49% of Bitcoin options expire next Friday, meaning BTC could be on the verge of a trend defining move.
The open interest on Bitcoin (BTC) options is just 5% short of their all-time high, but nearly half of this amount will be terminated in the upcoming September expiry.
Although the current $1.9 billion worth of options signal that the market is healthy, it’s still unusual to see Sell Bitcoin for USD such heavy concentration on short-term options.
Notice how BTC open interest has just crossed the $2 billion barrier. Coincidentally that’s the same level that was achieved at the past two expiries. It is normal, (actually, it’s expected) that this number will decrease after each calendar month settlement.
There is no magical level that must be sustained, but having options spread throughout the months enables more complex trading strategies.
More importantly, the existence of liquid futures and options markets helps to support spot (regular) volumes.
Risk-aversion is currently at low levels
To assess whether traders are paying large premiums on BTC options, implied volatility needs to be analyzed. Any unexpected substantial price movement will cause the indicator to increase sharply, regardless of whether it is a positive or negative change.
Volatility is commonly known as a fear index as it measures the average premium paid in the options market. Any sudden price changes often cause market makers to become risk-averse, hence demanding a larger premium for option trades.
There might never be a reasonable explanation for why BTC options are so heavily concentrated but a similar phenomenon occurred back in June which cut BTC options open interest by $900 million.
Upgradeability, vertical scaling and governance: What all three of these issues have in common is that people are attempting to iterate on top of a flawed architecture. Bitcoin and Ethereum were so transformative that they have totally framed the way we look at these issues.
We need to remember that these were developed at a specific moment in time, and that time is now in the somewhat-distant past when blockchain technology was still in its infancy. One of the areas in which this age is showing is in governance. Bitcoin launched with proof-of-work to establish Byzantine fault tolerance and deliver the decentralization necessary to create a trustless ledger that can be used to host digital money.
Proof-of-work is a mechanism for minimizing Byzantine fault intolerance — proving BFT is not as easy as people like to pretend. It is not a governance system. Bitcoin doesn’t need a governance system because it is not a general-purpose computer. The reason general-purpose computers sell bitcoin to cash need a governance system is that computers need to be upgraded.
Developers must be able to code up the behaviors they would like to see in the blockchain as smart contracts, and there must be an on-chain process for adding this behavior to the system through an explicit upgrade path. In short, we should be able to see the history of an upgrade just as we can see the history exchange bitcoin to western union of a given token.
The appropriate place for governance is in determining which smart contracts are made into “system” contracts based on whether they will increase the value of the protocol. The challenge is, of course, coming to a consensus on that value.
It is commonly understood that in any economy, there are essentially three factors of production: land (infrastructure), labor and capital. Every major blockchain only recognizes one class: capital. In PoW chains, those who have the most capital buy the most ASICs and determine which upgrades can go through. In proof-of-stake and delegated proof-of-stake chains, control by capital is more direct.
In addition to being problematic on its face, the absence of any other classes to act as a check on capital has a paradoxical effect that leads to political paralysis. No group is homogenous. Classes, properly measured, create efficiency — not inefficiency — by forcing the members of a class to come to a consensus around their common interest. Without such pressure, subclasses (groups within a class) will fight among one another, leading to gridlock. Properly designed classes motivate their members to come to an internal consensus so that they can maximize their influence on the system relative to the other classes.
In terms of choosing a cryptocurrency to mine in 2020, there have been no significant changes. This year, most video cards continue to be able to mine Ether (ETH) or its forks. As for Bitcoin (BTC), mining of the world’s first cryptocurrency stopped being available to ordinary people a few years ago, as it requires serious investments, special equipment and access to large amounts of cheap electricity.
This is even more so the case now, as BTC mining is bringing in half the income after the reward halving took place in May. The difficulty of mining continues to increase, and in September, it updated to an all-time high of 19.31 trillion at block 649,158.
As a result, many popular devices such as the Antminer S9 have become obsolete. After the halving, the most profitable miners became the Whatsminer M30S ++ from the Chinese company MicroBT, which can deliver a hash rate of up to 112 terahashes per second and bring in just over $8.50 per day in profit, and Bitmain’s Antminer S19 Pro, which can reach sell bitcoin for perfect money a hash rate of 110 TH/s and see a daily profit of just under $8.50. But the prices of these miners are rather steep: A Whatsminer M30S++ costs $1,800, and the Antminer S19 Pro comes in at $2,407.
There is another factor that attracts the interest of miners: the upcoming transition to Ethereum 2.0 and a proof-of-stake algorithm, which is expected to commence before the end of the year.
Regardless of the manufacturer, the most important factor is return on investment, as any miner must first invest a decent amount of money before turning any profit. A standard rig requires six graphics cards, and as a result, a miner can spend over $9,000 if buying the popular Nvidia RTX 2080 Ti with 8 GB or 11 GB of RAM memory. But what about those who can’t afford the top shelf but still want to make a profit? Here are the most popular graphics cards right now for Ether mining that cost under $400.
AMD’s RX 580 was released back in 2017 and is still one of the best low-budget GPUs for mining, with a price ranging between around $180 and $230. The card is used mainly for mining Ether and has 8 GB of memory, but it consumes little power at just 150 W. The only potential competitor might be the RX 570, but those card with only 4 GB of memory will no longer be able to mine Ether in 2021.