Market Reacts To Bitcoin Halving
For many, the 2020 Bitcoin halving is the greatest thing since sliced bread. The long-awaited halving, which took place on May 11, is already birthing results in seismic proportions. Firstly, there has been an increase in investors in the world’s leading and most diverse derivatives marketplace (CME crypto options market). This is an indicator that there’s a continued interest in bitcoin, and by extension, cryptocurrencies.
At the time of filing this report, Bitcoin’s price has gone up by 12 percent since the halving. Mind you, in the last 24 hours; Bitcoin has been trading by 6% at $9,689. The leading cryptocurrency is marching forward with several indicators showing moving averages above bullish levels. Technical indicators like the 10-day and 50-day moving averages have been above bullish levels since May 13.
Source: TradingView Bitcoin trading on since May 12
According to the head of trading for crypto brokerage BCB group Mark Warner, what we are experiencing now in terms of price gain can be attributed to the growing interest in bitcoin. He further stated that any uncertainty faced by miners would fizzle out in time.
“Generally, we expect an increase in demand, and it will take a little while for the supply shock to adjust itself and reflect on the price,” he said.
Since the first week of May, Bitcoin options open interest on CME, in addition to the overall count of outstanding contracts, have all increased. This is a clear sign that interest is rising. On May 14, Bitcoin options open interest clocked a new high of $105 million, an astronomical climb, considering the average figure has been $13 million for the better part of 4 months.
Source: Skew Options open interest on CME since January
According to Vishal Shah, an options trader, trading on the CME has been and carried out almost exclusively by capitalized investors with years of experience in the derivatives market. However, the increase in the interest of the market can only mean other subsets of the market are joining. “The person(s) behind these deals, have a strong appetite for trading.”
Shah mentions that bitcoin activity growth on the CME is from traders carrying out bullish bets. “The interest is always around high margins, as the May value at $10,500,” he said. “We can say these are buyers o calls. The $10,500 is a crucial level on the Bitcoin chart, and any movement close to it is expected to generate some news. It comes as no surprise that emphasis is on those high margins.
A call exercises the right of an asset owner to purchase an agreed amount of an asset at an agreed price at a particular time. While it might give the owner the right, it doesn’t give the owner the obligation.
Source: TradingView Bitcoin trading these past 30days
Before the halving, Bitcoin passed the $10,000 mark, albeit briefly. Lots of traders and market analysts are predicting that Bitcoin will go through that mark again, sooner rather than later. The fact that the economy is still shaking due to the coronavirus pandemic is one reason Henrik Kugelberg, an over-the-counter trader, insists we would see Bitcoin price hike soon.
“Bitcoin is highly undervalued, and the pandemic is still going strong,” Kugelberg said. “We have every reason to expect a Bitcoin price spike again. Mind you, the ride might have a little bump here and there, but the result will speak for itself.”
Considering Other Markets
Most digital assets were on the green side on Thursday. Ethereum, the second-largest crypto by market value, had a 3.2% gain in the last 24 hours.
Source: TradingView Ethereum trading since May 12
Other prominent gainers include, iota with a 6.2% rise, dogecoin with a 3.2% raise, and NEM registering a 3.2% rise. It wasn’t entirely good news for all parties. There were still some notable losers such as risk losing 2.5%, Cardano with a 1.2% loss, and stellar with a 1% loss.
In regards to commodities, oil was up on Thursday by 7%. At the same time, gold didn’t show any prominent moving, barely climbing less than a percent.
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