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100,000 Bitcoin Options Contracts Set to Expire

Deribit bitcoin options volumes, Jan 2021

“29JAN, the monster expiry, will be the biggest expiry Deribit has seen to date!” So said the bitcoin and ethereum derivatives trading platform, further adding: “A whopping ~100,000 bitcoin contracts…

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“29JAN, the monster expiry, will be the biggest expiry Deribit has seen to date!”

So said the bitcoin and ethereum derivatives trading platform, further adding:

“A whopping ~100,000 bitcoin contracts will expire, with a notional value of $3.1 billion.”

Deribit options for Jan 29 expiry
Deribit options for Jan 29 expiry

The trading platform has seen surging volumes this month as traders utilize options more and more.

Apparently most were quite bullish, with call interest pretty high at $52,000, that means these traders were betting for the right to trade BTC at $52,000.

As it happens, the crypto is currently trading at $32,000, meaning they’re at quite a bit of a loss, but fairing a bit better than the ones that bet for $72,000.

Deribit options platform, Jan 2021
Deribit options platform, Jan 2021

The above looks a bit like Chinese to most people unfamiliar with options, but you can buy the contract if you think it will reach a certain strike price level, or you can sell it if you think it won’t depending on whether there is someone willing to buy your sell.

At $8,000 for example there’s hardly much activity, but there is quite a bit at $36,000 and some are daring even $44,000.

In practice this works a bit like margins but instead of having your whole stack at risk, you risk only the option you put down, presuming you’re not the one offering the option.

The simple example is a house. You put down a deposit of say $10,000 for the option to buy it at $200,000, but you don’t have to buy it.

If the house price doubles from $200,000 to $400,000, you just made $200,000 from just $10,000. If it falls instead, you just lost $10,000.

Making options quite attractive especially as part of a trading strategy, with Deribit being the most liquid because they were the first.

They came to some general attention just in 2019, with it now two years later announcing this $3.1 billion expiry.

The effect of that on the spot price remains to be seen. Many may be using this as a cheap hedge, especially considering their peak volumes were on January 11 when bitcoin’s price fell considerably from $38,000 to $30,000.

One could have easily therefore gone short on spot, and taken the long call option just in case the market moves against them.

If they win on spot, they lose just the fraction put down in the option call. If they get short squeezed instead, they have the option cutting their losses.

The expiry therefore can potentially be bullish as now presumably they’ll have to buy coins if they want to play again.

But how it will work out remains to be seen as the public starts learning and accessing these wizz tools that bankers have been using against us for decades.

Blockchain

NEXT Chain: New Generation Blockchain With Eyes on the DeFi Industry

[Featured Content] The cryptocurrency industry is booming throughout the past year, and the increase in the total market capitalization is definitive proof. The market is, at the time of this writing, valued at about $1.5 trillion. The same can be said about the DeFi industry. The total value locked in various protocols exceeds $39 billion, […]

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[Featured Content] The cryptocurrency industry is booming throughout the past year, and the increase in the total market capitalization is definitive proof. The market is, at the time of this writing, valued at about $1.5 trillion. The same can be said about the DeFi industry. The total value locked in various protocols exceeds $39 billion, […] Checkout PrimeXBT
Source: https://cryptopotato.com/next-chain-new-generation-blockchain-with-eyes-on-the-defi-industry/

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‘Bitcoin Senator’ Lummis Optimistic About Crypto Tax Reform

Sen. Cynthia Lummis, the first in the Chamber to own Bitcoin, says bipartisan support will accelerate crypto tax reform.

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Sen. Cynthia Lummis (R-Wy) expressed hope on Wednesday that Congress will be able to reform the tax rules governing cryptocurrency, which have been a longtime bugbear for Bitcoin owners and the burgeoning crypto industry.

“We’re optimistic we can find bipartisan agreement on that issue,” said Lummis during a meeting with crypto executives and policy makers on the social media app Clubhouse.

The comment from Lummis, who has owned Bitcoin since 2013, came in response to a question about whether Congress will pass a proposed law calling for a “de minimis” tax exemption for small cryptocurrency transactions.

Currently, IRS guidance stipulates that any minor crypto transaction—such as sending $5 worth of Bitcoin to a friend or using it to buy a cup of coffee—can amount to a capital gains event. Critics say this rule creates needless tax headaches, and discourages innovation by limiting the use of crypto in day-to-day transactions.

And while the IRS has become preoccupied with collecting tax on crypto—a question about virtual currency is now at the top of filers’ income tax return—the agency has done little to simplify the process for reporting it.

Lummis’s interest could help accelerate the passage of crypto tax reform, which has been proposed in bills before the House of Representatives, but never in the Senate. Lummis, whose home state of Wyoming has branded itself as a crypto hub, also pointed to a new Financial Innovation Caucus she is leading with Sen. Kyrsten Sinema (D-Az) as evidence of bipartisan interest in the issue.

Bitcoiner Cynthia Lummis Wins US Senate Seat

Policy researchers on the Clubhouse call cautioned, however, that passage of crypto legislation is unlikely to occur in the near future. The Biden Administration and Congress is currently wrangling over weighty issues related to the pandemic and economic stimulus, so crypto taxation—a relatively boutique issue—is unlikely to be a high priority.

More broadly, members of the call noted that lawmakers are becoming more knowledgable about cryptocurrency, and not only at the federal level.

Nathan McCauley, the CEO of crypto storage service Anchorage, said that his company has been speaking with several state governments about adding crypto to their corporate treasuries—a move that would mirror what big private sector companies like Tesla and Square have done in recent months.

McCauley suggested the states’ interest in crypto is related to a search for alternate finance and investing options at a time when bond markets are in a prolonged slump.

Checkout PrimeXBT
Source: https://decrypt.co/60059/bitcoin-senator-lummis-crypto-tax-reform

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Billionaire Hedge Fund Manager and a Former CFTC Chairman Reportedly Invested in Crypto Firm

The hedge fund manager who predicted BTC’s rise to $40k in 2018 and the former CFTC Chair, a.k.a ‘crypto dad’, have invested in BlockTower Capital.

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The hedge fund manager who predicted BTC’s rise to $40k in 2018 and the former CFTC Chair, a.k.a ‘crypto dad’, have invested in BlockTower Capital. Checkout PrimeXBT
Source: https://cryptopotato.com/former-cftc-chairman-and-a-billionaire-hedge-fund-manager-reportedly-invested-in-crypto-firm/

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Bitcoin is up by a solid 6% today as the primary cryptocurrency surged by over $3000 over the past 24 hours. Quick recap: bitcoin is recovering after a heavy correction over the past week, in which the cryptocurrency dropped by around 25% as it broke beneath the February ascending price channel (as shown on the […]

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Bitcoin is up by a solid 6% today as the primary cryptocurrency surged by over $3000 over the past 24 hours. Quick recap: bitcoin is recovering after a heavy correction over the past week, in which the cryptocurrency dropped by around 25% as it broke beneath the February ascending price channel (as shown on the […] Checkout PrimeXBT
Source: https://cryptopotato.com/bitcoin-price-analysis-back-above-50k-but-facing-huge-resistance-now/

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