Bitcoin welcomes "national-level" players to join the game, and there are two new ways to play

The total market value of Bitcoin has returned to above $1 trillion, and more super players are entering the market...

Bitcoin prices rose for the fourth consecutive day, and driven by optimism in financial markets, the total market value of Bitcoin returned to above $1 trillion. Bitcoin's market value first crossed the $1 trillion mark in February this year, when it was traded at a record high of $58,350.

The U.S. February seasonally adjusted CPI announced last night rose 0.4% month-on-month, in line with expectations and up from 0.3% in the previous period; the unadjusted core CPI in February rose 1.3% year-on-year, in line with expectations and up from 1.4% in the previous period; the unadjusted CPI in February rose 1.7% year-on-year, in line with expectations and up from 1.4% in the previous period.

After the release of this data, some institutions said that due to the improvement of public health conditions and the gradual increase in demand for services such as air travel, the US CPI rose steadily in February, recording the largest annual increase in a year. Therefore, Bitcoin supporters still use this digital asset as a tool to hedge against future inflation. Bitcoin broke through $57,000 per coin on Wednesday, but fell back slightly on Thursday, falling below the $56,000 mark.

Data shows that in the past 24 hours, the total liquidation of the cryptocurrency contract market across the entire network was US$921 million, and a total of 113,815 people had their positions liquidated.

Bitcoin adds a new "national level" super player

It’s worth noting that Bitcoin’s new super player has grown in number—the latest being Russia.

Xinhua Daily Telegraph reported that according to the Russian Defense Ministry's Red Star TV, a huge cryptocurrency mine is hidden in a hydroelectric power station near Irkutsk, Siberia. Siberia has cold weather all year round, with the local cold climate dropping as low as minus 40 degrees Celsius, making it one of the coldest places on Earth. This provides good heat dissipation conditions for large "mines" under the "supervision" of the Russian army with thousands of "mining machines."

At the same time, the low cost of water and electricity here can greatly reduce the cost of mining and maximize the interests of the "mine owners". It is said that this huge "mine" is a joint venture between the Russian army and private investors.

In addition to Russia, Iran may be even more dependent on Bitcoin. At the end of last year, the official newspaper of the Iranian government, Iran Daily, reported that due to the increasing pressure on the country to use hard currency normally, the government revised its cryptocurrency regulations to make digital assets exclusively for imported goods.

Iran, with its vast oil reserves and relatively cheap electricity, can provide heavily subsidized power to miners and offset much of the cost of mining cryptocurrencies like Bitcoin for companies that follow the rules.

Goldman Sachs: Client demand for Bitcoin is increasing and is exploring Bitcoin ETFs

Wall Street already has many "old players" in the cryptocurrency circle, and Goldman Sachs is undoubtedly one of them. John Waldron, president and chief operating officer of Goldman Sachs Group, said on Wednesday that the company is exploring how to meet the growing demand of customers to hold and invest in Bitcoin while maintaining correct regulation.

The bank recently restarted its cryptocurrency trading desk and began trading bitcoin futures and non-deliverable forwards for clients this month. Goldman is also exploring a bitcoin ETF and has issued a request for information about exploring custody of digital assets.

Waldron said Goldman can regulate digital assets but “cannot set principles” and is in discussions with regulators and the Federal Reserve on how banks should be regulated when dealing with digital currencies.

The SEC is considering how to regulate broker-dealers that hold digital assets for clients and sought public comment on the matter in December.

The pandemic has led to an explosion in online commerce, as consumers have spent more time shopping from their couches than in person over the past year. Waldron said Goldman Sachs believes this trend will continue and will lead to a corresponding “explosion” in the use of digital currencies:

Wall Street: If pure Bitcoin ETFs are not allowed, how about adding some stocks?

However, as the U.S. Securities and Exchange Commission (SEC) refuses to approve pure cryptocurrency funds, U.S. ETF issuers are becoming more creative.

According to an announcement on Tuesday, the Simplify USEquity PLUS Bitcoin ETF will invest the majority of its assets in U.S. stocks, while investing up to 15% of its assets "indirectly and solely" in cryptocurrencies through the $34 billion Grayscale Bitcoin Trust.

The announcement is another example of ETF issuers looking for workarounds to convince the SEC. Buying GBTC shares that invest only in Bitcoin can gain exposure to the largest cryptocurrency without having to buy it itself. In addition, according to industry research, gaining exposure by investing in ETFs that set a limit on the proportion of Bitcoin held can also allow investors to avoid capital gains taxes.

Industry research analyst Athanasios Psarofagis said:

Bitcoin has surged nearly 600% over the past year as investors eager to get in have poured money into products such as GBTC and the Bitwise 10 Crypto Index Fund, pushing it to staggering heights.

The first North American Bitcoin ETFs were listed in Canada last month. The Purpose Bitcoin ETF has received about $464 million in assets, and the Bitcoin ETF under Evolve Fund Group has attracted $42 million in funds so far. Andrew Thrasher, portfolio manager at Financial Enhancement Group, said that although Wall Street is still waiting for regulatory approval, funds such as SPBC should also be favored by financial advisors:

Another new way to play: Bitcoin version of the "fear indicator" completed its first options transaction

Cryptocurrency investors can also trade volatility as a unique asset class, which has matured over the past few years, including the creation of more cryptocurrency derivatives.

Now a bitcoin VIX-like “fear indicator” has completed its first trade.

According to a statement from T3, the T3i BitVol Index, which measures Bitcoin’s 30-day implied volatility, saw a 1x2 call option spread trade with a March expiration, with a zero purchase cost. The statement said that quantitative crypto asset management company LedgerPrime was the market maker and the counterparty was a leading global macro crypto asset manager.

The BitVol Index is derived from tradable options on Bitcoin and constructed using a simple variance swap. The index was launched in July last year and aims to best capture the market's outlook on expected volatility using the full range of option strike prices.

In fact, as large investors flock in and the asset class matures, more cryptocurrency derivatives have been born in the past few years, such as products from regulated exchanges such as CME.