Low Volumes Across Crypto Spot Markets and Derivatives Indicate Bearish Conditions

January 23, 2022 Bitcoin.com

2 key Bitcoin trading indicators suggest BTC is ready for a 62% upside move

January 19, 2022 Coin Telegraph

BTC derivatives metrics currently mirror late-September readings which preceded a strong 62% move in Bitcoin price.

Bitcoin (BTC) has been below $45,000 for 14 days and is currently 40% below the $69,000 all-time high. This movement holds similarities to late-September 2021, when Bitcoin price flat-lined for 11 days and was 36% below the previous $64,900 all-time high on April 14.

*Bitcoin price at Coinbase, USD. Source: TradingView*

To understand whether the current price momentum mimics late September, traders should start by analyzing the Bitcoin futures contracts premium, which is also known as "basis." Unlike a perpetual contract, these fixed-calendar futures do not have a funding rate, so their price will differ vastly from regular spot exchanges.

By measuring the expense gap between futures and the regular spot market, a trader can gauge the level of bullishness in the market. Excessive optimism from buyers tends to make the three-month futures contract to trade at a 15% or higher annualized premium (basis).

*Bitcoin 3-month futures premium in Sept. 2021. Source: laevitas.ch*

For example, earlier in September, the basis rate ranged from 9% to 13%, indicating confidence, but on Sept. 29, right before Bitcoin broke out above $45,000, the 3-month futures premium was at 6.5%. Generally, readings below 5% are typically deemed bearish, so a 6.5% reading in late September meant investors were displaying low confidence.

*Bitcoin 3-month futures premium. Source: laevitas.ch*

Regarding the current market conditions, there are a lot of similarities to September 2021, right before Bitcoin broke $45,000 and initiated a 62% rally. First, the current Bitcoin 3-month futures premium stands at 6.5% and the indicator recently ranged from 9% to 11%, reflecting mild optimism.

Unexpected positive market moves happen when investors least expect it and this is precisely the scenario happening right now. To confirm whether this move was specific to the instrument, one should also analyze options markets. The 25% delta skew compares equivalent call (buy) and put (sell) options. The indicator will turn positive when "fear" is prevalent because the protective put options premium is higher than the call options.

The opposite holds when market makers are bullish, causing the 25% delta skew to shift to the negative area. Readings between negative 8% and positive 8% are usually deemed neutral.

*Deribit Bitcoin options 25% delta skew in Sept. 2021. Source: laevitas.ch*

The 25% delta skew ranged near 10% by late Sept. 2021, indicating distress from options traders. Market makers and arbitrage desks were overcharging for protective put (bearish) positions.

*Deribit Bitcoin options 25% delta skew. Source: laevitas.ch*

According to the current 25% delta skew indicator, options traders are neutral. However, on Jan. 10 the metric touched the 8% positive threshold, signaling a mild bearishness.

Derivatives metrics show that the current market conditions resemble late-September when Bitcoin reversed a 24-day downtrend and initiated a 62% rally in the following three weeks.

Will this phenomenon repeat itself? Bitcoin bulls certainly hope so.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Bitcoin price bounces to $41.5K, but derivatives data shows traders lack confidence

January 10, 2022 Coin Telegraph

Bitcoin price bounces to .5K, but derivatives data shows traders lack confidence

basis

Key BTC trading metrics are sitting on the edge of the “worst outcome” scenario, suggesting that the current sell-off is far from over.

Bitcoin (BTC) briefly reached its lowest level in five months this Monday at $39,650, marking a 42.6% drawdown from the all-time high present on Nov 22, 2022. Some argue that a “crypto winter” has already begun citing the $2.1 billion leverage-long aggregate crypto futures contracts that were liquidated over the past seven days.

*Bitcoin/USD price at FTX. Source: TradingView*

The descending channel guiding Bitcoin’s negative performance for the past 63 days indicates that traders should expect sub-$40,000 prices by February.

Confidence from investors continued to decline after the United States Federal Reserve’s December FOMC session on Jan. 5. The monetary policy authority showed commitment to decrease its balance sheet and increase interest rates in 2022.

On Jan. 5, Kazakhstan’s political turmoil added further pressure to the markets. The country’s internet was shut down amid protests and this caused Bitcoin’s network hashrate to tumble 13.4%.

Futures traders are still neutral

To analyze how bullish or bearish professional traders are, one should monitor the futures premium , which is also known as the “basis rate.”

The indicator measures the difference between longer-term futures contracts and current market levels. A 5% to 15% annualized premium is expected in healthy markets, which is a situation known as contango.

This price gap is caused by sellers demanding more money to withhold settlement longer and a red alert emerges whenever this indicator fades or turns negative, which is a scenario known as “backwardation.”

*Bitcoin 3-month future contracts basis rate. Source: Laevitas.ch*

Notice how the futures market premium did not trade below 7% over the past couple of months. This is an excellent indicator considering the absence of Bitcoin price strength during this period.

Options traders are not as bullish

To exclude externalities specific to the futures instrument, one should also analyze the options markets.

The 25% delta skew compares similar call (buy) and put (sell) options. This metric will turn positive when fear is prevalent because the protective put options premium is higher than similar risk call options.

The opposite holds when greed is the prevalent mood which causes the 25% delta skew indicator to shift to the negative area.

Readings between negative 8% and positive 8% are usually deemed neutral. The last time the 25% delta skew indicator entered the “fear” range at 10% was on Dec 6, 2022.

Thus, options markets’ traders are at the very edge of the neutral-to-bearish sentiment because the indicator currently stands at 8%. Moreover, buying protective put options is becoming more expensive, so market markers and arbitrage desks are not confident that $39,650 was the bottom.

Overall, the sentiment is pessimistic and the $2.1 billion in aggregate futures contracts liquidations signal that derivatives traders’ longs (buyers) are quickly losing confidence. Only time will tell where the exact bottom is, but presently, there is not an indication of strong support coming from pro traders.

5 ways derivatives could change the cryptocurrency sector in 2022

December 30, 2021 Coin Telegraph

BitMex

Retail and institutional investors love derivatives instruments. Here‘s how they could impact crypto markets in 2022.

We‘ve all heard stories of billion-dollar future contracts liquidations being the cause of 25% intraday price crashes in Bitcoin (BTC) and Ether (ETH) but the truth is, the industry has been plagued by 100x leverage instruments since BitMEX launched its perpetual futures contract in May 2016.

The derivatives industry goes far beyond these retail-driven instruments, as institutional clients, mutual funds, market makers and professional traders can benefit from using the instrument‘s hedging capabilities.

In April 2020, Renaissance Technologies, a $130 billion hedge fund, received the green light to invest in Bitcoin futures markets using instruments listed at the CME. These trading mammoths are nothing like retail crypto traders, instead they focus on arbitrage and non-directional risk exposure.

The short-term correlation to traditional markets could rise

As an asset class, cryptocurrencies are becoming a proxy for global macroeconomic risks, regardless of whether crypto investors like it or not. That is not exclusive to Bitcoin because most commodities instruments suffered from this correlation in 2021. Even if Bitcoin price decouples on a monthly basis, this short-term risk-on and risk-off strategy heavily impacts Bitcoin‘s price.

*Bitcoin/USD on FTX (blue, right) vs. U.S. 10-year yield (orange, left). Source: TradingView*

Notice how Bitcoin‘s price has been steadily correlated with the United States 10 year Treasury Bill. Whenever investors are demanding higher returns to hold these fixed income instruments, there are additional demands for crypto exposure.

Derivatives are essential in this case because most mutual funds cannot invest directly in cryptocurrencies, so using a regulated futures contract, such as the CME Bitcoin futures, provides them with access to the market.

Miners will use longer-term contracts as a hedge

Cryptocurrency traders fail to realize that a short-term price fluctuation is not meaningful to their investment, from a miners‘ perspective. As miners become more professional, their need to constantly sell those coins is significantly reduced. This is precisely why derivatives instruments were created in the first place.

For instance, a miner could sell a quarterly futures contract expiring in three months, effectively locking in the price for the period. Then, regardless of the price movements, the miner knows their returns beforehand from this moment on.

A similar outcome can be achieved by trading Bitcoin options contracts. For example, a miner can sell a $40,000 March 2022 call option, which will be enough to compensate if the BTC price drops to $43,000, or 16% below the current $51,100. In exchange, the miner‘s profits above the $43,000 threshold are cut by 42%, so the options instrument acts as insurance.

Bitcoin‘s use as collateral for traditional finance will expand

Fidelity Digital Assets and crypto borrowing and exchange platform Nexo recently announced a partnership that offers crypto lending services for institutional investors. The joint venture will allow Bitcoin-backed cash loans that can t be used in traditional finance markets.

That movement will likely ease the pressure of companies like Tesla and Block (previously Square) to keep adding Bitcoin to their balance sheets. Using it as collateral for their day-to-day operations vastly increases their exposure limits for this asset class.

At the same time, even companies that are not seeking directional exposure to Bitcoin and other cryptocurrencies might benefit from the industry‘s higher yields when compared to the traditional fixed income. Borrowing and lending are perfect use cases for institutional clients unwilling to have direct exposure to Bitcoin‘s volatility but, at the same time, seek higher returns on their assets.

Investors will use options markets to produce “fixed income”

Deribit derivatives exchange currently holds an 80% market share of the Bitcoin and Ether options markets. However, U.S. regulated options markets like the CME and FTX US Derivatives (previously LedgerX) will eventually gain traction.

Institutional traders dig these instruments because they offer the possibility to create semi “fixed income” strategies like covered calls, iron condors, bull call spread and others. In addition, by combining call (buy) and put (sell) options, traders can set an options trade with predefined max losses without the risk of being liquidated.

It‘s likely that central banks across the globe will worldwide keep interest rates near zero and below inflation levels. This means investors are forced to seek markets that offer higher returns, even if that means carrying some risk.

This is precisely why institutional investors will be entering crypto derivatives markets in 2022 and changing the industry as we currently know.

Reduced volatility is coming

As previously discussed, crypto derivatives are presently known for adding volatility whenever unexpected price swings happen. These forced liquidation orders reflect the futures instruments used for accessing excessive leverage, a situation typically caused by retail investors.

Yet, institutional investors will gain a broader representation in Bitcoin and Ether derivatives markets and, therefore, increase the bid and ask size for these instruments. Consequently, retail traders‘ $1 billion liquidations will have a smaller impact on the price.

In short, a growing number of professional players taking part in crypto derivatives will reduce the impact of extreme price fluctuations by absorbing that order flow. In time, this effect will be reflected in reduced volatility or, at least, avoid problems such as the March 2020 crash when BitMEX servers “went down” for 15 minutes.

Crypto regulation is coming, but Bitcoin traders are still buying the dip

December 20, 2021 Coin Telegraph

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The premium on CME Bitcoin futures dropped to zero, but data shows pro traders are still bullish.

Looking at the Bitcoin chart from a weekly or daily perspective presents a bearish outlook and it's clear that (BTC) price has been consistently making lower lows since hitting an all-time high at $69,000.

*Bitcoin/USD on FTX. Source: TradingView*

Curiously, the Nov. 10 price peak happened right as the United States announced that inflation has hit a 30-year high, but, the mood quickly reversed after fears related to China-based real estate developer Evergrande defaulting on its loans. This appears to have impacted the broader market structure.

Traders are still afraid of stablecoin regulation

This initial corrective phase was quickly followed by relentless pressure from regulators and policy makers on stablecoin issuers. First came VanEck's spot Bitcoin ETF rejection by the U.S. Securities and Exchange Commission on Nov. 12. The denial was directly related to the view that Tether’s (USDT) stablecoin was not solvent and concerns over Bitcoin's price manipulation.

On Dec. 14, the U.S. Banking, Housing and Urban Affairs Committee held a hearing on stablecoins focused on consumer protection and their risks and on Dec. 17, the U.S. Financial Stability Oversight Council (FSOC) voiced its concern over stablecoin adoption and other digital assets. "The Council recommends that state and federal regulators review available regulations and tools that could be applied to digital assets," said the report.

The worsening mood from investors was reflected in the CME's Bitcoin futures contracts premium. The metric measures the difference between longer-term futures contracts to the current spot price in regular markets.

Whenever this indicator fades or turns negative, this is an alarming red flag. This situation is also known as backwardation and indicates that bearish sentiment is present.

*Bitcoin CME 2-month forward contract premium versus Coinbase/USD. Source: TradingView*

These fixed-month contracts usually trade at a slight premium, indicating that sellers are requesting more money to withhold settlement for longer. Futures should trade at a 0.5% to 2% annualized premium in healthy markets, a situation known as contango.

Notice how the indicator moved below the “neutral” range after Dec. 9 as Bitcoin traded below $49,000. This shows that institutional traders are displaying a lack of confidence, although it is not yet a bearish structure.

Top traders are increasing their bullish bets

Exchange-provided data highlights traders' long-to-short net positioning. By analyzing every client's position on the spot, perpetual and futures contracts, one can better understand whether professional traders are leaning bullish or bearish.

There are occasional discrepancies in the methodologies between different exchanges, so viewers should monitor changes instead of absolute figures.

*Exchanges top traders Bitcoin long-to-short ratio. Source: Coinglass.com*

Despite Bitcoin's 19% correction since Dec. 3, top traders at Binance, Huobi, and OKEx have increased their leverage longs. To be more precise, Binance was the only exchange facing a modest reduction in the top traders' long-to-short ratio. The figure moved from 1.09 to 1.03. However, this impact was more than compensated by OKEx traders increasing their bullish bets from 1.51 to 2.91 in two weeks.

The lack of a premium in CME 2-month future contracts should not be considered a 'red alert' because Bitcoin is currently testing the $46,000 resistance, its lowest daily close since Oct. 1. Furthermore, top traders at derivatives exchanges have increased their longs despite the price drop.

Regulatory pressure probably won’t lift up in the short term, but at the same time, there's not much that the U.S. government can do to suppress stablecoin issuance and transactions. These companies can move outside of the U.S. and operate using dollar-denominated bonds and assets instead of cash. For this reason, currently, there is hardly a sense of panic present in the market and from data shows, pro traders are buying the dip.

Here’s why Ethereum traders could care less about ETH’s current weakness

December 18, 2021 Coin Telegraph

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ETH price could hit new lows near $3,600, but derivatives data suggests pro traders still feel bullish.

Since hitting an all-time high at $4,870 on Nov. 10, Ether (ETH) price has been posting lower lows over the past 50 days. If this downtrend continues, the lower trendline support suggests that the altcoin will bottom at $3,600. Still, derivatives data is signaling that pro traders are not concerned about the seemingly bearish market structure.

Ether/USD price on FTX. Source: TradingView

Notice how the price peaks are getting lower on the 12-hour time frame as mounting regulatory concerns drive investors away from the sector. In a press conference on Dec. 17, Russia's Central Bank governor, Elvira Nabiullina, stated that banning crypto in the country is "quite doable."

Nabiullina cited crypto's frequent use for illegal operations and significant risks for retail investors. Russian President Vladimir Putin also recently criticized cryptocurrency by saying they are not backed by anything. Interestingly, the country plans to launch its own central bank digital currency even as the Russian ruble lost 44% against gold over the past four years.

In the United States, a bipartisan group of U.S. senators has called on Treasury Secretary Janet Yellen to clarify the language in the infrastructure bill relating to the crypto tax reporting requirements. Under the current broader "broker" definition, miners, software developers, transaction validators and node operators will likely be required to report digital asset transactions worth more than $10,000 to the Internal Revenue Service.

Even with the regulatory uncertainty and negatively skewed price action, traders should monitor the futures contracts premium — also known as the "basis rate" — to analyze how bullish or bearish professional traders are.

Pro traders are neutral despite the price weakness

The basis indicator measures the difference between longer-term futures contracts and the current spot market levels. A 5% to 15% annualized premium is expected in healthy markets. This price gap is caused by sellers demanding more money to withhold settlement longer.

However, a red alert emerges whenever this indicator fades or turns negative, also known as "backwardation."

*Ether 3-month futures basis rate. Source: Laevitas.ch*

Notice how the sharp decrease after the 24% intraday crash on Dec. 3 caused the annualized futures premium to reach its lowest level in two months. After the initial panic, the Ether futures market recovered to the current 9% level, which is close to the middle of the "neutral" range.

To confirm whether this movement was specific to that instrument, traders should also analyze the options markets. The 25% delta skew compares similar call (buy) and put (sell) options. The indicator will turn positive when "fear" is prevalent because the protective put options premium is higher than similar risk call options.

When market makers are bullish, the 25% delta skew indicator shifts to the negative area, and readings between negative 8% and positive 8% are usually deemed neutral.

*Ether 30-day options 25% delta skew. Source: Laevitas.ch*

For the past three weeks, the 25% delta skew ranged between a positive 3 and 8 which is in the neutral zone. Consequently, options market data validate the sentiment seen in futures markets and signals that whales and market makers are not worried about the recent price weakness.

If investors "zoom-out" a bit, they will see that Ether's year-to-date gains are at 300%, and this explains why pro traders are not worried about a 20% drop from the $4,870 all-time high.

Furthermore, the Ethereum network's total value locked in smart contracts doubled over the past six months to $148 billion. This data gives derivatives traders the confidence needed to remain calm even with the current short-term price weakness.

Data shows pro traders are currently more bullish on Ethereum than Bitcoin

December 9, 2021 Coin Telegraph

basis rate

ETH has outperformed BTC by more than 230% this year and derivatives data suggests traders believe the altcoin has a lot more upside.

Most traders have noticed that Ether (ETH) price has seriously outperformed Bitcoin (BTC) for months now and the ETH/BTC ratio has rallied more than 230% in 2021 and recently hit a new high at 0.089 BTC on Dec. 9.

*ETH/BTC pair at Coinbase. Source: TradingView*

To put things in perspective, Ether's $490 billion market capitalization currently represents 54% of Bitcoin's $903 billion. This ratio finished 2020 at a mere 15%, so it is safe to conclude that some 'flippening' has occurred. It might still be far from what Ethereum-maximalists imagined, but it is still quite a respectable run.

Instead of analyzing the rationale for the move or, even worse, predicting the outcome based on some loose expectations, analysts should explore the market structure of each coin individually.

For example, is the futures' market premium facing a similar trend on both coins and how does the pro traders' long-to-short ratio compare? These are the most relevant metrics to determine whether a movement has the strength to continue.

The futures premium favors Ether

Quarterly futures are the whales and arbitrage desks' preferred instruments but because of their settlement date and the price difference from spot markets, they might seem complicated for retail traders. However, these quarterly contracts' most notable advantage is the lack of a fluctuating funding rate.

These fixed-month instruments usually trade slightly above spot market prices, indicating that sellers are requesting more money to withhold settlement longer. Consequently, futures should trade at a 5% to 15% annualized premium in healthy markets. This situation is known as "contango" and is not exclusive to crypto markets.

Bitcoin and Ether futures basis. Source: Laevitas.ch

After comparing both charts, we can see that Bitcoin futures trade at an average 2.6% annualized premium for March 2022 and 4.4% for June 2022. This compares to Ether's 2.9% and 5%, respectively. As a result, it becomes clear that whales and arbitrage desks are demanding a larger premium on Ether and this is a bullish indicator.

Bitcoin's long-to-short ratio declined

To effectively measure how professional traders are positioned, investors should monitor the top traders' long-to-short ratio at leading crypto exchanges. This metric provides a broader view of traders' effective net position by gathering data from multiple markets.

It is worth noting that exchanges gather data on top traders differently because there are multiple ways to measure clients' net exposure. Therefore, any comparison between different providers should be made on percentage changes instead of absolute numbers.

*Bitcoin top traders long-to-short ratio. Source: Coinglass*

The long-to-short ratio for top Bitcoin traders currently stands at a 1.21 ratio average, down from the 1.39 on Dec. 5. Compared to the 1.59 figure from two weeks ago, this signals that buyers (longs) reduced their exposure by 24%. Once again, the absolute number has less importance than the overall change in the time frame.

*Ether top traders long-to-short ratio. Source: Coinglass*

Meanwhile, Ether whales and arbitrage desks showed a positive sentiment change from Dec. 5 after the long-to-short moved to 1.16 from 1.0. When comparing the average data from Nov. 25, top Ether traders' long-to-short have been cut by 20% from 1.43.

Data shows Ether traders are more confident than Bitcoin traders

Current derivatives data favors Ether because the asset currently shows a higher futures basis rate. Furthermore, the improvement on the top traders' long-to-short since Oct. 5 signals confidence at a delicate period when ETH price is down 16% from its $4,870 all-time high.

Bitcoin investors may be lacking confidence as its price stands 31% below the $69,000 all-time high on Nov. 10. There's no way to know whether this is a cause or consequence. Still, judging by the futures premium and long-to-short data Ether seems to have enough momentum to keep outperforming.

Bitcoin and altcoins took a hit, but derivatives data reflects a calmer market

December 6, 2021 Coin Telegraph

Chiliz

BTC and altcoins took a beating over the weekend, but data shows a market with healthier trading conditions, even if prices consolidate for the foreseeable future.

Looking at the winners and losers of the past week clearly shows that traders endured some serious heat as the total crypto market capitalization dropped by 12.7% when Bitcoin fell to $41,000. This sharp downside move knocked the figure from $2.37 trillion to $1.92 trillion on Dec. 3 and a total of $2 billion long future contracts were liquidated.

*Top winners and losers from top 80 coins. Source: Nomics*

Bitcoin (BTC) price retraced 14.6% over the past week, effectively underperforming the broader altcoin market. Part of this unusual movement can be explained by the performance seen in decentralized applications which held up better than most of the market. Data shows Ether (ETH) traded down 6.0%, Binance Coin (BNB) lost 7.3% and Solana (SOL) dropped by 7.8%.

This week's top gainers include OKEx’s OKB token (OKB) and Bitfinex's UNUS (LEO). Perhaps these benefited from not having a United States entity because the regulatory uncertainties in the region continue to increase. Moreover, scaling solutions Polygon (MATIC) and Algorand (ALGO) benefited from Ethereum's $40 or higher network transaction fees.

Terra (LUNA) featured on last week's top performers after its built-in token burn mechanism significantly reduced the supply. Meanwhile, Stacks (STX), previously known as Blockstacks, pumped after D'Cent wallet included support for SIP010 tokens.

Sharing solutions had a disappointing week

Among the worst performers were three decentralized sharing solutions: Theta Network (THETA), Filecoin (FILE), and Internet Computer (ICP). They were not alone, as some of the sectors' altcoins below the top-80 also crashed. Siacoin (S.C.) endured a 34% drawdown and Ankr Network (ANKR) dropped by 31.8%.

Chiliz (CHZ) suffered direct competition after Binance successfully launched an independent soccer fan token called SANTOS. Initially, Chiliz’ platform was created to host exclusive promos, services and voting for their fan tokens and more recently the project ventured into the non-fungible NFT market. However, that initiative also lost impact after soccer player Neymar launched a collection with NFTStar.

Despite being among the bottom performers, decentralized exchange aggregator 1inch Network (1INCH) concluded a $175 million Series B investment round and these funds will be used to expand the protocol’s utility.

Tether’s premium and the futures' perpetual premium held up well

The OKEx Tether (USDT) premium measures the difference between China-based peer-to-peer (P2P) trades and the official U.S. dollar currency, and in the past week it decreased slightly.

*OKEx USDT peer-to-peer premium vs. USD. Source: OKEx*

Currently the indicator has a 98% reading, which is slightly bearish, signaling weak demand from crypto traders to convert cash into stablecoins. Even at its best moment over the past two months, it failed to surpass 99%, so Chinese players have not been excited about the general market.

The overall impact of last week’s correction was a drop in the total futures open interest, down 28% to $16.7 billion. Nevertheless, the move was expected since the total market cap retraced and some $3.9 billion worth of liquidations took place during the week.

More importantly, the funding rates on Bitcoin and Ethereum futures quickly recovered from Dec. 3 price crash. Even though longs (buyers) and shorts (sellers) are matched at all times in any futures contract, their leverage varies.

Consequently, to balance their risk, exchanges will charge a funding rate to whichever side is using more leverage and this fee is paid to the opposing side.

*BTC and ETH perpetual futures 8-hour funding rates. Source: Coinglass.com*

Data reveals that a modest bearish trend occurred on Dec. 3 and 4 as the 8-hour funding rate went below zero. A negative funding rate shows that shorts (seller) were the ones paying the fees, but the movement faded as soon as BTC and ETH prices bounced 15% from their lows.

The above data might not sound encouraging, but considering that Bitcoin suffered considerable losses this week, the overall market structure held nicely. If the situation was worse, one would definitively not expect a 99% Tether premium or a positive perpetual funding rate.

CME Group launches micro Ether futures as ETH hovers at $4K

December 6, 2021 Coin Telegraph

CME Group launches micro Ether futures as ETH hovers at K

Business

Micro Ether futures joins crypto derivatives products at the exchange including micro Bitcoin futures, Bitcoin futures, options on Bitcoin futures, and Ether futures.

Major derivatives marketplace Chicago Mercantile Exchange Group has expanded its crypto offerings to include a micro Ether futures product.

In a Monday announcement, the CME Group said it had launched a micro Ether (ETH) futures contract sized at 0.1 ETH, giving institutional and individual traders another product for Ether exposure. The cash-settled micro ETH derivatives offering is trading under the Globex code METZ1 and joins crypto derivatives products at the exchange including micro Bitcoin (BTC) futures, Bitcoin futures, options on Bitcoin futures, and Ether futures.

The newest member of the CME Group cryptocurrency product family has arrived. Micro Ether futures are available for trading. https://t.co/bJoZWA7qZz
— CME Group (@CMEGroup) December 6, 2021

Tim McCourt, CME Group’s global head of alternative investment products, said the offering would allow investors “to hedge their spot Ether price risk or more nimbly execute Ether trading strategies.” Genesis Global Trading, one of the liquid providers for CME Group’s crypto derivatives offerings, said it had already executed a contract for the micro ETH futures product in partnership with crypto investment firm XBTO.

“The Micro Ether futures contract fills a need for greater flexibility and more precise delta hedging,” said Joshua Lim, Genesis’ head of derivatives.

The announcement came following the price of ETH and many cryptocurrencies including Bitcoin falling significantly over the weekend. According to data from Cointelegraph Markets Pro, the ETH price has dropped more than 15% since hitting an all-time high of $4,785 on Nov. 8. At the time of publication, the price of the second-largest cryptocurrency by market capitalization is $4,016, having fallen more than 13% in the last seven days.

CME Group first launched its Bitcoin futures contracts in December 2017 amid the major bull run. The exchange’s micro Bitcoin futures product launched in May, with the company reporting on Dec. 2 it traded more than 3.3 million contracts.

Crypto.com to acquire two US exchanges for derivatives and futures offerings

December 1, 2021 Coin Telegraph

Coin Telegraph

Crypto.com aims to offer derivatives and futures products to its U.S. customers with the acquisition of Nadex and the Small Exchange.

Global crypto exchange Crypto.com is looking to strengthen its foothold in the United States with the acquisition of IG Group's stakes in two exchange platforms.

Crypto.com announced that it is purchasing the U.S.-regulated North American Derivatives Exchange (Nadex) and the Small Exchange for a reported $216 million. The deal is expected to close in the first half of 2022, following regulatory approval.

Both based in Chicago, Nadex offers retail investors derivative products while the Small Exchange is known for its futures offerings, enabling Crypto.com to provide traditional instruments to its U.S. customers. Crypto.com co-founder and CEO Kris Marszalek said that the goal is to offer customers a trusted, secure and regulated platform to achieve financial independence.

Regulated by the Commodity Futures Trading Commission (CFTC), Nadex offers binary options, call spreads and Touch Bracket (“knock-out”) contracts, according to the announcement. The Small Exchange, on the other hand, provides futures products that are smaller, more capital efficient in a bid to attract first-timers.

According to the announcement, Travis McGhee and Donald Roberts will continue in their roles as CEOs of Nadex and the Small Exchange, respectively.

The acquisition adds to Crypto.com’s spending spree to make a name in the U.S. The company recently made headlines with its $700 million deal with AEG to buy the naming rights of Staples Center, the home of the NBA’s Los Angeles Clippers and Los Angeles Lakers, for 20 years.

Crypto.com is also working on streamlining its fiat deposit and withdrawal processes. Following its integration with Circle API to enable U.S. dollar bank transfers to Circle-based USD Coin (USDC) wallets, the exchange has partnered with state-chartered Silvergate Bank to allow dollar deposits and withdrawals for its institutional clients.

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