Nov. 21, 2024

CoinDesk 20 Index: 3,048.35 +2.24%
Bitcoin (BTC): $97,988.32 +4.55%
Ether (ETH): $3,284.40  +6.06%
S&P 500:  5,917.11  0%
Gold: $2,664.88  +0.56%
Nikkei 225: 38,026.17  -0.85%

A message from Kraken

Bitcoin topped $98,000 heading into the U.S. morning, extending its breakout from an eight-month consolidation since crypto-friendly Donald Trump won the U.S. presidency. The largest crypto has advanced 4.5% over the past 24 hours, leaving the broad-market CoinDesk 20 Index behind. Some altcoins are quickly catching up to BTC's gain, with ether (ETH), Chainlink (LINK) and Uniswap (UNI) surging 5% in the past hour. The $100,000-per-BTC mark is just a stone's throw away and BTC futures on Deribit maturing next year are already trading above the threshold. Still, the round-number level might pose a barrier at least in the short term as investors take some profits after a 40% rally in only two weeks. "If BTC breaks through $100K, there is a high probability of a pullback," Gracy Chen, CEO at crypto exchange Bitget, said in a note. It's a "psychological barrier where investors might reassess their positions, leading to a natural sell-off point, as seen in other asset classes when significant round numbers are breached."

Crypto-focused U.S. equities also rallied pre-market open. MicroStrategy (MSTR), owner of the largest corporate bitcoin treasury, rose 11% to $520 before the open of U.S. trading. Public companies following MicroStrategy's approach of buying BTC for its treasury also gained. MARA Holdings (MARA) added 10% and Semler Scientific (SMLR) 24% before the opening bell. Options trading on Defiance's 2X long MicroStrategy ETF, which is a leveraged bet on MSTR share prices, took off yesterday and showed extreme bullish positioning with risk-on sentiment at record levels.

The creator of the Chillguy meme threatened legal action for profit-related assets or applications using his character as a spoof token went viral on social media. The Solana-based meme token CHILLGUY, inspired by Phillip Banks' copyrighted character, skyrocketed in price this week nearing $500 million market value fueled by its viral spread on TikTok. Banks’ legal threats tanked the token's price from Wednesday's peak, as holders likely took profits.

Bitcoin futures open interest (OI) on the Chicago Mercantile Exchange (CME) hit a record 218,000 BTC ($21.3 billion), more than a third higher than before the Nov. 5 U.S. election, according to Coinglass data. Rising open interest when prices are also ratcheting higher is a sign of bullish sentiment in the market.

"The relentless surge in CME open interest shows no sign of stopping; back-to-back all-time highs," Vetle Lunde, head of research at K33, wrote in a post on X. "To contextualize, the growth in CME OI over the past 15 days is larger than the average notional open interest on CME in any year before 2022."

Lunde noted that active and direct market participants are behind the rally. This cohort engages directly with the futures market, whereas other growth could have come from futures-based exchange-traded funds (ETFs) such as the ProShare Bitcoin ETF (BITO), as CoinDesk reported last month.

The introduction of options tied to U.S. spot ETFs should also help CME futures grow. "CME open interest crosses 200k BTC, with active market participants continuing to be the force moving exposure higher. Expect CME futures to continue to thrive with the launch of ETF options", Lunde wrote.

The larger bitcoin's role and the more intertwined it becomes with the traditional financial (TradFi) system, the more likely volatility will decline over time. We have seen this over the past few years, as realized volatility has decreased from over 100% to approximately 40%, according to Glassnode data.

A message from Kraken

- Omkar Godbole