By Rob Nelson
In a recent discussion, John Divine of BlockFills described how professional trading firms took advantage of new spot bitcoin ETFs.
Exploring the recent evolution in bitcoin’s market dynamics, Roundtable anchor Rob Nelson engaged with John Divine, head of digital OTC trading at BlockFills, to shed light on the cryptocurrency’s current pricing trends and the impact of new spot bitcoin exchange-traded funds (ETFs).
Divine provided an in-depth analysis of the market’s reaction to these new products, describing it as largely anticipated by those deeply embedded in the trading community. He attributed the “sell the news” phenomenon to several strategic moves by traders, particularly focusing on the dislocation between bitcoin spot prices and futures contracts that emerged around the ETF announcement.
Divine also highlighted a significant aspect of the market’s behavior: the basis trade, where the spread between spot bitcoin and January futures contracts notably widened, presenting a lucrative opportunity for professional trading companies. By purchasing spot bitcoin and simultaneously selling the futures contracts, these entities were able to capitalize on the demand for leverage, thereby injecting liquidity into the market and moderating sell-side pressure.
Additionally, the conversation touched upon the strategic…
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