Hedge funds and institutional traders are aggressively buying back into cryptocurrency call options following one of the most significant sell-offs of bullish positions this year. This renewed interest comes after a weekend liquidation event that saw about $1.1 billion wiped out from crypto bets.

On August 4, Bitcoin fell as much as 17% and Ether lost over 20% of its value, marking one of the worst market downturns of 2024. The sell-off, which started during Asian trading hours, resulted in roughly 50% of open interest in crypto derivatives being liquidated, according to Yevgeniy Feldman from SwapGlobal.

Despite this downturn, Hedge Funds traders are re-entering the market with optimism. They are particularly focused on buying call options that allow them to purchase Bitcoin at strike prices of $90,000 and above later this year. This rebound is reflected in increased demand for Bitcoin on platforms like Coinbase Global Inc., where the bid-to-offer ratio indicates strong buying interest at lower levels.

Short-term hedging has surged on offshore exchanges, with a higher put-to-call ratio observed on Deribit. Retail investors, who frequently use these platforms, are buying more puts as a hedge against further price declines. Conversely, U.S. institutional investors, who typically use over-the-counter (OTC) desks, have shown a bullish bias for the latter part of the year.

The most popular options currently are September $90,000 calls, December $100,000 calls, and March $100,000 calls, which together hold nearly $1 billion in notional value. Bitcoin’s price was around $56,850 on Tuesday, showing a 4.5% increase.

The optimism for a bullish end to the year is partly driven by political factors, including the potential re-election of Donald Trump, a known crypto supporter. As Hedge funds traders look to capitalize on a potential market rebound, the landscape remains volatile but promising for those with a long-term bullish outlook.

Featured Image: Freepik

Please See Disclaimer

Bitcoin (BTC-USD) has faced a significant pullback, plunging as much as 20% over the weekend to below $50,000—a level not seen since February. However, the cryptocurrency has since rebounded by approximately $6,000, though it remains down 14% over the past week.

Despite this downturn, Bitcoin enthusiasts are maintaining their bullish forecasts. MarketVector’s Martin Leinweber believes that Bitcoin could surpass its previous all-time high of $74,000, potentially reaching between $80,000 and $100,000 by the end of 2024. Onramp Bitcoin’s Mark Connors also reaffirmed his earlier prediction of Bitcoin hitting $110,000 in 2024.

Bitwise Asset Management’s Matt Hougan echoed the optimism, emphasizing that Bitcoin investors are long-term holders, resistant to short-term market fluctuations.

Skeptics, however, have raised concerns about Bitcoin’s performance as a haven asset. Critics argue that Bitcoin’s recent behavior mirrors that of risk assets like technology stocks, challenging its narrative as an uncorrelated store of value.

The recent market correction appears to be linked to broader financial movements, including shifts in the US dollar’s strength relative to the Japanese yen. Additionally, Bitcoin ETFs experienced significant net outflows of $168 million on Monday, with trading volumes doubling compared to previous days.

Fundstrat Global Advisors remains confident, projecting Bitcoin could reach $126,000 in 2024. They view the recent decline as a minor setback rather than a market peak.

As Bitcoin continues to experience volatility, market participants will be closely watching trading flows and the impact of new Bitcoin exchange-traded funds managed by major Wall Street firms.

Featured Image: Freepik

Please See Disclaimer

Core Scientific (NASDAQ:CORZ) saw its shares spike as much as 17% following the announcement of a new $2 billion high-performance computing (HPC) contract with CoreWeave. The extension of a prior agreement will see Core Scientific host an additional 112 megawatts (MW) of GPUs for CoreWeave, an AI hyperscaler firm. This deal boosts Core Scientific’s expected total revenue from the contract to $6.7 billion, starting in the first half of 2026.

CoreWeave will cover all capital expenditures necessary to upgrade Core Scientific’s existing infrastructure for HPC use. This new deal follows an earlier agreement to provide 200MW of GPU hosting, with subsequent expansions adding 70MW, and now this third extension.

The agreement highlights Core Scientific’s strategic advantage in leveraging its existing infrastructure for HPC and AI needs, which require high-energy data centers. This is a growing market opportunity as demand for advanced data center infrastructure increases.

Core Scientific has also secured options for further contract extensions to host an additional 118MW for HPC computing, underscoring its role in meeting the energy-intensive demands of modern computing.

The company’s ability to adapt its mining infrastructure to support high-performance and AI data centers is seen as a key factor in its current market performance, given the challenges faced by the crypto mining sector amid a prolonged bear market.

Featured Image: Freepik

Please See Disclaimer

Robinhood Markets Inc. (NASDAQ:HOOD) is poised to deliver strong second-quarter earnings, driven by a resurgence in meme stock trading and a significant uptick in cryptocurrency activity. Wall Street is eagerly anticipating Robinhood’s financial results, which are expected to showcase record-breaking revenue growth fueled by retail investors flocking back to the platform. This article explores the factors contributing to Robinhood’s anticipated success in Q2 and the potential challenges that lie ahead.

The Meme Stock Phenomenon Returns

Robinhood’s popularity soared during the 2021 retail trading frenzy, where everyday investors used the commission-free app to drive up the prices of so-called “meme stocks” like GameStop and AMC Entertainment. This trend has seen a revival in recent months, with the return of influencer Keith Gill, also known as “Roaring Kitty,” sparking renewed interest in these retail favorites.

According to reports, Robinhood’s equity trading volumes surged 82% in April and 76% in May compared to the same period last year, highlighting the platform’s enduring appeal among retail investors. This surge in activity is expected to be a key driver behind the company’s strong Q2 performance.

Cryptocurrency Trading on the Rise

In addition to the resurgence of meme stocks, Robinhood has also benefited from a significant increase in cryptocurrency trading. As sentiment in the crypto markets improved—partly due to easing regulatory constraints and the approval of the first spot bitcoin exchange-traded funds by the U.S. Securities and Exchange Commission—Robinhood saw its crypto trading volume skyrocket. In May, crypto trading volume on the platform surged by 238%, following a 173% increase in April compared to the previous year.

Robinhood’s bet on cryptocurrency as a major growth avenue appears to be paying off, with the company now positioning itself as a key player in the burgeoning digital asset market. Despite ongoing regulatory challenges and market volatility, Robinhood remains optimistic about the future of crypto trading on its platform.

Revenue and Earnings Expectations

Analysts are optimistic about Robinhood’s Q2 earnings, forecasting a 32% increase in revenue to approximately $643.34 million, according to LSEG data. This growth is expected to be driven largely by a 51% surge in transaction-based revenues, reflecting the increased trading activity on the platform. Additionally, analysts predict that Robinhood will report second-quarter earnings per share of 15 cents, a significant improvement from the 3 cents per share reported a year ago.

The company’s efforts to mature into a full-fledged financial services provider, with growth in deposits, margin balances, and options/equities trading, have been noted by industry experts. Citigroup analysts have highlighted the fundamental improvements in Robinhood’s business model, suggesting that the company’s growth trajectory remains healthy.

Long-Term Sustainability Concerns

While Robinhood’s Q2 performance is expected to be strong, some analysts have expressed concerns about the sustainability of the factors driving this growth. Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors, cautioned that the current trading activity might be driven by short-term trends rather than sustainable market shifts. Events like Keith Gill’s return to social media and the excitement around crypto ETFs could be fleeting, making it difficult for analysts to incorporate these factors into long-term financial models for Robinhood.

This sentiment is echoed by other market watchers who question whether the frenetic trading activity seen in recent months can be maintained over the long term. The volatility inherent in both the stock and cryptocurrency markets poses ongoing challenges for Robinhood, which must navigate these dynamics while continuing to expand its service offerings.

Conclusion

Robinhood’s second-quarter earnings are set to reflect the company’s ability to capitalize on the resurgence of meme stock trading and the growth in cryptocurrency activity. With revenue expected to climb and earnings per share on the rise, Robinhood is demonstrating its resilience in a rapidly changing market. However, questions remain about the long-term sustainability of these trends and the challenges the company may face in maintaining its momentum. As Robinhood prepares to release its Q2 results, all eyes will be on how the company navigates these opportunities and obstacles.

Disclaimer: This article is for informational purposes only and does not constitute financial, legal, or investment advice. These are my opinions and observations only.

Featured Image: Freepik

Please See Disclaimer

Crypto bank Anchorage has taken a significant step forward by expanding its custody support to include tokens on the Solana blockchain. This move, announced by CEO Nathan McCauley, marks an important development in the rapidly evolving cryptocurrency landscape, particularly for institutions that rely on secure digital asset storage. This article explores how Anchorage’s new Solana token custody services could impact the broader market and what it means for the future of Solana-based assets.

Anchorage’s Strategic Expansion into Solana Token Custody

Anchorage, a federally chartered custody company, has been a leader in providing secure storage solutions for digital assets. The company’s decision to add custody support for Solana-based tokens is a strategic response to increasing demand from its clients, which include venture capital firms, hedge funds, and the treasuries of various protocols. As McCauley explained, “we’re very responsive to what our clients ask for,” highlighting the importance of customer demand in shaping Anchorage’s service offerings.

The initial rollout of custody support focuses on a select group of tokens that adhere to Solana’s SPL standard. These include prominent assets such as USDC, HNT, W, PYTH, and MPLX. By focusing on these tokens, Anchorage aims to offer its clients a reliable and secure way to manage their Solana-based assets, with the potential to expand its offerings as demand grows and more tokens pass through the company’s due diligence reviews.

The Resilience of the Solana Ecosystem

The Solana blockchain has faced its share of challenges, particularly following the collapse of FTX in early 2023, which caused significant collateral and reputational damage to the ecosystem. Despite these setbacks, Solana’s developers and community have demonstrated remarkable resilience. Builders on the Solana network continued to innovate, and users gradually returned to the platform to trade, stake, and mint new tokens, particularly on popular memecoin launchpads like Pump.fun.

This resurgence in activity on the Solana blockchain has not gone unnoticed by Anchorage. The company’s careful approach to integrating Solana token custody services—waiting to build out and launch support for SPL tokens—reflects a commitment to ensuring robust and secure solutions for its clients. This strategy contrasts with the more aggressive approaches seen elsewhere in the crypto industry, where rapid expansion sometimes comes at the expense of security and reliability.

Implications for Institutional Investors

Anchorage’s expansion into Solana token custody is particularly significant for institutional investors, who require highly secure and regulated custody solutions for their digital assets. With the addition of Solana tokens to its custody services, Anchorage is positioning itself as a key player in the institutional crypto space, offering a broader range of options for investors looking to diversify their portfolios with Solana-based assets.

This move also signals a broader trend within the crypto industry: the growing institutional interest in Solana. As more financial institutions and large investors explore opportunities within the Solana ecosystem, the demand for secure custody solutions will likely continue to rise. Anchorage’s early adoption of Solana token custody positions the company to capture a significant share of this emerging market.

The Future of Solana-Based Assets on Anchorage

While Anchorage’s current support for Solana-based tokens is limited to a handful of assets, the company has indicated that it may expand its offerings based on customer demand and thorough due diligence. This cautious but responsive approach ensures that Anchorage can maintain its high standards of security and reliability while accommodating the evolving needs of its clients.

As the Solana ecosystem continues to grow and attract new users, the range of assets eligible for custody on Anchorage is likely to expand. This could include more niche tokens and potentially even the memecoins that have gained popularity on Solana’s various platforms. However, such expansions will depend on the continued maturation of the Solana network and the development of robust risk management practices within the ecosystem.

Conclusion

Anchorage’s expansion into Solana token custody is a significant development for the cryptocurrency industry, particularly for institutional investors seeking secure and reliable storage solutions. As the Solana ecosystem recovers and grows, Anchorage’s strategic decision to support Solana-based assets positions it as a key player in the digital asset custody space. With the potential for further expansion based on customer demand, Anchorage is poised to play a crucial role in the future of Solana-based assets.

Disclaimer: This article is for informational purposes only and does not constitute financial, legal, or investment advice. These are my opinions and observations only.

Featured Image: Freepik

Please See Disclaimer