Bitcoin and Leverage

Bitcoin hit an all time high of $66,909 (according to Coinbase) on 10/20/21. This comes on the heels of Bitcoin’s highest weekly close last week at $63K, higher than $61.5K seen in April. Bitcoin has had a great week with strong macro indicators coming both from regulators and institutional investors.

The SEC approved a Bitcoin ETF, and the Fed mentioned that they have no plans of banning crypto in the US. All in all, it has been a good few weeks for Bitcoin. But with good news comes increased risk and leverage.

Bitcoin options open interest has hit all-time highs that were last seen in April. It has already reached an all-time high with exchanges like FTX, Binance and CME, while Chinese exchanges are still well-below their April highs due to the crackdown in the market.

Takeaways: Be careful, especially, when open interest, leverage and greed start reaching highs. It has usually been followed by liquidations and corrections, something that we have partially seen today.

The Quant is our key defensive, long-term hold strategy, that allows our customers to get conservative bitcoin exposure over a long-term time horizon. It should be a part of everyone’s hodl portfolio.


-Harsharn Singh, Investment Associate @ Ember Fund

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