Heading into the close of the week, Bitcoin is set to finish with gains of over 20% and above the psychologically important 5,000 USD level, while Ethereum rallied all the way to the $180 area before pulling back to mid the $160 region. Social media has been abuzz with excitement, with plenty of “to the moon” references by market commentators. Some attributed the surge to a major order by an anonymous buyer which, as reported by Reuters, set off a frenzy of computer-driven trading. The said order, worth about $100 million, was spread across U.S. based exchanges Coinbase, Kraken, and Bitstamp.
A digital asset strategist at VanEck pointed out that CME Bitcoin futures expired last Friday and a large chunk of positions were rolled (buying) into the new front-month BTC futures contract. Over the weekend, heavy spot Bitcoin and over-the-counter buying followed the Bitcoin futures contract expiration, pushing the BTC price up slowly and gradually. As the price has moved up in increments, over $500 million shorts have been liquidated on leveraged crypto derivatives trading platforms around the world.
This week saw a big increase in traded volume (Bitcoin futures) on the CME, with over 12k on April 2nd, 17k on April 3rd and 22k on April 4th, big fluctuations in the curve with the underlying structure generally remaining in backwardation. Visibility remains very limited but the recent market positioning suggests that investors are becoming increasingly bullish. In terms of options flow, a good size is noted in June 6000 strike (calls) OI 2376.1 and delta 0.33, while all the way out in Sep, 7000 strike (calls) OI 1243.6 and delta 0.30. Ethereum futures remain in contango to recap something that was mentioned last week.
Finally, Tom Lee of Fundstrat Global Advisors believes that the fair value of Bitcoin is around $14,000. The research chief and managing partner at Fundstrat also says that the old Bitcoin whales are back and have begun to buy back in large part due to a shift towards positive market sentiments.
Thank you for reading,
The BeQuant’s Analytics team