CRYPTOCURRENCIES 5 minutes to read

The future of crypto derivatives

Summary:  This week the entire crypto market cap fell by 3.5%, bringing the market cap to $250 billion. Bitcoin is up by less than 0.2%. Meanwhile, Ethereum rose by 13%. Bitcoin’s and Ethereum’s month-to-date returns are 48% and 58% respectively


Bitcoin’s steam appears to be running out as volumes are declining while the price is consolidating around $8,000.

CME reaches highest notional volume ever

On 13 May the CME Group reported over a billion US dollars in record volume for their Bitcoin Futures products. This volume dwarfs that previous record by 50%. This brings the volume traded for at over $6.6bn for May. We see a similar trend for other derivative providers, such as Crypto Facilities and Deribit showing record months in May. This trend highlights that institutions are increasingly using derivatives to both hedge and gain exposure to the nascent technology.

SEC delays Bitcoin ETF again

This week the SEC decided to delay the decision on the VanEck Bitcoin ETF, a day earlier than expected. Despite this surprise the BTC price barely moved on the news, possibly signalling the lack of speculation around an ETF approval. The new deadline for a decision is 22 August. The market has been unfazed by ETF decisions ever since the rejection of the Winklevoss ETF in March 2017. Approval of the ETF can only bring greater liquidity to Bitcoin, while never approving an ETF will only serve to disenfranchise specific investor segments.

Bakkt set to test launch in July

The physically settle futures exchange Bakkt announced that it would launch user testing in July. The company has been in close collaboration with the Commodity Futures Trading Commission to develop fully compliant contracts and clearing. They are set to launch both a daily and monthly settled product. This product would be the first of its kind on a regulated exchange. Since Bitcoin is a unique bearer instrument, custody of the asset is of the utmost importance which is why the firm is seeking licenses as a trust company in New York. The approval of the New York Department of Financial Services is essential in the launch of Bakkt.
Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-hk/legal/disclaimer/saxo-disclaimer)