Learn Live ICYMI: Riding the Bull Run
As we progress into 2024, the cryptocurrency market has witnessed a vibrant resurgence, heralding what many are calling a new bull run. Key drivers of this resurgence include the January 2024 approval of Bitcoin Spot ETFs, which has increased institutional participation, and the anticipation of Bitcoin's fourth halving, expected to further reduce coin issuance and potentially boost prices.
With these developments setting the stage, our new series, Learn Live ICYMI, aims to provide a recap of our Learn 101 livestreams, providing you with comprehensive expertise and insights from leading figures in the crypto industry in case you missed the livestream.
In the inaugural session of Learn Live ICYMI, we gathered an esteemed panel of crypto experts: Lennix Lai, Chief Commercial Officer of OKX; Willis Croft, Director of BD and Partnerships at Wintermute; and Hao Yang, Global Head of Derivatives and Financial Products at Bybit. Nathan Thompson, Lead Tech Writer at Bybit, skillfully moderated the livestream session held on Apr 19, 2024. The discussion focused on the implications of recent regulatory and economic developments, and nuances of the current market.
Key Takeaways:
The impact of the recent Bitcoin halving continues to evolve, with diminishing effects on price volatility.
Approval of Bitcoin Spot ETFs has significantly broadened the investor base, integrating more institutional participants.
As the market matures, volatility is decreasing, but opportunities for strategic investments remain robust.
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Understanding the Market and Trends
Understanding the Post-ETF & Post-Halving Landscape: Challenges and Opportunities
The approval of Bitcoin Spot ETFs in early 2024, along with the April 11, 2024 Bitcoin halving have painted a complex canvas for 2024. Lennix Lai highlighted the new post-ETF market dynamics in his introduction, emphasizing the influx of traditional capital and varied market participants. The uncertainty of post-halving effects, as well as their interplay with broader economic factors, also present a complex scenario. Lai noted, "Halving was more impactful in the early stages. Now, we must consider macroeconomics as well."
Hao delved into the specifics of market supply-and-demand influences, stating that the introduction of a Bitcoin Spot ETF has certainly “opened up the floodgates to institutional money,” which traditionally hasn’t been as involved in crypto. This new demand has driven up prices. However, the halving also cuts supply significantly, even though its impact lessens with each cycle (due to the finite nature of Bitcoin). He further explained that we're seeing a convergence of the total circulating supply toward the 21 million cap, which will naturally diminish the supply-side impact over time.
Croft commented on the strategic implications of these events, sharing that both the Bitcoin Spot ETFs and halving narratives have been major topics. While their immediate impacts might not stir significant volatility, BTC price action tends to follow a pattern over months following a halving in what is essentially a sophisticated market that likely has these factors priced in already. Croft emphasized the market's evolving sophistication: "Immediate impacts might be muted, but the long-term effects are worth noting. Historically, the period from halving to peak has extended, showing that the real impact unfolds over months."
Thompson synthesized their insights, concluding that while immediate market reaction may be subdued, underlying shifts in market fundamentals will likely drive significant change over the medium-to-long term.
Market Trends and Predictions: Insights Into the Current Bull Run
The panel then moved on to discuss the current bull run, emphasizing the reduced market volatility, which suggests a maturing market. Hao observed the trend toward market maturity: "As we witness diminishing volatility, it's indicative of a maturing market. This maturity suggests that cryptocurrencies are moving toward mainstream acceptance, making the market less volatile but still rich with opportunities for both retail and institutional investors."
Lai discussed the evolving demographics and behaviors of market participants. As the market matures, the correlation with traditional macroeconomic factors becomes more pronounced. This bull run isn’t just about speculative interest, as it’s being driven by more foundational changes in the market structure that include the effects of the halving and the influx of new institutional players.
"In the short term, Bitcoin behaves like a risky asset class, influenced by positive sentiments pre-halving," Lai said.
Thompson added, "It appears that market participants are reacting preemptively to these events, a behavior akin to front-running, which has historically proven to influence Bitcoin's price trajectory well before the halving actually occurs."
Croft added that the narrative around these market events often precedes actual price action: by the time we see movement, the market has already digested the news. What's compelling is how these narratives develop and run their course over time, shaping market behavior in less direct but profound ways.
Maximizing Market Performance for Crypto Users
Leveraging Derivatives and Options Markets for Enhanced Performance
The next segment discussed ways in which options might offer a viable dynamic to certain traders, and how that could impact the market.
Croft detailed the strategic use of derivatives, averring that options and derivatives are being used more strategically than ever. They're not just being used for hedging, but are integral to the investment strategies of various institutional players. This is a testament to the market's maturation and the sophistication of the products available. Croft noted, “We’re seeing lots of these guys come into our CFD products” [CFD products are similar to perpetuals] … and these investors “look to go long or short in a particular basket or individual tokens and try to pick out the performers and underperformers.”
When asked about his usage of the phrase “[basket of] tokens,” Croft clarified that he wasn’t talking about indexes, but rather about how “someone could come in and get ten tokens they want to go short on, and ten tokens they want to go long on, and we can execute that. So it’s those clients choosing those baskets themselves rather than the products being preset.” Croft shared that Wintermute recently launched a new index provider, GMCI, and is looking toward working with other exchanges to help provide comprehensive, reliable and accessible indices.
The Rise of Meme Coins in the Crypto Market
Lai then discussed the evolution of market products, commenting that as the market evolves, so too must our products. Derivatives and options markets are crucial for providing the flexibility and tools users need to navigate this complex environment.
Hao focused on the technical aspects, maintaining that the real challenges and opportunities lie in enhancing the robustness of these tools. As we develop more sophisticated trading derivatives and options, we're not just creating new investment opportunities — we're also setting the stage for a more resilient market.
Thompson concluded this segment: "Clearly, the role of advanced financial instruments like derivatives and options is becoming more central as the market grows in complexity and scale."
When asked to comment on meme coins, Hao said it’s a “social movement starting from Wall Street and GameStop” and that it’s a “way to get people together … It can be a force for good instead of a tool for speculation.” Hao then shared about Bybit’s new initiative, the Blockchain for Good Alliance, explaining that it could be used for a charity or fundraising, linking it to a meme coin that’s “naturally inspiring and easy for people to understand.” In this way, meme coins can “be a force for good, to raise a charity fund for cancer treatment” or other causes.
Croft agreed, sharing his perspective that as long as meme coins are “fully transparent” and the projects make it clear that they’re part of a social movement whose participants who believe in and buy in to the cause, he’s “all for crypto facilitating that.”
Lai commented that memes are a sort of collective, and that not all meme coins are going to be successful. While they may be easy to create, it’s difficult to collectively get consensus from any large group of people.
Tokenization of Real-World Assets
Hao also discussed the tokenization of real-world assets, expressing support for it and emphasizing that RWAs are “the link between traditional finance and crypto. That’s the last mile before crypto can be a real financial system, a link to the real-world economy.” He concluded that it’s certainly something he would “bet big on,” especially with more RWAs now on-chain.
How Exchanges and Institutions Adapt to Changing Market Dynamics
Innovation in Exchange Offerings: New Products, Services and Trading Pairs
Lai discussed the continuous need for innovation in the crypto exchange space, saying that as market dynamics evolve, so too must our platforms, focusing not just on expanding product offerings but also on enhancing underlying technology. Decreasing system latency and improving resilience and the sophistication of risk management systems is critical to staying ahead in the fast-paced environment.
Hao emphasized the importance of reliability and scalability, asserting that the foundation of any successful exchange lies in the robustness of its trading systems. As Bybit introduces more complex products and services, our priority remains ensuring that our matching engine and order processing systems can handle increased volumes without compromise. This is crucial for maintaining trust and efficiency in our operations.
Croft highlighted the strategic role of liquidity in product innovation, elaborating that Wintermute is closely involved in the initial stages of product launches by providing liquidity. This collaboration is essential for the successful rollout of new offerings. The ability to support exchanges from day one with robust liquidity helps ensure that new products can find a stable market footing.
Thompson summed up the discussion, observing that the adaptation of exchanges to market changes isn’t just about technological advancements, but also about understanding and integrating the needs of diverse market participants. This approach helps in crafting services that truly meet the evolving demands of the crypto market.
Insights Into the Future
Global Market Integration: Collaborations and Partnerships for Sustainable Growth
Hao envisions a future of deeper integration between crypto and traditional financial systems. He referred to his comment during the segment on real-world assets, elaborating that the last frontier for a mature crypto ecosystem is its integration with the real economy. Tokenizing RWAs and streamlining processes such as clearing and settlement through blockchain technologies are steps toward this integration. These innovations will make many traditional roles obsolete, dramatically improving efficiency.
Lai projects the mainstreaming of crypto in traditional finance: we’re at a turning point, in which cryptocurrency is being woven into the fabric of TradFi services. The integration of trading infrastructure, exchange products and custody solutions between crypto and TradFi is accelerating. This convergence suggests that crypto will soon be an indistinguishable part of the broader financial ecosystem.
Croft discussed the expanding role of stablecoins as a critical bridge between fiat and crypto economies. Their growth into yield-bearing and basis-trading instruments shows their potential to transform financial services. These instruments thus play a pivotal role in the integration of crypto markets with TradFi, ensuring liquidity and stability.
Thompson highlighted the importance of collaboration, pointing out that the future of crypto isn't just about technological innovation but also about strategic partnerships. Collaborations between liquidity providers, exchanges and possibly even decentralized platforms are key to creating a seamless, integrated market experience.
Closing Thoughts
Our first Learn Live ICYMI session has laid a comprehensive groundwork for understanding the significant changes and opportunities in the cryptocurrency market. As we continue to explore similar themes in upcoming episodes, our focus will remain on providing in-depth insights and actionable strategies.
As part of the livestream, Bybit is holding an exclusive event that offers you a chance to participate in our pop quiz and earn a share of the 10,000 MFER prize pool. The event period is through Apr 26, 2024, 2PM UTC.
Stay tuned for our upcoming livestream held on May 2, 8AM UTC where we will discuss the meme coin craze!
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