Having traded at a huge premium, Bitcoin futures contango is seemingly being evaporated, with Sep-perpetual trading within $10 of each other. Whether the curve will invert or not remains to be seen, but anyone trading directional should not underestimate the importance of watching the futures curve as we head towards the June 28 contract expiry. Bitcoin continues to hold onto $8k and the key level to watch on the downside is 7,450, as a break below would open the door towards what could develop into a very painful crypto market correction. The Lightning Network, which experienced massive growth earlier this year continues to experience a drop in capacity. In the past 30 days, network capacity is down 9%, and the number of channels is also down 8.1%.
Despite the growing short-term uncertainty surrounding Bitcoin, the imminently expiring Ethereum 14June19 options contract with 300 call strike continues to garner demand, with open interest now at 5028. Looking further out, open interest is dominant in lower strikes, with 28June19 140 put strike OI at 10453 and 27Sep19 120 put strike OI at 8200. Nonetheless, 27Sep19 520 and 600 calls have been active recently.
Litecoin, which has been on a monumental uptrend this year ahead of the widely publicised reward halving in early August, is showing signs of fatigue. While the broader market is showing modest gains, LTC coin is actually trading down in early European trade. As has been pointed out for some time, profit taking at this stage is a big factor, especially given that Bitcoin continues to struggle in reaching the $10k level, which in itself indicates a potential cryptocurrency market correction on the horizon.
Former Wall Street executive and current blockchain researcher Tone Vays has expressed skepticism about the fact that crypto winter is over. As reported by Cointelegraph, Vays, a former financial analyst at JPMorgan, revealed that he does not trust the recent rally in the crypto markets, claiming that he has not observed “too much external money coming into the space.”
In other news, Reuters reported that British insurer Legal & General has teamed up with Amazon to establish what it said is the first blockchain system for corporate pension deals. The insurer said it would use a managed blockchain system launched by Amazon Web Services (AWS) to handle bulk annuities, which involve Legal & General taking over companies’ defined benefit or final salary pension schemes.
Finally, French financial newspaper Les Échos reported that French video gaming giant Ubisoft is allegedly exploring potential blockchain applications in gaming as a strategy to gain a more competitive edge in the industry. The report points out that the company plans to put intra-game virtual objects and accessories onto the blockchain and monetize them.
Thank you for reading,
The BeQuant’s Analytics team