• Bitcoin markets took a high near USD 7,000 today but ultimately remains above USD 6,200
  • Interest in customizable Bitcoin options is climbing as miners, funds and exchangers seek a volatility hedge
  • A Japanese politician suggests that Japan should push as soon as possible for a digital yen

 

Bitcoin has had a weird day at the office today, pushing to a thrilling high of USD 6,942 (CoinDesk) today before quickly retracing back town to USD 6,200 levels right now as volatility remains the name of the game.

A new key indicator, meanwhile, called the “Puell Multiple”, has been pushed down to new levels that suggest new bitcoins generated by the network roughly every ten minutes are actually quite low when compared to levels made in the past — a pointer that Bitcoin is now hugely undervalued. The Puell Multiple is derived from dividing the daily issuance dollar value of Bitcoins terms by the 365-day moving average of the daily issuance value.

All good news for the market traders, and crypto firms like GSR are saying that they have never seen such interest before in customizable options contracts as market participants like funds, exchanges and miners attempt to seek hedges against volatility.

GSR have been doing crypto product development and also offers multiple services such as market making and over-the-counter trading. And for them, the year is looking really attractive as their business growth is being driven by structured products. Co-founder Rich Rosenblum explained:

“The pandemic has predictably sparked a rise in trading activity, but it’s only adding to what has been a substantial shift towards risk management in 2020. Volumes for the custom swaps and options contracts we provide have already surpassed the total volumes for 2019 and we’re on pace for a 400 percent year-on-year increase.”

Conditions have been blustery for all kinds of markets, with the coronavirus pandemic still active in large parts of Europe and North America. This has been marked not only by a price plunge from USD 7,800 to USD 4,100 last week, but also a huge surge of volatility from 60% to over 160%.

GSR’s clients, the majority of whom are funds and exchanges, explain the rationale behind the hedges, since they need to pay salaries and overheads. They are also preparing for the much-anticipated Bitcoin halving, GSR’s Asia business development director Xin Song said about miners:

“Many miners have approached us proactively since last Friday, inquiring about protective puts.”

Even with all this happening, though, states are still keen on blockchain, as proven by Japan, who is now pushing to adopt blockchain-based digital currency for the state as soon as possible. In fact, Kozo Yamamoto, Liberal Democratic Party (LDP) Member of the House of Representatives and a former official at the Ministry of Finance, has said that there is no better time than now for a digital yen.

In an interview with Cointelegraph Japan, Yamamoto, who is famed for supporting the “Abenomics” policy, discussed how money had three typical roles: as a medium of exchange, a store of value, and a unit of account. He believed multinational corporations like Facebooks should be allowed to issue tokens and control this form of money in two of those roles, but that states should control “unit of account”.

The danger here, otherwise, he said was that people would soon forget about sovereign money:

“We must protect it (the role of a unit of account) no matter what. If Japan doesn’t issue a digital currency and people in the world use other digital currencies, the Japanese yen will be forgotten and lose its sovereignty.”

He adds that a digital yen basically bridged digital currencies, whereas corporate-owned ones would be working only in their silos.

 

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