the CME and CBOE futures. Nevertheless, traders still tend to connect the CME launch to the 70% crash in BTC price that occurred in the first 3 months following the launch.
Analyzing an assortment of commodities and FX contract launches over the past two decades might provide a better perspective on the matter so we will review data from the CME’s historical first trade dates index to see if there is a discernible price trend that occurs after CME listings.
Crude palm oil
When crude palm oil futures launched at CME in May 2010, they did not affect its ongoing price recovery as the above data indicates. Similar contracts had already existed for nearly a decade at NYMEX, thus the above event might have held lesser importance as both exchanges handle institutional clients.
Multiple factors could have caused palm oil prices to hike after the CME launch, including WTI oil’s 23% positive performance over the next five months.
South Korean won
On a similar tone, the South Korean won futures listed in September 2006 and in this instance the launch did appear to have an immediate impact on price.
Despite not having a futures contract, Non-Deliverable Forwards (NDF) for the South Korean won already existed ahead of the CME listing. These NDF contracts are usually traded over-the-counter (OTC) and are seldomly transferable between investors. This means that the listed futures contract had a broader number of institutions that might take part.
Once again, it is impossible to estimate whether this futures contract launch had an immediate impact on price. It’s possible that the South Korean won devaluation followed the trend of emerging or Asian economies. Therefore, pinning this movement to CME futures launch seems a stretch.
How did commodities fare?
Both Ether and Bitcoin are usually considered scarce digital commodities, thus it makes sense to compare it against other previous CME launches.
Going back to commodities, Diammonium phosphate (DAP), a widely used fertilizer, held its CME futures contracts debut in June 2004.
Prior to the CME launch, the Chicago Board of Trade (CBOT) held these contracts since 1991. Nevertheless, there’s potential evidence of a price dump ahead of the listing. However, for those analyzing a broader time frame, the listing itself seemed like a price catalyst rather than something negative.
South African coal futures
Coal futures started trading in July 2001 at CME, and unlike the previously discussed examples, it did not have a listed proxy on other exchanges. Similar to Bitcoin, a 50% hike occurred over the year and a half that preceded its debut.
The result mimics Bitcoin’s listing, as the commodity dropped 33% during the next twelve months.
To conclude, there is no set trend which allows anlayts to predict an assets performance after a CME listing. Multiple historical events have been lined up, and a concrete pattern has not been found.
Not every futures contract gathers relevant liquidity and the CBOE Bitcoin futures delisting proves this point.
At this point, it’s safe to conclude that Ether’s future price performance will depend on a range of factors like the performance of Eth2 and its crucial role in the DeFi sector.
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.
Traders speculate that Bitcoin’s price may continue to trade sideways for now
Cointelegraph By Benjamin Pirus
Bitcoin’s price has declined in recent days. While it has rebounded from its weekly lows, the asset’s trajectory remains uncertain says CryptoWendyO, a crypto trader on Twitter.
“The daily timeframe is not looking great as we are having trouble sustaining $50K,” she told Cointelegraph on Friday. “I am feeling like we will get a run to $51.6[K].”
“From there I would be cautious as rejection could lead back to the $50K -$45K range. A break down there could be a swift wick to $42-38K with a glorious recovery. Invalidation would be a sustained consolidation at $52K.”
After hitting record highs of approximately $58,360 in February, Bitcoin (BTC) dropped down to roughly $43,015 in subsequent days, based on TradingView data. The asset then rebounded up to about $52,660, before continuing its downward price action below $50,000. Bitcoin is trading at roughly $49,020 at time of publication.
Cheds, a trader on Twitter holding his CMT level I certification, expects “more consolidation from BTC above that key 42k level,” he told Cointelegraph on Friday. He also tweeted a chart of his range expectations.
“The big question is if the recent 27% correction is enough to bring us to a new high,” Cheds said. “In the meantime we will watch a tightening range on the daily of lower highs and higher lows.”
A number of technology stocks have also suffered price decline recently.
Bitcoin Support at $47K “Very Strong,” Glassnode CTO Asserts After Price Falls
Bitcoin has an extreme potential to hold $47,000 as its support level, according to Rafael Schultze-Kraft, the co-founder/CTO of blockchain analytics platform Glassnode.
The data scientist studied the number of existing bitcoins that moved within the said price bucket and placed it against other price levels. He noted that the “UTXO Realized Price Distribution” near the $47,000-level was comparatively higher than the rest in recent times, stressing that the range prompted the Bitcoin network participants to become more active than usual.
In retrospect, a higher number of coins moving near a specific level signifies more trades. It is possible that traders and investors sold or bought more bitcoins near $47,000 than any other level around it. Given the cryptocurrency’s recent uptrend, it is safe to assume that most trades near $47,000 had a bullish outlook, which made the level ideal support for Bitcoin.
“[We have a] very strong on-chain support at $47k – around 500,000 BTC have been moved at that level,” noted Mr. Schultze-Kraft. “It is important that we hold it; otherwise, we could see low forties quickly before the next upwards movements.”
Offsetting Yield Fears?
The statements appeared as Bitcoin bled through an unaccustomed macroeconomic environment. The benchmark cryptocurrency was among the biggest losers this Thursday as Federal Reserve Chairman Jerome Powell ignored offering any future guidance on rising bond yields in the US.
Bitcoin closed the previous session 3.95 percent lower and opened Friday declining further as it logged an intraday low near $46,219. The cryptocurrency pushed against bearish attempts and attempted a recovery above $47,000. At press time, it was still wobbling around the so-called on-chain support level.
Traders anticipated that Mr. Powell would boost the Fed’s bond-buying program to longer-dated Treasurys to contain interest rate returns on the benchmark 10-year note. Lower yields have benefited Bitcoin throughout 2020, so it was safe to assume that the Fed’s extended assistance would aid the cryptocurrency’s bull run.
But with Mr. Powell choosing to remain mum, the Bitcoin market entered an uncertainty phase.
“Speculation is harder when there is no clear upwards trend,” said Alex Krüger, an independent market analyst. “There are multiple major market drivers pulling in opposite directions, and/or trades are crowded. As is the case right now.”
“I’ve got bids down to 45k,” said another analyst. “I still definitely lean towards the low being in — this drop doesn’t surprise me at all.”
Institutional Support for Bitcoin
Ki-Young Ju, the CEO of CryptoQuant—a South Korea-based blockchain analytics platform, said that institutional capital into the bitcoin market remains higher near the $46,000-47,000 range. As of Friday morning in London, about 12,000 BTC flowed out of Coinbase Pro wallets to enter its custodian addresses, reflecting accumulation via over-the-counter desks.
“Also,” Mr. Ju added, “it seems most US institutions haven’t sold any Bitcoin since their OTC deals. For example, custody wallets from Coinbase outflows on Dec 23, 2020 [show that] no BTC moved since then.”
Bitcoin was trading at $46,500 at press time.
Former Bitcoin opponent says crypto is an effective hedge against currency debasement
Cointelegraph By Sam Bourgi
Financial industry veteran George Ball believes investors would be prudent to allocate a “small part” of their portfolio to cryptocurrencies — marking a major departure from his previous stance towards digital assets.
In an interview with Yahoo Finance, Ball described cryptocurrencies like Bitcoin (BTC) as an “attractive” option for investors looking to hedge against currency debasement. His comments came as Congressional lawmakers mulled a $1.9 trillion relief bill that would put provide up to $1,400 in direct stimulus payments to Americans impacted by Covid-19.
“I’ve never said this before, and I’ve always been a blockchain, cryptocurrency and Bitcoin opponent. But if you look now, the government cannot stimulate markets forever, the liquidity flood will end,” Ball said.
“With the cryptocurrencies, I think there is a fundamental hydra-headed shift that makes them attractive as a part, a small part, of almost any portfolio.”
If higher inflation leads to currency debasement over the long term, Ball said, “then the cryptocurrencies have a great deal of allure.”
Ball, who served as Chairman of Prudential Financial between 1982 and 1992, began to change his tune on Bitcoin in August 2020 when he told investors that now was the time to seek exposure to the digital asset. At the time, one Bitcoin was worth roughly $12,000. It’s presently valued at just over $48,000.
Wall Street veterans like Ball are warming to cryptocurrencies as they’ve watched Bitcoin pull a 5x move in less than six months. Institutions like JPMorgan and Morgan Stanley are eyeing the Bitcoin market, whereas firms like BNY Mellon have already started to custody the digital asset.
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