Welcome to another edition of Qume Market Mondays!
Hong Kong’s Hang Seng index plunged 5.56% by the close on Friday after China announced new national security laws involving Hong Kong.
China also announced that it will not set a GDP target for the year 2020.
USD strengthened over every major world currency this week, thereby increasing the prices of USD-pegged stablecoins in relation to those currencies. We have also seen an increase in volatility in forex markets over the last two months.
On a related note, Qume has just launched USDT/INR spot markets in India where users will be able to buy USDT Tether at global rates. We have previously talked about high premiums at which USDT usually trades in India, making it anything but a stablecoin.
Bitcoin is down around 13.12% since our last report. Bitcoin fell 7% last Wednesday after news broke of movement from a bitcoin address inactive from 11 years. Some people speculated that it was Satoshi Nakamoto who supposedly for the first time after 2009, moved his bitcoin.
This move was further augmented by overleveraged positions getting liquidated on BitMEX.
Yesterday, BTC dropped around 700 points more, now keeping at $8,800+ levels. The decrease in the price of bitcoin is a blow to the mining industry. If the price falls further to $8,000 levels, there will be an extreme sell pressure on old bitcoin mining rigs. With mining profitability falling, this would worsen the situation for miners after the halved block rewards.
Bitcoin hash rate has continued to drop this week as well. As sell pressure on miners increase this is expected to continue for a while.
Bitcoin Volatility indices have fallen over the week.
Probability of strike price of Bitcoin being in the range of $8,500 - $9,000 for May and June 2020 options is now higher.
This comes with the bitcoin price going down to around $8,600 this Sunday. People who would have bought out of the money May 20 and June 20 options in March or before when BTC was down to $4000 price levels should now see profits.
Arb opportunities are highly concentrated within 20–30bps among derivatives exchanges except for Exmo.