Bitcoin options party💰
Record-breaking Bitcoin options trading, $14B expiring this week. India's crypto crackdown. FTX debtors propose valuations. $1.8B lost in hacks. SEC wins the case against Do Kwon.
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Bitcoin options trading volume has surged to an unprecedented level across major crypto derivatives exchanges.
The end of the month, quarter, and year expiry date is witnessing a historic high in trading activity.
$14 billion in Bitcoin options due to expire this Friday, with significant volumes on Deribit and CME.
Deribit holds $7.6 billion, while CME accounts for another $6.4 billion of the expiring options.
Over $38 billion in monthly trading volume was recorded, with Deribit leading at $26.7 billion.
Current data shows call (buy) options have the upper hand, but bears could limit losses by pushing Bitcoin's price below $42,000.
Distribution
On CME, 55% of the expiring options are calls, showing a moderately optimistic sentiment.
Deribit shows a stronger bullish sentiment, with a 60/40 split between calls and puts.
$5 billion worth of options set to expire in March, ahead of the Bitcoin halving in April.
Open Interest in Bitcoin Contracts
Current open interest in Bitcoin contracts is an impressive $21 billion.
Expiring options at the end of January are $2.3 billion on Deribit and $1.5 billion on CME.
Other exchanges like Binance, OKX, ByBit, and BIT contribute an additional $1.5 billion in expiring options.
Why this matters?
Investor Sentiment: High call-to-put ratio shows bullish market sentiment.
Price Volatility: Large expiring volume may lead to significant Bitcoin price fluctuations.
Institutional Interest: High trading on platforms like CME indicates strong institutional involvement.
Halving Effect: Expiry timing around Bitcoin halving suggests expectations of price changes.
Market Liquidity: Large open interest signifies a deep, liquid market.
Scenarios and Profit Potentials
Four likely scenarios have been outlined with potential profits for each side:
Between $39,000 and $40,000: Puts favoured by $575 million.
Between $40,000 and $42,000: Calls favoured by $90 million.
Between $42,000 and $44,000: Calls favoured by $730 million.
Between $44,000 and $45,000: Calls favoured by $1.15 billion.
Strategies for Bulls and Bears
Bears need a modest 3% price drop to $41,900 to balance the scales.
Bulls aim for a rise above $44,000 for a significant advantage.
Traders rolling positions to 2024, with close attention on the upcoming ETF decision.
What could happen?
CryptoQuant expects Bitcoin to potentially drop to $32,000 following the approval of a spot ETF.
'Sell the News' Event: This anticipated decline is a classic "sell the news" scenario, where asset prices fall after a major, anticipated event.
Risk of Price Drop: High unrealised profits among short-term Bitcoin holders are a warning sign, typically leading to market corrections.
Current Market Trends: Short-term holders are seeing about 30% unrealised profit margins, with corrections often following such high margins.
Bitcoin Price Forecast: The expected correction could bring Bitcoin's price down to its short-term holder realised price of $32,000.
Historical Context: Past "sell the news" events in Bitcoin's history include post-CME futures listing in 2017 and post-Coinbase IPO in 2021.
TTD India 🇮🇳
India's Financial Intelligence Unit (FIU) set its sights on nine foreign digital asset service providers.
The providers include Binance, KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex.
Alleged Regulatory Violations
These entities are accused of operating illegally and breaching Anti-Money Laundering (AML) regulations in India.
As a response, the Ministry of Electronics and Information Technology has been requested to block their URLs.
All digital asset providers in India, domestic or offshore, are required to register as a "Reporting Entity" with the Financial Intelligence Unit.
Once registered, they must adhere to the Prevention of Money Laundering Act (PMLA) 2002, which includes KYC guidelines.
To date, 31 virtual digital asset service providers have registered with the FIU.
Despite this, many Indian users continue to utilise unregistered exchanges, prompting the FIU's regulatory action.
India was ranked the top country in the global crypto adoption index by Chainalysis in 2022.
TTD FTX💰
FTX debtors have proposed valuations for crypto and fiat claims related to the exchange's bankruptcy.
The valuations are based on asset prices at the time of FTX's collapse in November 2022.
Proposed Cryptocurrency Valuations
Bitcoin claimants could be valued at $16,871 per coin, Ether at $1,258, and Binance Coin at $286.
The pricing list includes around 500 assets but excludes an estimated price for FTX Token (FTT).
The US Bankruptcy Court for the District of Delaware has broad discretion in determining asset valuation.
Digital asset claims will be converted into cash based on proposed rates, with distributions made in cash.
Coin Metrics data was used to estimate digital asset prices.
Deadline for Objections and Court Hearing
Parties have until Jan. 11 to file objections, with a hearing scheduled for Jan. 25.
Approval of the motion to estimate creditor claims based on proposed pricing is pending.
Where’s ETF? 🚨
Asset management firm Hashdex has released a new advertisement as the SEC considers approving or denying applications for listing spot Bitcoin ETFs in the US.👇🏻
TTD Hacks 🦹🏻
The total crypto losses of 2023: $1.8 billion.
Major Hacks of the Year
The largest hack: Mixin Network, with over $200 million in losses.
Euler Finance faced a $197-million exploit.
Multichain suffered a $126-million hack.
Blockchain security platform Immunefi reported:
The North Korea-linked Lazarus Group was responsible for 17% of these losses.
Approximately $309 million of the total losses are attributed to the Lazarus Group's activities.
The majority of lost funds were due to hacks rather than outright fraud.
$1.6 billion was lost from hacks and exploits.
Only $103 million was lost from identifiable fraud schemes like rug pulls.
Losses predominantly came from decentralised protocols, totalling $1.3 billion.
Centralised finance (CeFi) crypto protocols accounted for $409 million in losses.
TTD Do Kwon👨🏼
A US federal judge has ruled in favour of the SEC in its case against Terraform Labs and its former CEO, Do Kwon.
The court found that Terraform Labs and Kwon offered and sold unregistered securities, including LUNA, UST, and MIR.
Summary Judgment: While the court ruled in favour of the SEC on unregistered securities, it disagreed on classifying mAssets as security-based swaps.
Howey Test: The court applied the Howey test, concluding that both LUNA and MIR tokens are securities based on profit expectations from Terraform's efforts.
Fraud Claims Pending: The SEC's fraud allegations, accusing Kwon of a scheme causing a $40 billion market loss, will go to a jury trial in January 2024.
M-Assets and Security-Based Swaps: The court ruled that mAssets, acting as mirrors of real-world assets, do not meet the definition of a security-based swap.
Ruling on MIR Token: The court ruled that MIR token holders were led to expect profits from Terraform’s efforts in the Mirror Protocol.
TTD Surfer 🏄
Binance has seen a 30% increase in its user base this year, adding 40 million accounts to reach a total of 170 million.
Baidu's AI chatbot, Ernie Bot, has reached 100 million users in China since its launch in August.
Monex Group has announced plans to acquire a majority stake in 3iQ Digital Holdings, an asset manager.
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