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18 May 2020 12:41

Despite being more complicated then futures trading, options markets allow investors to leverage their positions without liquidation risk.

bitcoin

As you most likely heard, the Bitcoin halving occurred on Monday. The information stunned many, on condition that the bank's CEO, Jamie Dimon, made public statements in 2017 claiming Bitcoin to be "a fraud that will blow up," and "only fit for use by drug dealers, murderers, and people living in North Korea." The Reddit link-sharing and dialogue platform, with an estimated 330 million customers, is set to launch its personal crypto tokens. These tokens will permit customers to purchase entry to sure web site options and features. Whereas incentivizing engagement utilizing crypto is actually not a brand new thought, Reddit's extensive attain will serve to introduce many new customers to cryptocurrency. Earlier than we conclude, this week's "Bitcoin quick question" is what's the incentive for working a Bitcoin node?

bitcoin

Which means it has data of each Bitcoin transaction ever made. The extra nodes working world wide the more durable it's to close down Bitcoin. Consider it this manner – to be able to actually destroy Bitcoin it is advisable to destroy all data of all transactions ever made, so extra nodes means a extra strong Bitcoin community. Nevertheless, there's no financial incentive to working a Bitcoin node. Not like Bitcoin mining, should you run a node your solely incentive is to ensure you're not counting on any third occasion to make use of the Bitcoin community and in doing so that you're contributing to the community's energy.

bitcoin

In the present day there are almost 8400 nodes unfold out world wide. If you wish to see precisely the place they're, check out the hyperlink within the description beneath. Simply go to the hyperlink within the description beneath. That's what's occurred this week in Bitcoin. The crypto markets are back in the green again following solid weekend buying which has increase market capitalization by almost five percent.

Total crypto markets' cap is back up to just below US$270 billion[AU$420 billion] as a weekend rally has added $12 billion back to the space. By Monday morning, BTC prices had reached an intra-day high of $9,950 before pulling back slightly. The weekly candle had closed green again which indicates a continuation of the longer-term uptrend. Bitcoin must make a new higher high above $10,500 for this to be confirmed, however. Analysts have noted another gap formation on the CME futures chart which will need to close. Altcoins are also making solid gains today with Ethereum at the top of the performance pile adding seven percent on the day to reach $215. Bitcoin's two smaller siblings, BCH and BSV, are also performing well with gains of around six percent while Zcash is the top of the chart in terms of performance with a 10% surge. Bitcoin's (BTC) options markets are finally taking off at CME. This week Cointelegraph reported that the combined volume traded over the last ten days surpassed $140 million, as institutional investors delved in call options. The buyer of a call option can acquire Bitcoin for a fixed price on a predetermined date. For that privilege, this investor pays an upfront premium for the call option seller. CME Bitcoin Options Volumes - USD. As halving uncertainties became less of a risk, institutional investors began mounting bullish positions. Despite being more complicated then futures trading, options markets allow investors to leverage their positions without liquidation risk. In simple terms, open interest is the total number of contracts held by market participants. Imagine a scenario where $70 million worth of call options are traded one week and reverted on the following one. Both the buyer and seller would be closing out their positions and risk. Despite $140 million being traded, market exposure (open interest) for such a scenario would be zero. CME Bitcoin Options Open Interest - USD. As per the above chart, volume registered over the last couple of weeks matched open interest. This indicates no positions have been closed so far. Most trades were short term call option contracts. CME Bitcoin options contracts settlement. Source: CME Keep in mind CME displays open interest in the number of contracts. As each CME contract entails 5 BTC, the minimum trade for a $10,000 strike amounts to a $50,000 notional. This sets CME markets apart from other markets where one can trade as little as 0.10 BTC. 1,800 call option contracts were traded at the May 29 expiry, which is equivalent to $90 million. The June 26 expiry currently has an open interest of 800 contracts, roughly $40 million notional. Strikes, or the contract expiry price, were scattered from $9,700 to $13,000. Such trades are an undeniably bullish indicator from professional investors. The total cost of creating such impressive exposure exceeds $5 million. On the other hand, it is safe to assume such investors built short-term bullish positions. CME options contracts are deliverable, meaning Bitcoin futures contracts will be given out to the call option buyer. Investors can immediately sell those futures, pending market liquidity, although this buying movement indicates potential longer-term market optimism. It might seem unreasonable to sell a call option with unlimited downside, in exchange for a fixed upfront. This strategy changes drastically if the seller previously had Bitcoin, or acquired exposure using CME futures. Such a strategy is known as a 'covered call' which allows investors to put a ceiling for its gains while simultaneously reducing its average entry price. This could be interpreted as a short-term bearish trade, although not a leveraged bet. Monitoring the potential Bitcoin price impact The first thing retail traders should take note of is CME options expiry calendar. One should also keep a close eye on the put/call ratio, as call options usually indicate bullish strategies. Bitcoin Options Put/Call Ratio. Recent call options movement at CME caused the indicator to reach the lowest level ever registered. As of right now, 88% of current open interest is dominated by call options. There's a significant incentive for such call options buyers to boost Bitcoin price nearing each expiry. As for the covered call option seller, there's no gain by pushing the market much further from the strike price, but neither to suppress it. As option markets gain relevance, there are potential incentives for additional price pressure surrounding each expiry. Every investment and trading move involves risk. CME Bitcoin Trading Product Records Show Institutional Participation Uptick Mainstream market exchange, the Chicago Mercantile Exchange, or CME, recently posted record numbers for its (BTC) trading products. May 14 yielded open interest of 10,792 Bitcoin futures trading contracts at CME, totalling 53,960 BTC — an all-time high for the product, according to information a CME representative provided to Cointelegraph. CME Bitcoin Trading Product Records Show Institutional Participation Uptick