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CRYPTO IS UNDERGOING BOUT OF VOLATILITY

CRYPTO IS UNDERGOING BOUT OF VOLATILITY

Chris Bae, chief executive and founder of the strucd-derivative-solutions provider EDG and former trader at UBS and Goldman Sachs, is looking for open profits and tracks global trading that offers trading options.


"It does not suggest that inflation has dropped significantly," Bae said in an interview. "There are a lot of details that suggest that market maturity has improved and that in the stock market in particular, it is a business as usual, to a large extent, when we look at our natural environment." Bae added that the spread of the bid seems reasonable.


The environment, of course, has been plagued by numerous hacks, as well as the burning of stablecoin projects and the accumulation of large crypto hedge funds. Over the past few weeks, lenders, in particular, have shown instability, with the withdrawal of Celsius Network and Babel Finance, as well as Three Arrows Capital, a major crypto hedge fund, facing liquidity issues. And it all comes amid a volatile monetary policy base, where the Federal Reserve and other central banks are raising rates angrily to combat inflation.


Certainly, the market is very different from last year's bulls. Open interest rates, or the total amount of remaining contracts, dropped significantly from the top. OI dropped just over $ 7 billion from a record $ 15 billion in October 2021, according to data from Skew. The current volume is slightly below $ 600 million, compared to the highest of $ 8 billion in October.


Patrick Chu, head of the APAC center in Paradigm, a liquidity provider of crypto derivatives, says the decline in OI reflects market sentiment. During bear markets, interest rates have skyrocketed.


Options can serve two functions, he says. One is a fence, and the other a guess. In some cases, the value of the material used is reduced and therefore less to be fenced. Both, guess what, people have only strong crypto bias, so when the market goes down, people get rect, "referring to the term" broken "commonly used in the crypto community.


However, Chu says, his company has been seeing "many TradFi players" - or traditional financial stakeholders - showing interest in options. And they are entering the market, he says. That may help explain why OI standards have remained stable, despite all the turmoil within the crypto industry.


The fact that institutions play a major role is also reflected in other details. A report from Amber Group, a digital-asset company, showed that their desk has seen an increase in demand for option options after the collapse seen a few weeks ago. "Risk reduction should be considered especially under current market conditions," the note said.


Meanwhile, Luke Farrell, trader for crypto market-maker GSR, says he has seen a significant change in the options space over the past two years compared to previous cycles. Institutions, he says, were invading, and crypto, prior to 2017, was heavily influenced by retail participation. Today, institutions use options to adjust risk management solutions or hedge portfolios or positions. In addition, he says, investors can play with options with an increased number of coins, a practice that encourages owners to seek to use them in risk management solutions.


Finally, Farrell says, Bitcoin miners, many of whom have found themselves in hot water amid declining digital token prices, are circulating their future production, a change from last year when, in the middle of the bull market, they were not buying defensive options. "They are willing to pay less to protect themselves from change under production at their own expense," he said. "That was an exciting change."

Source: yahoo




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