The bitcoin bull is back, and so is price volatility. BTC traded 6.8% higher at $62,992 at press time, having printed highs near $64,000 on Wednesday. The price has gained 21% this week alone. The CoinDesk 20 Index, a broader market gauge, traded 7.5% higher at $2,326. The cryptocurrency's 30-day realized volatility, or the standard deviation of the last 30 days' daily percentage price change, has surged to an annualized 46% from 30% in a week. Activity in the derivatives market has picked up. According to Swiss-based data tracked platform Laevitas, $374 billion worth of crypto futures, perpetual futures and options contracts have changed hands in the past 24 hours. That's the largest single-day tally since November 2021. Renewed demand for leveraged products, which magnify profits and losses, suggests an increase in risk appetite and the potential for sudden liquidations-induced price turbulence.

Source: Laevitas

Bitcoin miners are selling more of their coins and running down their inventories in a rising market. Data tracked by Glassnode shows the estimated number of BTC held in wallets tied to miners has dropped by 8,426 BTC ($530 million) since the start of the year to 1,812,482 BTC. The decline began in the second half of October when miners held over 1.83 million BTC. The impending halving of miners' rewards and the ongoing dry season in China have catalyzed the sales, according to analysts at FRNT Financial.

Morgan Stanley is deciding whether to offer spot bitcoin ETFs to customers of its large brokerage platform, according to two people with knowledge of the matter. The U.S. Securities and Exchange Commission greenlighted 11 spot bitcoin ETFs on Jan. 10. Since then, billions of dollars have poured into these products, known to closely track bitcoin’s price and allowing investors to take exposure to the cryptocurrency without owning it. Liquidity floodgates, however, would open once big registered investment adviser (RIA) networks and broker-dealer platforms like Merrill Lynch, Morgan Stanley, Wells Fargo and others offer ETFs. Morgan Stanley, a leader in the alternative investments and private market space, has over $150 billion in assets under management and was the first major U.S. bank to offer its wealthy clients access to bitcoin funds in 2021.

Setting a cash-and-carry arbitrage strategy in the bitcoin market is now significantly more rewarding than investing in 10-year and two-year U.S. Treasury notes, which yield 4.3% and 4.6, respectively.

Cash-and-carry arbitrage is a market-neutral strategy that seeks to profit from price discrepancies between spot and futures markets. The arbitrageur combines a long position in the spot market with a short position in futures when futures trade at a premium to spot prices. As futures expiry nears, the premium evaporates, and on the day of the settlement, futures converge with spot prices, generating a relatively riskless return to the arbitrageur.

The bitcoin cash-and-carry strategy currently yields over 14%. That's more than three times the 10-year Treasury yield, the so-called risk-free rate. That higher yield could attract more money to the crypto market, according to Glassnode.

- Omkar Godbole