First Mover Americas: CME Futures Open Interest Hints at Bitcoin Bottom, Ether Breaks Out

Good morning, and welcome to First Mover, our daily newsletter putting the latest moves in crypto markets in context. Sign up here to get it in your inbox each weekday morning.

Here’s what’s happening this morning:

And check out the CoinDesk TV show “First Mover,” hosted by Christine Lee, Emily Parker and Lawrence Lewitinn at 9:00 a.m. U.S. Eastern time.

By Omkar Godbole

Bitcoin traded sideways around $41,000 early Monday while traditional markets were cautious as China kept interest rates unchanged, disappointing markets.

Hopes of a cut had increased in the wake of Vice Premier Liu He, President Xi Jinping’s top economic adviser, recent assurance that Beijing would roll out support for the Chinese economy and be cautious with measures for capital markets.

The top cryptocurrency’s implied volatility trended lower, extending last week’s slide, a sign of continued selling of options or volatility by sophisticated traders. “The desk saw a tremendous amount of vol selling post-FOMC. From the highs of nearly 100%, both BTC and ETH front-end vols have dropped to 60%. A truly massive move,” QCP Capital said in Saturday’s Telegram broadcast.

One-week, one, three- and six-month put-call skews held around 2% versus pre-Fed highs around 5% to 7% and down significantly from February highs around 8%-10%, a sign of continued weakening of demand for puts or downside protection.

Ether, the second-largest cryptocurrency by market value, rose nearly 2% to $2,920, having jumped 13% last week, the biggest gain in six weeks. Traders talking to CoinDesk said Ethereum’s impending proof of work and proof of stake mechanism would have bullish implications for the programmable blockchain’s native token ether.

The Bored Ape Yacht Club-linked ApeCoin (APE) jumped 11% to $10.70, according to data provided by the charting platform TradingView. Leading decentralized asset management platform Ribbon Finance launched an option vault tied to APE. All holders have to do is deposit their coins in the vault, which will sell a one-week APE covered call each Friday. At press time, the projected annualized yield from the APE covered call strategy was 42%.

Other major gainers were THORChain’s RUNE token, waves, dash and liquid staking protocol Lido’s LDO token.

“Since a portion of staking rewards are obtained as revenue for the Lido DAO, the price of their governance token (LDO) has been appreciating,” IntoTheBlock said in the weekly newsletter published Friday.

On March 15, approximately 190,000 ETH was deposited into Lido’s stETH liquid staking, according to data tracked by the IntoTheBlock.

By Omkar Godbole

While bitcoin is yet to exit the downtrend on technical charts, the dollar value locked in the bitcoin futures contracts open on the Chicago Mercantile Mercantile Exchange (CME), a proxy for institutional participation, has done so.

Open interest has breached the trendline falling from November highs. In simple words, the CME open interest suggests the downtrend is over.

Historically, a breakout in the CME’s open interest has coincided with the end of bear runs and reversal higher in the spot market. Open interest dived out of an uptrend line at the end of April 2021, warning of an impending sell-off. Bitcoin crashed in mid-May.

Ether breakout

Ether broke out of a multi-week contracting triangle on Friday, indicating the path of least resistance is to the higher side.

The cryptocurrency’s bounce from the upper end of the triangle early today has reinforced the breakout and perhaps opened the doors for higher prices.

The immediate resistance is seen at $3,284 (Feb. 10 high).