Heightened activity in futures market underpins crypto rally

Markets • January 14, 2023, 7:10AM EST

Quick Take

Bitcoin has been trading sharply higher this weekend, underpinned by heightened activity in the futures market for digital currencies.
As noted by Crypto Quant’s Ki Young Jun, buyers entered the market early Saturday morning, purchasing ~$4 billion worth of bitcoin futures.

Bitcoin has been trading sharply higher this weekend, underpinned by heightened activity in the futures market for digital currencies. The price of the biggest cryptocurrency was trading at $20,692 at 6:35 a.m. ET, according to data from TradingView.

Elsewhere, Solana was trading up more than 30% over the last 24 hours, while ether was trading up 7.7%. The move upward triggered $449 million in short liquidations on Jan. 14 — the highest level in months, according to data provided by Coinglass.

As noted by Crypto Quant’s Ki Young Jun, buyers entered the market early Saturday morning, purchasing ~$4 billion worth of bitcoin futures. Cryptocurrencies have been trading higher since new data released Thursday by the U.S. Department of Labor indicated a cooldown in inflation.

The much-followed consumer price index declined in December on a monthly basis by 0.1%. Young Jun said that a pullback of a wide range of crypto market participants could be behind the extended gains. In the wake of bankruptcies including Sam Bankman-Fried’s Alameda Research and BlockFi, crypto brokerage firms and market makers have become less active.

Market-making firms can help dampen volatility during wild market swings. As recently noted by The Block, such market participants have pulled back — a fact that has resulted in a liquidity gap that could leave the market open to bouts of volatility.

“This might be just an orchestrated effort to make a short squeeze when markets have thin liquidity,” Young Jun said in a message to The Block. “We’re close to the bottom for sure," he added, saying that the actual market recovery should start by at least mid-2023, in his opinion.

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About Author

Frank Chaparro is Host of The Scoop podcast and Director of Special Projects. He also writes a biweekly newsletter. Chaparro started his career at Business Insider, where he specialized in the intersection of digital assets and Wall Street, market structure, and financial technology. Soon after joining Business Insider out of Fordham University, Chaparro was interviewing top finance and tech executives, including billionaire Mark Cuban, “Flash Boys” star Brad Katsuyama, Cboe Global Markets CEO Ed Tilly, and New York Stock Exchange President Tom Farley. In 2018, he become a sought after reporter in the crypto world, interviewing luminaries such as Tyler Winklevoss, the cofounder of Gemini, Jeremy Allaire, the CEO of Circle, and Fundstrat head Tom Lee. For inquiries or tips, email [email protected].