Bitcoin price rallied ferociously past the psychologically important $10,000 level before topping out just above the $11,000 level, while the futures curve remains in deep contango but the delta has narrowed from the widest levels observed over the weekend. At the same time, Ethereum rallied all the way to the $320 area, with the Sep-perpetual spread expanding to $17. As a reminder, this week will see June CME Bitcoin futures expire, so pay close attention to the futures roll and the shape of the curve. The funding costs are also on the rise, moving to their highest level since May.
Given the increasing rise in the open interest for CME Bitcoin futures, the Commitment of Traders (COT) report will begin to garner more attention from cryptocurrency market participants. As it stands, Asset Manager/Institutional category remains net long, with no short interest. Leveraged category long at 2,564 vs short at 2,911 (close to 2019 highs), other reportable long at 482 vs short 1,621 (2019 highs) and non-reportable category long at 1,500 (2019 highs) vs short at 368.
Looking elsewhere, Bank of International Settlements (BIS) has warned that big tech groups pose a threat to stability. As pointed out by FT, in an extract from BIS’s upcoming annual review published on Sunday, there is a fair amount of unease on behalf of regulators after Facebook last week outlined its desire to upend the financial system through the launch of Libra, a “global digital currency”. The BIS, the central bank for central banks, said regulators worldwide may need to “revamp” rules to deal with the structural changes being brought about by entrants that control “key digital platforms” such as e-commerce sites and social networks. As a reminder, last week the Financial Action Task Force (FATF) released its latest standards combating money laundering and terrorism, and it includes the much-debated “travel rule,” requiring crypto exchanges to collect and transfer customer information during transactions.
As a guide, the US Senate Committee on Banking, Housing, and Urban Affairs will hold a hearing on July 16 regarding Facebook’s cryptocurrency, Libra. The hearing, “Examining Facebook’s Proposed Digital Currency and Data Privacy Considerations,” comes amid calls from members of Congress to more closely examine Libra and its potential risks.
In other news, according to sources, Bitmain Technologies Ltd, the world’s biggest producer of cryptocurrency mining chips, is reviving plans for an initial public offering (IPO). Reports indicate that the cryptocurrency mining giant is aiming to file listing documents with the US Securities and Exchange Commission (SEC) as soon as next month. The Bloomberg report notes that Bitmain, which was valued at about $15 billion in a private funding round last year, is considering reducing its earlier fundraising target due to increased volatility in cryptocurrency prices.
Elsewhere, the use of “draw” feature on the MakerDAO platform, which allows holders to take loans in DAI from your CDP, was close to its 3-month high. The amount of ETH coins locked in the credit ecosystem remains stable at around 1.50%.
Finally, two Ethereum Improvement Proposals (EIPs) have been approved for inclusion in Ethereum’s next major upgrade, Istanbul. EIP 2024 – or, in some documents, EIP 131 – adds a new precompile to the Ethereum virtual machine. Pre-compiles are normally expensive operations on the Ethereum blockchain that deploy for a fixed fee or “gas cost.” EIP 2024 introduces a precompile for a new hash function called “Blake2.” The function is said to be faster in verifying and authenticating blockchain data than other, more traditional hash functions on Ethereum such as SHA-3.
Thank you for reading,
The BeQuant’s Analytics team