The crypto market continues to trade stubbornly around the $8k level and the June Bitcoin futures contract, which posted its first trade on Dec. 31, 2018 and subsequently traded in contango, causing a huge squeeze in the market, is due to expire at the end of this month. The total open interest on the CME is 4,423, of which 3,171 corresponds to the June contract. The contango between Sep and perpetual has tightened significantly recently and spot traders should pay particular attention to the shape of the curve in the next few weeks to gauge the near-term sentiment, especially if the price action remains sideways. Interestingly, realized funding is back in the negative across the board. Another metric worth noting is that of Bitcoin’s layer-2 scaling solution, the Lightning Network, which saw a huge growth phase earlier this year and now is experiencing a prolonged drop-in capacity. In early European trade, the network capacity is down 11%, and the number of channels is also down 9.4%.
Despite the growing short-term uncertainty surrounding Bitcoin (BTC) and its ability to break through the key $10k level, the soon to be expiring Ethereum’s 14June19 options contract with 300 call strike continues to garner demand, with open interest now at 5027. However, looking further on, open interest is dominant in lower strikes, with 28June19 140 put strike OI at 10453 and 27Sep19 120 put strike OI at 8200.
Elsewhere, Litecoin (LTC) continues to outperform its peers and is up nearly 10%, and the widely publicised mining reward halving is due in less than 60 days. On Aug. 8, the reward for mining on Litecoin’s blockchain will be halved from 25 LTC to 12.5 LTC per block. The hash rate has again hit a new lifetime high of over 400 trillion hashes per second and while the short-term momentum is bullish, risk of a sharp correction should not be underestimated, especially if the broader market undergoes a pullback.
In terms of news flow, as reported by CoinTelegraph, Coin Center — a nonprofit research and advocacy center focused on crypto-related public policy issues — has urged Her Majesty’s Treasury not to over-broaden the scope of the United Kingdom’s anti-money laundering/counter terrorism financing (AML/CFT) regulations. Specifically, Coin Center’s central concern regards HM Treasury’s plans to ostensibly “impose data collection and reporting requirements on not only cryptocurrency developers, but all open-source software developers and others who facilitate the peer-to-peer exchange of cryptoassets”.
In other news, a blockchain APT hacker group that provides AI-powered blockchain ecosystem security, according to CBInsights, released a report showing that the equivalent of $6mln in transaction volume was driven by rampant, malicious bot activity on Dapps in the first quarter of 2019. The report, the largest-scale study of malicious bots in the EOS ecosystem — also found 51% of unique accounts and 75% of total transactions were driven by non-human accounts.
Thank you for reading,
The BeQuant’s Analytics team