Sebastian Sinclair

Volatility in crypto markets is hovering at long-term lows, signaling a potential profitable entrance for traders to begin piling into long volatility positions in both options and spot markets, analysts say.



<a href="https://blockworks.co/price/btc">Bitcoin’s</a> 30-day implied volatility has fallen to its lowest point in more than two years: to 16.7% above realized, according to data compiled by digital asset research firm BitOoda. Bitcoin’s realized volatility sits at 22%.



“We view these unusually low levels as a potential opportunity to go long volatility,” BitOoda said in its report. “Volatility seems very cheap right now, and we would expect it to increase in the coming days and/or weeks.”



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="556" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/01/bitcoin-volatility-bitooda-1024x556.jpg" alt="" class="wp-image-43874" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/01/bitcoin-volatility-bitooda-1024x556.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/bitcoin-volatility-bitooda-1024x556.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/bitcoin-volatility-bitooda-1024x556.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/bitcoin-volatility-bitooda-1024x556.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/bitcoin-volatility-bitooda-1024x556.jpg?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/bitcoin-volatility-bitooda-1024x556.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/bitcoin-volatility-bitooda-1024x556.jpg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/bitcoin-volatility-bitooda-1024x556.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/bitcoin-volatility-bitooda-1024x556.jpg?w=80 80w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Figure: Bitcoin annualized volatility based on 30-say trailing daily returns of BTCUSD (spot bitcoin) and 100% Moneyness Implied Volatility for BTC1 (CME bitcoin futures) since January 2020; Source: Bloomberg, BitOoda</figcaption></figure>



Utilized within the derivatives markets, implied volatility refers to a metric designed to anticipate changes in an asset&#8217;s fluctuations. The setup, in turn, has rendered the purchase of bitcoin options remarkably cheap through a historical lens, per BitOonda’s report.



Typically, in bear markets, implied volatility tends to drift upwards where expectations of an asset’s price are believed to be heading down over time. In bull markets, implied volatility tends to drift down on expectations of a future price rise.



Here “typically” is important to keep in mind, since volatility expansion can come either to the upside or downside.



Implied differs from realized volatility, which is a measure of past performance and actual results.



With both realized and implied volatility both sitting at historic lows and volatility being cheap versus prior levels, structures such as bull call spreads may be attractive investment strategies, Toby Chapple, head of trading from Australian trading firm Zerocap told Blockworks.



Bull call spreads are an options trading strategy pairing a long call at a lower strike price with a short call higher at a strike price.



<blockquote class="wp-block-quote">
“If you look at the past performance of volatility, it has been down at these levels multiple times, so it is not out of the ordinary,” Chapple said. “It generally does not stay low for long, though.”
</blockquote>



Chapple concluded volatility in the crypto markets has not been this low since July 2020 — more than two and a half years ago.



Over the same 30-day period, <a href="https://blockworks.co/price/eth">ether</a> (ETH) options could also be “especially attractive” amid the highly anticipated Shanghai hard fork expected in March, which would likely be a catalyst for future volatility for the asset, BitOoda said. ETH realized volatility of 36% and implied volatility of 52% are also hovering at long-term lows.



“Interestingly in crypto, the times when volatility has been low have [preceded] explosive bull runs in the market, not crashes in prices,” Chapple said.



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Bargain-basement Opportunity for Crypto Volatility Traders

<div id="highlights-block_63340b716297e" class="highlights">
 <ul>
 <li>DeFi derivatives platform Ribbon Finance is hoping to build on the success of its previous product launches</li>
 <li>Ribbon said it aims to tap into the buzz surrounding ether post-merge</li>
 </ul>
 
</div>



DeFi derivates platform Ribbon Finance announced the launch of its Ethereum-based options exchange Tuesday, allowing users to trade directly from their smart wallets.



Dubbed Aevo, the exchange’s executives are hoping to generate $100 million in daily volume within a six-month timeframe by encouraging traders to tap into more than 100 instruments with varying expirations.



That might be easier said than done considering crypto’s recent downturn and bear market cycle, which has all but sapped liquidity and sent retail investors fleeing for the exits.



Still, its founders are pinning their hopes on Ethereum’s post-merge honeymoon period, that might help warm investors around to an otherwise frosty period in the spot market.



As of September, the total trading volume for ether options has remained steady at roughly $11 billion across Deribit, OKx, Bit.com CME and Huobi. That’s down from around $15 billion seen in May, <a href="https://studio.glassnode.com/metrics?a=ETH&amp;c=usd&amp;category=Volume&amp;m=derivatives.OptionsVolumeDailySum&amp;s=1619672493&amp;u=1631836799&amp;zoom=" target="_blank" rel="noreferrer noopener">Glassnode data shows</a>.



“With the majority of total value locked in our platform coming from the Ethereum ecosystem, we have always regarded it as our home ground,” Ribbon’s CEO Julian Koh said.



Aevo will initially start with ETH options and then launch BTC as well as other contracts in the following months, Ribbon said in a statement.



This isn’t Ribbon’s first product launch. The platform focuses on structured products — a category familiar in traditional finance but on the rise in DeFi — and says it invented the concept known as <a href="https://ribbonfinance.medium.com/ribbonv2-f1e64f956692" target="_blank" rel="noreferrer noopener">Decentralized Option Vaults</a> (DOV) which allows users to generate yield through various predefined strategies. 



Before the invention of DOVs, option strategies were previously only available to accredited investors through over-the-counter trading.



It also rolled out lending and earning products that offer users principle-protected yields designed to protect against losses in the underlying asset at maturity.



To date, Ribbon said its products have traded more than $6 billion in options volume while maintaining a presence on Ethereum, Avalanche, and Solana.



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Ribbon Finance To Tap Ethereum Interest with Options Exchange

Ben Strack

<div id="highlights-block_6307c073fdf3c" class="highlights">
 <ul>
 <li>Company’s near-term focuses include adding margin-based futures contracts, market data tools, executives said</li>
 <li>“We very intentionally established a diverse group of partners,” Cboe Chief Strategy Officer John Deters said</li>
 </ul>
 
</div>



Cboe Global Markets is bringing aboard a slate of equity partners to help grow its digital assets business, just months after closing its acquisition of <a href="https://www.erisx.com" target="_blank" rel="noreferrer noopener">ErisX</a>.



The company is seeking to build out its crypto spot and futures capabilities to fill what executives called “a massive gap” in the space of offering market intermediaries a trusted venue for its retail and institutional clients.



ErisX operates a US-based digital asset spot market, as well as a futures exchange and clearinghouse regulated by the Commodity Futures Trading Commission (CFTC). <a href="https://www.cboe.com" target="_blank" rel="noreferrer noopener">Cboe</a>, which owns the world’s largest options exchange, <a href="https://cms.blockworks.co/cboe-sees-need-to-move-quickly-in-crypto-following-exchange-acquisition/" target="_blank" rel="noreferrer noopener">closed its acquisition</a> of the company in May as a way to enter the digital asset spot and derivatives marketplaces and is set to rebrand ErisX to Cboe Digital.



The new planned partners, each of which intend to take minority stakes in Cboe, are B2C2, DRW, GSR, Hidden Road, IMC, Interactive Brokers, Jane Street, Jump Crypto, Optiver, Robinhood, tastytrade and Virtu Financial. Executives did not reveal the specific size of the stakes.



The investors join other previously announced partner firms, such as Fidelity Digital Assets, Galaxy Digital, NYDIG and Webull. Cboe plans to form a digital advisory committee comprising the partner firms.



The incoming group of partners includes retail order flow providers, some of the largest market makers in the spot crypto world and other market makers focused more on derivatives pricing and trading, Cboe Chief Strategy Officer John Deters told Blockworks.&nbsp;



“We very intentionally established a diverse group of partners,” he said. “It’s that kind of mix which creates, we think, an ideal and healthy blend of participants, each with a little bit different focus and coming together simultaneously to make a vibrant and liquid market.”&nbsp;



<h3>ErisX and Cboe product roadmap</h3>



ErisX offers cash-settled futures contracts on bitcoin and ether. It offers spot trading on bitcoin, ether, bitcoin cash, litecoin and USD Coin.



In terms of the company’s product roadmap, ErisX President John Palmer told Blockworks that its “next push” is getting CFTC approval to trade margin-based futures contracts. Cboe hopes to roll those products out by the end of the year, he said.



Into 2023 and 2024, the firm will seek to offer additional futures contracts and spot trading for tokens beyond the five digital assets currently offered. Though Palmer did not name specific assets it would seek to offer, it noted that it would be considering other “top-traded tokens.”



“We certainly want to offer that very quickly and have a platform where participants can trade spot and derivatives and really get the benefit of capital efficiencies by having these things all clear at our clearinghouse,” Palmer said.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;



Using market data based on actionable bid and offer prices from the spot crypto market, Cboe Digital also plans on developing a benchmark data stream to help market participants evaluate crypto execution prices, Deters said.



“Our industry is going digital over the long-term, and so making sure that our platform is built for that future, that we’re helping market participants and our clients engage in the market and helping them figure out opportunities to digitizing and interacting with their products is a “mission-critical” initiative for us and will keep us busy for quite a bit of time to come,” Deters said.



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Cboe To Add Slate of Partners to Grow Digital Asset Business

Shalini Nagarajan

<div id="highlights-block_630764e0c3f5c" class="highlights">
 <ul>
 <li>Traders are anticipating higher prices in the $1,850 to $2,000 range in the lead up to the Merge</li>
 <li>Other industry participants believe the crypto’s “non-event” will likely spark a trading frenzy in the other direction</li>
 </ul>
 
</div>



Now that the Ethereum network’s transition to proof-of-stake (PoS) is right around the corner, traders are placing bets in crypto’s derivatives and spot markets in anticipation of future ether price moves on the other side of the Merge.



The <a href="https://cms.blockworks.co/the-investors-guide-to-the-ethereum-merge/" target="_blank" rel="noreferrer noopener">Ethereum Merge</a> is thought to be the most significant upgrade event in the crypto industry’s history. A lot is riding on the successful switch from proof-of-work to proof-of-stake, and it’s likely to affect the price of bitcoin (BTC) and ether (ETH) significantly.



Given the importance of the event — expected to happen <a href="https://twitter.com/TimBeiko/status/1562418377582419968" target="_blank" rel="noreferrer noopener">on our about Sept. 15</a> — bullish experts hope the hype and subsequent media frenzy will buoy the price in the short term.&nbsp;



Yet there is a possibility that, instead of a smooth transition, the merge won’t go as expected or that a contentious hard fork could end up negatively impacting crypto valuations across the board.&nbsp;



Hard forks are already being anticipated, and they may create confusion, particularly among <a href="https://cms.blockworks.co/ethereum-proof-of-work-fork-proposal-is-a-retail-trap-researchers-say/" target="_blank" rel="noreferrer noopener">retail investors</a>. Long-time crypto investor and Ethereum bull Chandler Guo <a href="https://cms.blockworks.co/ethereum-fork-may-be-doomed-to-fail-but-chandler-guo-is-all-in-again/" target="_blank" rel="noreferrer noopener">told Blockworks earlier this month</a> there was roughly a 10% chance the network could fork and he would support a stablecoin built around a proof-of-work fork should it occur. The major stablecoin issuers <a href="https://cms.blockworks.co/stablecoins-will-only-have-value-on-pos-ethereum-post-merge/" target="_blank" rel="noreferrer noopener">have all said</a> they will honor redemptions solely from the canonical proof-of-stake Ethereum chain.



<h3>Buy the rumor?</h3>



The Merge could also very well shape up to be a “buy the rumor and sell the news” event — a common scenario in speculative markets that see prices rise ahead of anticipated news catalysts, before falling again once news is officially confirmed, begetting frenzied selling.



Ether has already outperformed bitcoin in the past few weeks due to hype surrounding the upgrade. The number two crypto is up around 17% over a 30-day period to about $1,700 on spot markets, while bitcoin remains relatively flat at 1.7% up, trading near $21,700.



Traders in the options markets for ether are already betting big on the Merge. Call options are significantly greater when compared to puts, with the majority of traders across major derivatives exchanges opting for a strike price between $1,850 and $2,200.



<figure class="wp-block-image"><a href="https://lh3.googleusercontent.com/KjxHLOp52Zbv1J0t1VvCjWHjMuTVc7HMjo_lxe4gzOHMZyLVHl-DQ4d147KJKBPsBOSRu3sXQiD_h1ElUj01VG7TvdlCyeYrjVcmhz3HpaLdYZjVaA-HcGIvjnjzl75KJ9du6axmWzSacpnF7Ob8Po8"><img decoding="async" src="https://lh3.googleusercontent.com/KjxHLOp52Zbv1J0t1VvCjWHjMuTVc7HMjo_lxe4gzOHMZyLVHl-DQ4d147KJKBPsBOSRu3sXQiD_h1ElUj01VG7TvdlCyeYrjVcmhz3HpaLdYZjVaA-HcGIvjnjzl75KJ9du6axmWzSacpnF7Ob8Po8" alt="" /></a></figure>



A call option for ether gives the holder of the contract the right to buy the crypto at a strike price, while conversely, a put option gives the holder the right to sell it at a predetermined price. The contracts are set to expire on Sept. 30, 15 days after the anticipated merge date.



Meanwhile, open interest for ether’s options contracts across Deribit, OKEx, Bit.com and CME are also up considerably from a July low of $2.6 billion to around $7.8 billion at current levels. A ratio of 1.64 from puts to calls means traders are anticipating future price rises ahead of Sept 15.



<h3>What could go wrong with the Merge?</h3>



No one knows what will happen immediately after ether’s merge between its Beacon Chain and Mainnet. Some industry participants remain skeptical, believing that a lot of the price action has already taken place.&nbsp;



Prices would likely dip should the Merge be delayed in some fashion, which would harken back to similar instances in Ethereum’s history since at least 2016.&nbsp;



“Around the Merge we can expect increased volatility,” Max Kordek, co-founder of blockchain application platform Lisk, told Blockworks.



“Given the current economic climate, prices are more tied to interest rates and inflation than they are the technological advancement of Ethereum itself,” said Kyle Klemmer, COO of Web3 gaming engine Mech.com.



While the Merge changes the consensus mechanism to PoS, it won’t expand network capacity or <a href="https://cms.blockworks.co/the-merge-will-not-lower-ethereum-transaction-fees/" target="_blank" rel="noreferrer noopener">lower gas fees</a>. The cost of transactions is mostly related to demand for Ethereum block space.



PoS in itself does nothing for transactions-per-second (TPS) or speed, said Race Capital partner Chris McCann.&nbsp;



“The <a href="https://blockchair.com/ethereum/charts/transactions-per-second" target="_blank" rel="noreferrer noopener">current Ethereum TPS</a> is 10-20, with the median being around ~13 TPS,” he said. “Moving to proof-of-stake will not change this.”



Scaling improvements will begin to arrive after the next planned upgrade — EIP-4844, also known as danksharding after Ethereum researcher Dankrad Feist and the scaling technique <a href="https://ethereum.org/en/upgrades/sharding/" target="_blank" rel="noreferrer noopener">sharding</a>.



The market has already known for quite some time that the proof-of-stake transition is going to happen, McCann said. Now it&#8217;s a wait and see approach as to whether the final tests for Ethereum’s transition are completed without a hitch.



<h3>The ether vs bitcoin price</h3>



One way to see how the market values the upcoming Merge is via the ether/bitcoin ratio, according to Nicholas Cawley, strategist at DailyFX.&nbsp;



“This spread has been moving higher since June this year, as ether outperforms bitcoin, and from a technical point of view, it has a lot more to go if it is to test prior highs made in June 2017 and January 2018,” he said.



<figure class="wp-block-image"><a href="https://lh4.googleusercontent.com/Uww1vPm6S3Cjg5Gf-p56EweGWgb4czoj7q-PqwhESNc2QojUCRYeILKMi-NyPTg-ZJVPV5CS3iDHAYhVcV3zuzNnOVDZGikMzLa6Qruryg3SnwB6Xt9y9G1urHjbscH0z0Xh5A3nd99zV5e7CjxTg8E"><img decoding="async" src="https://lh4.googleusercontent.com/Uww1vPm6S3Cjg5Gf-p56EweGWgb4czoj7q-PqwhESNc2QojUCRYeILKMi-NyPTg-ZJVPV5CS3iDHAYhVcV3zuzNnOVDZGikMzLa6Qruryg3SnwB6Xt9y9G1urHjbscH0z0Xh5A3nd99zV5e7CjxTg8E" alt="" /></a></figure>



As of Thursday 9:00 am ET, 1 ETH will fetch about 0.079 BTC. That’s about 10% shy of its late-2021 peak.



For Martin Hiesboeck, head of blockchain and crypto research at Uphold, the Merge will be a “sell the news” event.



“While Ethereum changed the world and smart contracts showed us the way to more efficient business processes and much else, I think we’ve reached a bottleneck,” Hiesboeck said.



“There is no rational basis to believe ether’s price will be majorly impacted by this overhyped non-event,” he said.



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What Could Happen to the Ether Price Following The Merge?

<div id="highlights-block_62e453600d165" class="highlights">
 <ul>
 <li>The app launched with 970 stocks, ETFs and American depository receipts available for trading</li>
 <li>FTX US hopes to allow users to trade stock options on the app in the future</li>
 </ul>
 
</div>



The majority of trades on crypto exchange FTX US’s new stocks application have been of the fractional variety — leading the company to waive fees for such trades moving forward, the company told Blockworks. 



The US affiliate of crypto exchange FTX, which <a href="https://cms.blockworks.co/ftx-us-launches-zero-commission-stock-trading/" target="_blank" rel="noreferrer noopener">revealed plans</a> to launch a commission-free stock trading platform in May, officially unveiled the app Wednesday. 



Several thousand people from a waitlist participated in its private beta stage in recent months, and on Wednesday it became available to residents in all 50 states, FTX US President Brett Harrison said in a <a href="https://twitter.com/Brett_FTX/status/1552329303353950208" target="_blank" rel="noreferrer noopener">tweet</a>. FTX US is the US affiliate of crypto exchange FTX. 



The app launched with 970 tickers available to trade — including stocks, ETFs and American depository receipts — and plans to add thousands more in time. Ultimately, Harrison said, FTX US hopes to allow users to trade stock options.



Harrison declined to share the number of users or trading volume FTX Stocks booked in its first day, but noted that he was surprised to see the high amount of trades that represented less than one share of a stock.&nbsp;



People are showing interest in trading $100 of Tesla stock, for example, Harrison noted, despite a share of Tesla being worth, as of Friday afternoon, nearly $900.



“That is clearly a very important part of the platform,” he said. “And, in fact … we’re going to make all trades underneath one share be free.”



Excluding the free fractional shares trading, FTX Stocks will charge a fee representing 0.05% of the notional value of the trade, or 1 cent per share — whichever is lower — beginning Oct. 1.&nbsp;



“The goal there is to have a fully transparent, very clearly well defined fee as opposed to a sort of hidden cost associated with payment for order flow,” Harrison said.



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FTX US to Make Fractional Stock Trading Free

Casey Wagner

<div id="highlights-block_61d376d1b3ddb" class="highlights">
 <ul>
 <li>The CFTC filed a cease and desist order against popular crypto betting platform Polymarket</li>
 <li>The startup allowed users to bet on anything from election results to celebrity engagements to earn cryptocurrencies</li>
 </ul>
 
</div>



The Commodity Futures Trading Commission (CFTC) took its first public action against decentralized finance (DeFi) companies of the year on Monday. 



The regulator fined cryptocurrency betting platform Blockratize Inc., which operates under the name Polymarket, $1.4 million. The CFTC has also ordered the New York-based company to wind down “all markets displayed on Polymarket.com that do not comply with the Commodity Exchange Act (CEA),” according to a <a href="https://www.cftc.gov/PressRoom/PressReleases/8478-22" target="_blank" rel="noreferrer noopener">statement</a> from the CFTC. 



Polymarket enables users to bet on current events, including politics and pop culture, using cryptocurrencies. Popular bets of the past year included whether or not Jennifer Lopez and Ben Affleck would get engaged or if the United States would reach 100,000 new daily coronavirus cases before Jan. 1, 2022.&nbsp;&nbsp;



Users select one of at least two options for the given scenario and place bets, which, under federal law, qualifies the markets as swaps. The CFTC reports that Polymarket has offered more than 900 different event markets since its inception in 2018.&nbsp;



Polymarket failed to obtain a Designated Contract Market (DCM) and Swap Execution Facility (SEF) registration, both requirements under the CEA, the CFTC said.&nbsp;



“All derivatives markets must operate within the bounds of the law regardless of the technology used, and particularly including those in the so-called decentralized finance or ‘DeFi’ space,” acting director of enforcement, Vincent McGonagle, said in a statement. “Market participants should proactively engage with the CFTC to ensure that our markets remain robust, transparent, and afford customers the protection provided under the CEA and our regulations.”



Polymarket responded to the filing late Monday afternoon via Twitter.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">We’re pleased to confirm that we&#39;ve successfully agreed to a settlement with the CFTC, &amp; are excited to move forward &amp; focus on the future of Polymarket. As per the order, the 3 markets lasting past 1/14 that don&#39;t comply with the Act will be prematurely resolved. More soon 🔮&mdash; Polymarket (@PolymarketHQ) <a href="https://twitter.com/PolymarketHQ/status/1478132679510048773?ref_src=twsrc%5Etfw">January 3, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<a href="https://www.bloomberg.com/news/articles/2021-10-23/crypto-venue-for-bets-on-trump-jlo-and-covid-faces-u-s-probe" target="_blank" rel="noreferrer noopener">Reports</a> that the CFTC was investigating Polymarket first surfaced in October 2021. The company secured a $4 million seed funding round the same month. Polychain Capital was a lead investor.&nbsp;



Polymarket cooperated with the investigation, the CFTC report noted, which helped the company secure a lower fine. All Polymarket markets will end by Jan. 14, 2022, and refunds will be available to users by Jan 24.



This story was updated on Jan. 3, 2022, at 10:09 pm ET to add additional information and a statement from Polymarket.



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CFTC Fines Crypto Betting Service Polymarket $1.4 Million, Orders Shutdown of  Three Markets

Sam Martin

<div id="highlights-block_60c9fc7f1690b" class="highlights">
 <ul>
 <li>Valkyrie filed an 8-A with the SEC in a key step for a bitcoin futures ETF approval</li>
 <li>Total market capitalization of all digital assets reaches all-time high</li>
 </ul>
 
</div>



Valkyrie filed an 8-A with the US Securities and Exchange Commission in a key step for a bitcoin futures ETF approval. While an ETF is a net positive, a futures-backed ETF could invite Wall Street price manipulation games.



Bitcoin options volume spikes amidst bullish price action. 



Very little of the BTC supply has traded hands above $60,000. 



Perpetual funding rates are rising as traders enter long positions. 



Approximately 1.5% of the circulating BTC supply is locked in Ethereum smart contracts. 



Latest in Macro:



<ul><li>S&amp;P 500: 4,471, +.75%</li><li>NASDAQ: 14,897, +.50%</li><li>Gold: $1,768, -1.56%</li><li>WTI Crude Oil: $82.24, +1.14%</li><li>10-Year Treasury: 1.572%, +.053%</li></ul>



Latest in Crypto:



<ul><li>BTC: $62,150, +7.88%</li><li>ETH: $3,856, +2.21%</li><li>ETH/BTC: .0626, -5.45%</li><li>BTC.D: 46.49%, +3.87%</li></ul>



<h3>Bitcoin ETF Update</h3>



&#8220;The U.S.&#8217;s dollar dominance, jobs, votes, plenty of revenue (tax) and, most importantly — it counters China — are top reasons we expect Uncle Sam will embrace cryptocurrencies with proper regulation and ETFs. Imagine the potential for a new digital world order if the price of Bitcoin keeps rising, and 1.4 billion citizens are banned from it by their government,&#8221; <a href="https://twitter.com/mikemcglone11/status/1448979416172871692?s=21" target="_blank" rel="noreferrer noopener">wrote</a> Mike McGlone of Bloomberg Intelligence, in a report today.



His comments came moments before Valkyrie <a href="https://cms.blockworks.co/valkyrie-files-8-a-in-key-step-for-bitcoin-futures-etf-approval/" target="_blank" rel="noreferrer noopener">filed</a> an 8-A with the SEC in a key step for a bitcoin futures-backed ETF approval, indicating support of bitcoin from regulators. 



In anticipation of approval, the basis on futures contracts is widening alongside rising open interest in BTC futures. This could open the door for institutions to put on a risk-free basis trade where they sell the futures contract and buy spot BTC in order to lock in a spread. 



&#8220;While over a dozen organizations have applied to launch bitcoin ETFs, the diversity of the applicants attests to a climate of intensive interest in bitcoin among retail investors,&#8221; CTO and co-founder of Lolli, Matt Senter, wrote to Blockworks. &#8220;By offering clients indirect exposure to bitcoin, ETFs will be a powerful way to dissolve barriers to entry in bitcoin, building an onramp to adoption and greater knowledge about bitcoin as a new asset class.”



While providing more investors a new vehicle to gain exposure to BTC is a net positive, it is worth noting that a futures-backed ETF could lead the way to more price manipulation tactics from Wall Street firms.



<div class="wp-block-image"><figure class="aligncenter size-full"><img decoding="async" loading="lazy" width="596" height="593" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-1.52.24-PM.png" alt="" class="wp-image-9457" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-1.52.24-PM.png?w=596 596w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-1.52.24-PM.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-1.52.24-PM.png?w=150 150w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-1.52.24-PM.png?w=258 258w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-1.52.24-PM.png?w=262 262w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-1.52.24-PM.png?w=220 220w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-1.52.24-PM.png?w=80 80w" sizes="(max-width: 596px) 100vw, 596px" /><figcaption>Source: @CaitlinLong_</figcaption></figure></div>



<h3>Bitcoin Fundamentals</h3>



Despite increased options premiums, volume has spiked on the bullish BTC price action as traders prepare for price discovery:



<div class="wp-block-image"><figure class="aligncenter size-large"><img decoding="async" loading="lazy" width="1024" height="572" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/skew_btc_options_volumes-1024x572.png" alt="" class="wp-image-9452" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/skew_btc_options_volumes-1024x572.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/skew_btc_options_volumes-1024x572.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/skew_btc_options_volumes-1024x572.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/skew_btc_options_volumes-1024x572.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/skew_btc_options_volumes-1024x572.png?w=467 467w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/skew_btc_options_volumes-1024x572.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/skew_btc_options_volumes-1024x572.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/skew_btc_options_volumes-1024x572.png?w=1200 1200w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Source: Skew</figcaption></figure></div>



There isn&#8217;t much on-chain activity at these price levels, meaning that very little supply has changed hands above $60,000. That should come as no surprise considering the brief amount of time BTC maintained its price above $60K back in April. With little support or resistance in this trading range, expect higher volatility as BTC nears price discovery. 



<div class="wp-block-image"><figure class="aligncenter size-large"><img decoding="async" loading="lazy" width="1024" height="576" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/UTXO-dist-1024x576.png" alt="" class="wp-image-9453" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/UTXO-dist-1024x576.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/UTXO-dist-1024x576.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/UTXO-dist-1024x576.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/UTXO-dist-1024x576.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/UTXO-dist-1024x576.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/UTXO-dist-1024x576.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/UTXO-dist-1024x576.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/UTXO-dist-1024x576.png?w=1456 1456w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Source: Glassnode</figcaption></figure></div>



Perpetual funding rates are creeping higher, which means the longs are paying the shorts in order to hold their positions. Bulls are getting aggressive in a hurry. It will be something to keep an eye on to gauge the amount of greed in the market over the weekend. The chart below shows the APR longs are paying to keep positions open, sorted from the highest open interest to the lowest. 



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="571" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-4.48.59-PM-1024x571.png" alt="" class="wp-image-9482" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-4.48.59-PM-1024x571.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-4.48.59-PM-1024x571.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-4.48.59-PM-1024x571.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-4.48.59-PM-1024x571.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-4.48.59-PM-1024x571.png?w=468 468w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-4.48.59-PM-1024x571.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-4.48.59-PM-1024x571.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-4.48.59-PM-1024x571.png?w=1206 1206w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Source: https://app.laevitas.ch/dashboard/btc/derivs</figcaption></figure>



Bitcoin is outpacing all altcoins and ether, as seen in the ETH/BTC chart below. Anyone who is positioned heavily in alts is having a rough time. 



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="563" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.10.20-PM-1024x563.png" alt="" class="wp-image-9459" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.10.20-PM-1024x563.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.10.20-PM-1024x563.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.10.20-PM-1024x563.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.10.20-PM-1024x563.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.10.20-PM-1024x563.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.10.20-PM-1024x563.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.10.20-PM-1024x563.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.10.20-PM-1024x563.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.10.20-PM-1024x563.png?w=1551 1551w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Source: Trading View</figcaption></figure>



<h3>Non-Fungible Tokens (NFTs)</h3>



Axie Infinity co-founder, Jeff Zirlin, took to <a href="https://twitter.com/Jihoz_Axie/status/1448660069445300237?s=20" target="_blank" rel="noreferrer noopener">Twitter</a> to announce that the popular play-to-earn game has cracked the top 500 in global websites for engagement over the last 90 days. 



Laguna Games <a href="https://venturebeat.com/2021/10/15/laguna-games-raises-5m-to-launch-crypto-unicorns-with-egg-nfts/" target="_blank" rel="noreferrer noopener">raises</a> $5 million from BitKraft Ventures and Delphi Digital to launch its blockchain-based game, Crypto Unicorns, next month. 



Trading data from <a href="https://opensea.io/rankings" target="_blank" rel="noreferrer noopener">OpenSea</a> and <a href="https://solanalysis.com" target="_blank" rel="noreferrer noopener">Solanalysis</a> of some of the top Solana and Ethereum projects can be found in the photos below:



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="351" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.21.33-PM-1024x351.png" alt="" class="wp-image-9463" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.21.33-PM-1024x351.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.21.33-PM-1024x351.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.21.33-PM-1024x351.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.21.33-PM-1024x351.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.21.33-PM-1024x351.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.21.33-PM-1024x351.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.21.33-PM-1024x351.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.21.33-PM-1024x351.png?w=1252 1252w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Top Ethereum Projects</figcaption></figure>



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="291" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.21.47-PM-1024x291.png" alt="" class="wp-image-9464" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.21.47-PM-1024x291.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.21.47-PM-1024x291.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.21.47-PM-1024x291.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.21.47-PM-1024x291.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.21.47-PM-1024x291.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.21.47-PM-1024x291.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.21.47-PM-1024x291.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-2.21.47-PM-1024x291.png?w=1231 1231w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Top Solana Projects </figcaption></figure>



<h3>BTC on Ethereum</h3>



<ul><li>There is now over 280,000 BTC locked in ethereum smart contracts. That equates to roughly 1.5% of the circulating BTC supply. </li><li>The most popular form of BTC on Ethereum is wBTC, which holds a 76% marketshare. </li></ul>



<div class="wp-block-image"><figure class="aligncenter size-full"><img decoding="async" loading="lazy" width="622" height="376" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-3.51.02-PM.png" alt="" class="wp-image-9470" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-3.51.02-PM.png?w=622 622w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-3.51.02-PM.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-3.51.02-PM.png?w=425 425w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-3.51.02-PM.png?w=432 432w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-3.51.02-PM.png?w=362 362w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-15-at-3.51.02-PM.png?w=80 80w" sizes="(max-width: 622px) 100vw, 622px" /><figcaption>Source: Dune Analytics</figcaption></figure></div>



<h3>Other Notable News</h3>



<ul><li>Tether settled with the CFTC for $42 million over false claims of being fully backed by dollars, Blockworks <a href="https://cms.blockworks.co/tether-settles-with-cftc-for-42-5m/" target="_blank" rel="noreferrer noopener">reported</a> earlier.</li><li>Nine out of 10 lightning nodes that were launched in the last year run on Umbrel, <a href="https://twitter.com/mayankdotch/status/1448999505211187205?s=20" target="_blank" rel="noreferrer noopener">according</a> to the company&#8217;s co-founder. </li><li>The total crypto market capitalization has crossed <a href="https://www.tradingview.com/symbols/CRYPTOCAP-TOTAL/" target="_blank" rel="noreferrer noopener">$2.5 trillion</a> for the first time today. </li><li>US treasury five-year breakeven inflation rate hit 2.753% today for the first time since <a href="https://twitter.com/Fxhedgers/status/1449030958372442126?s=20" target="_blank" rel="noreferrer noopener">April 2005</a>.</li></ul>



That is all for this week, folks. Looking forward to catching up on Monday! 



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