Fun

News Feed - 2023-11-29 06:11:22

Lucas Kiely2 hours agoFutures will be the best crypto game in town even after a Bitcoin spot ETFA spot Bitcoin ETF will bring fresh money to the market, but it will not change a fundamental reality: Bitcoin liquidity is declining.966 Total views13 Total sharesListen to article 0:00OpinionJoin us on social networksThe Chicago Mercantile Exchange (CME) has long been the home of crypto for traditional finance investors, and this is unlikely to change — even with the approval of a Bitcoin spot ETF.


Activity on the CME has expanded significantly over the past 12 months. The CME now sees more Bitcoin (BTC) futures trading than the world’s biggest crypto exchange, Binance. Open BTC interest on the CME now makes up 24.7% of the entire market, making it the top Bitcoin futures trading venue in the world 


While some of this activity is almost certainly linked to anticipation of approval for a spot ETF, the launch of one or more will not lead to a reduction of activity in the futures market. In fact, futures trading is likely to expand rather than contract when the SEC finally gives BlackRock et. al. the green light.


Related:History tells us we’re in for a strong bull market with a hard landing


There is no doubt that a spot ETF will bring large flows of institutional money into the sector. However, it will not change the basic fundamentals of Bitcoin liquidity. As we know, the supply of Bitcoin is capped at 21 million. That means the futures market is the only place where real trade action can happen.


The CME has been successfully used by Goldman Sachs, Morgan Stanley, JP Morgan and others to trade cryptocurrency instruments for years, and they have been using futures to do so. Futures remain the instrument of choice because liquidity is the main issue in the spot market. These huge institutional investors could buy bitcoin at any time, but liquidity remains the chief drawback - not the lack of a spot ETF.Bitcoin options open interest, June 2020-November 2023. Source: CoinGlass


Institutional investors that use the CME are also highly sophisticated. As such, any fund manager that takes a position in BlackRock’s spot ETF, for example, will want to hedge that position using futures on the CME. Accordingly, we can expect activity on the CME to grow almost in lockstep with the growth in spot ETFs.


Futures are also — as we know — a speculative instrument, and there is perhaps no market that is more speculative than cryptocurrency. As the asset class gains more legitimacy and credibility with the approval of a spot ETF, we will see more investors interested in all corners of digital asset trading.


Related:Bitcoin ETFs: A $600B tipping point for crypto


Adventurous day traders who may have stuck to the foreign-exchange market in the past will likely start to venture into Bitcoin and other crypto instruments. And they will exercise this interest through the CME. Indeed, I suspect we will see increasing interest in perpetual swaps and other types of derivative instruments in the sector next year.


Crypto futures also benefit from clearer and more consistent regulation, which is another major factor here. While the Commodity Futures Trading Commission (CFTC) looks after futures, nobody has yet fully decided who looks after the crypto spot market from a regulatory perspective, and this remains a problem. Applications for these Bitcoin spot ETFs are currently sitting on the Securities and Exchange Commission’s desk, but as has become abundantly clear, Chairman Gary Gensler is a big fan of ambiguity.


Clear regulation is leading to obvious success in cryptocurrency futures, while the spot market is being hindered by regulatory opacity. And so, while the approval of an ETF is just a matter of time at this stage, we still don’t know how much time. While we are waiting, the futures market remains an extremely enticing trading ground for institutional investors.Lucas Kiely is the chief investment officer for Yield App, where he oversees investment portfolio allocations and leads the expansion of a diversified investment product range. He was previously the chief investment officer at Diginex Asset Management, and a senior trader and managing director at Credit Suisse in Hong Kong, where he managed QIS and Structured Derivatives trading. He was also the head of exotic derivatives at UBS in Australia.


This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.# Bitcoin# Cryptocurrencies# Goldman Sachs# ETF# Morgan Stanley# CME# Futures# Trading# Opinion# JPMorgan ChaseAdd reactionAdd reactionRead moreThe ‘WAGMI’ mentality is undermining cryptoWhy Binance’s US plea deal could be positive for crypto adoptionCME becomes second-largest Bitcoin futures exchange as open interest surges

News Feed

OKX Ventures invests in Web3 ‘play ARPG to train AI’ game Blade of God X
Tristan Greene7 hours agoOKX Ventures invests in Web3 ‘play ARPG to train AI’ game Blade of God XThe game is currently available in early access on the Epic Games Store.1142 Total views5 Total sharesListen to article
Mnuchin Affirms $1.5 Trillion Unaccounted For, Still Demands Strict Bitcoin Regulation
Mnuchin Affirms $1.5 Trillion Unaccounted For, Still Demands Strict Bitcoin Regulation U.S. Treasury Secretary Steven Mnuchin remarked last week that a reported $1.5 trillion in
Onecoin Victims Petition Bulgaria for Seizure of Assets and Compensation
Onecoin Victims Petition Bulgaria for Seizure of Assets and Compensation A lawyer representing investors defrauded by the notorious crypto scam Onecoin has urged authorities in Bul
Ezra Reguerra12 hours agoXbox to enhance game dialogues with generative AI through new partnershipThe company will provide an AI toolset for game developers to improve scripts, dialogue trees and quests inside games.1696
Binance gets greenlight to invest customer assets in US Treasury Bills
Vince Quill4 hours agoBinance gets greenlight to invest customer assets in US Treasury BillsThe court stipulated that Binance could invest customer funds custodied at BitGo in Treasury Bills maturing along a four-week ba
Ethereum ETFs are coming — Here’s what you need to know
Alex O’Donnell4 hours agoEthereum ETFs are coming — Here’s what you need to knowAre you ready for the July 23 launch of nine spot Ethereum ETFs? Here"s what you need to know to start trading.3567 Total views21 Tota
Alleged Hydra Administrator Refuses to Provide Access to His Crypto Wallet, Report Claims
Alleged Hydra Administrator Refuses to Provide Access to His Crypto Wallet, Report Claims A Moscow court has ordered the seizure of the crypto wallet of one of the alleged administ
Turkey’s President Erdogan Instructs Ruling Party to Study Cryptocurrency, Metaverse
Turkey"s President Erdogan Instructs Ruling Party to Study Cryptocurrency, Metaverse The president of Turkey, Recep Tayyip Erdoğan, has reportedly instructed the country
Bitcoin Faces Persistent Resistance at $100K, Analyst Eyes Next Step
Este artículo también está disponible en español. Weeks after hitting an all-time high above $109,000, Bitcoin’s price remains under pressure. It is currently trading b
Blockchain gets down and dirty fighting fraud at California’s DMV
Andrew Singer11 hours agoBlockchain gets down and dirty fighting fraud at California’s DMVIt’s not the world’s first chain-based property transfer protocol, but it could be one of the most impactful, given its scal
Ezra Reguerra11 hours agoMining service provider faces $100M lawsuit over pyramid scheme allegations in ChinaProsecutors alleged that the executives of a Filecoin mining project orchestrated an elaborate pyramid scheme a
TCG World Partners With Stock Giants WSB to Expand Their Metaverse
TCG World Partners With Stock Giants WSB to Expand Their Metaverse press release PRESS RELEASE. The world’s largest metaverse on blockchain and NFT platform TCG World announc