Coinbase launches regulated crypto futures services for US retail traders

November 1, 2023 Coin Telegraph

Coinbase Advanced customers in the U.S. can trade nano-sized futures contracts sized at 1/100th of a Bitcoin and 1/10th of an Ether.

Coinbase Advanced allows retail traders in the United States access to regulated crypto futures contracts four months after Coinbase Financial Markets (CFM) secured approval to operate a Futures Commission Merchant (FCM) entity.

On Aug. 17, CFM secured regulatory approval from the National Futures Association (NFA), a Commodity Futures Trading Commission-designated self-regulatory organization, to operate an FCM and offer crypto futures services to eligible U.S. traders.

In details shared with Cointelegraph, CFM revealed that Coinbase Advanced customers in the U.S. can trade nano-sized futures contracts sized at 1/100th of 1 Bitcoin (BTC) and 1/10th of 1 Ether (ETH). As explained by Andrew Sears, the CEO of CFM:

“These contracts offer lower upfront capital requirements and can be an affordable investment option for a broader range of retail customers.”

The nano-Ether contract allows participants to manage risk, trade on margin or speculate on the price of Ether. The nano-Bitcoin contract allows users to bet on the future price of BTC.

In addition to providing regulated, leveraged and cash-settled crypto futures, users will be provided access to a library of educational content via Coinbase Learn. U.S. residents with an active Coinbase account for spot trading are eligible to create an FCM futures account.

The services have been launched on the web version and will soon be available on mobile devices.

Coinbase’s decision to launch crypto futures services seemed natural as the exchange witnessed a sharp decline in spot trading volume this year compared to 2022.

An analysis from digital asset data provider CCData showed that Coinbase registered around $76 billion in spot trading volume — a 52% drop in spot trading for Q3 2023 compared to the same period in 2022.

*Crypto exchange Coinbase spot trading volume in billions of dollars. Source: Bloomberg*

Despite the decline in spot trading volume, Coinbase gained market share in the last quarter as crypto exchange Binance came under increased scrutiny from regulators.

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Bitcoin futures data highlight investors’ bullish view, but there’s a catch

October 31, 2023 Coin Telegraph

bonds

The stars are lining up for Bitcoin price, but a few major price threats remain in play.

Bitcoin (BTC) price surged by 26.5% in October and several indicators hit a one-year high, including the BTC futures premium and the Grayscale GBTC discount.

For this reason, it's challenging to present a bearish thesis for BTC as data reflects the post-FTX-Alameda Research collapse recovery period and is also influenced by the recent increase in interest rates by the U.S. Federal Reserve.

Despite the positive indicators, Bitcoin price still remains around 50% below its all-time high of $69,900 which was hit in November 2021. In contrast, gold is trading just 4.3% below its $2,070 level from March 2022. This stark difference diminishes the significance of Bitcoin's year-to-date gains of 108% and highlights the fact that Bitcoin's adoption as an alternative hedge is still in its early stages.

Before deciding whether the improvement in Bitcoin futures premium, open interest and the GBTC fund premium signal a return to the norm, or the initial signs of institutional investors' interest, it's essential for investors to analyze the macroeconomic environment.

The U.S. budget issue sparks Bitcoin’s institutional hope

On Oct. 30, the U.S. Treasury announced plans to auction off $1.6 trillion of debt over the next six months. However, the key factor to watch is the size of the auction and the balance between shorter-term Treasury bills and longer-duration notes and bonds, according to CNBC.

Billionaire and Duquesne Capital founder Stanley Druckenmiller criticized Treasury Secretary Janet Yellen's focus on shorter-term debt, calling it "the biggest blunder in the history of the Treasury." This unprecedented increase in the debt rate by the world's largest economy has led Druckenmiller to praise Bitcoin as an alternative store of value.

The surge in Bitcoin futures open interest, reaching its highest level since May 2022 at $15.6 billion, can be attributed to institutional demand driven by inflationary risks in the economy. Notably, the CME has become the second-largest trading venue for Bitcoin derivatives, with $3.5 billion notional of BTC futures.

Moreover, the Bitcoin futures premium, which measures the difference between 2-month contracts and the spot price, has reached its highest level in over a year. These fixed-month contracts typically trade at a slight premium to spot markets, indicating that sellers are requesting more money to delay settlement.

*Bitcoin 2-month futures annualized premium. Source: Laevitas*

The demand for leveraged BTC long positions has significantly increased, as the futures contract premium jumped from 3.5% to 8.3% on Oct. 31, surpassing the neutral-to-bullish threshold of 5% for the first time in 12 months.

Further bolstering the speculation of institutional demand is Grayscale's GBTC fund discount narrowing the gap to the equivalent underlying BTC holdings. This instrument was trading at a 20.7% discount on Sept. 30 but has since reduced this deficit to 14.9% as investors anticipate a higher likelihood of a spot Bitcoin exchange-traded fund (ETF) approval in the U.S.

Not everything is rosy for Bitcoin, and exchange risks loom

While the data seems undeniably positive for Bitcoin, especially when compared to previous months, investors should take exchange-provided numbers with caution, particularly when dealing with unregulated derivatives contracts.

The U.S. interest rate has surged to 5.25%, and exchange risks have escalated post-FTX, making the 8.6% Bitcoin futures premium less bullish. For comparison, the CME Bitcoin annualized premium stands at 6.8%, while Comex gold futures trade at a 5.5% premium, and CME's S&P 500 futures trade at 4.9% above spot prices.

The Bitcoin futures premium, in the broader context, is not excessively high, especially considering that Bloomberg analysts give a 95% chance of approval for a Bitcoin spot ETF. Investors are also mindful of the general risks in cryptocurrency markets, as highlighted by U.S. Senator Cynthia Lummis's call for the Justice Department to take "swift action" against Binance and Tether.

The approval of a spot Bitcoin ETF could trigger sell pressure from GBTC holders. Part of the $21.4 billion in GBTC holdings will finally be able to exit their positions at par after years of limitations imposed by Grayscale's administration and exorbitant 2% yearly fees. In essence, the positive data and performance of Bitcoin reflect a return to the mean rather than excessive optimism.

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’s bull move might not be over yet — Here are 3 reasons why

October 30, 2023 Coin Telegraph

bitcoin futures

Bitcoin options market positioning and BTC’s daily chart suggest another bull move could be in the making.

The bullish momentum that propelled Bitcoin (BTC) price to a year-to-date high continues into its third week as the price presses toward the $35,000 handle.

Some notable developments that back the current bullish momentum are:

The forming a golden cross between the 50-day moving average and 200-day moving average on the daily timeframe.

Liquidity maps from DecenTrader and Kingfisher highlighting the potential for a short squeeze between the $36,300 and $40,000 range if Bitcoin price manages to blitz the $36,300 level.

Still a good amount of liquidity for #bitcoin between current price all the way up to $39,500.

Track it here: https://t.co/s1yivlKw5D pic.twitter.com/2i09F7Z9We
— Decentrader (@decentrader) October 26, 2023

Options market data highlighting a shift in investors’ sentiment and positioning.

Bitcoin’s options data appears confluent with the perspective that further price upside could be in store and suggests a potential extension of last week’s gamma event culminating with BTC price rallying to $35,280. The data also shows the possibility for a gamma event in the $35,000 to $40,000 range, and investor positioning has shifted accordingly.

In the past week, daily option volumes across the derivatives market surged, leading The Big Picture podcast host Joe Kruy to say:

“Paradigm had its best day ever by 70%, in terms of volume.”

*Paradigm daily option volumes (USD). Source: Paradigm*

Adding to the conversation on the Bitcoin options market, Kelly Greer, Head of America Sales at Galaxy said:

“The flows that we’ve seen reflect everything that is illustrated here and what’s in the market in the listed space. An uptick month over month from Q3 to Q4, interest in the calls that we’ve been highlighting and as we started highlighting this short gamma, the noticeable difference between Bitcoin and ETH in early October, actually was the first time we started talking about this. It was incredible to see that play out once we got the catalyst for spot to break out over its range and see the chasing in spot. And see spot settle down in the mid $30; from when we started talking about it, it was mid-$25s. We’ve seen interest in upside now that vol is higher and calls skews are a little elevated. Seeing those strikes roll out so that peak gamma at the time when we discussed this in early October was around $32K and now it's around $36K to $40K.”

From the perspective of technical analysis, traders are eyeballing the bull pennant pattern, which has formed on the daily timeframe, along with the birth of a golden cross.

*BTC/USDT 1-day chart. Source:* *TradingView*

In the short-term, the catalyzing move to be on the watch for is whether or not a price move through the $36,300 level leads to escalating pressure on shorts, and if this triggers a rapid uptick in spot buying volumes as options and perpetual futures traders are forced to cover their positions or face liquidation.

Essentially, one would see aggregated short liquidations surge as spot volumes peak, a process that is documented in the chart below.

*BTC/USDT at Binance Futures. 12 hour chart. Source: Velo*

According to Alex Thorn, Head of Firmwide Research at Galaxy, “the Bitcoin gamma squeeze from last week could happen again if BTC/USD moves higher to $35,750 - $36K.”

Thorn explained that:

“Options dealers will need to buy $20 million in spot BTC for every 1% upside move, which could cause explosiveness if we begin to move up towards those levels.”

*Total dealer gamma at Spot BTC levels. Source: Galaxy*

*Explanation of gamma in the BTC options market. Source: Alex Thorn / X*

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

CME becomes second-largest Bitcoin futures exchange as open interest surges

October 30, 2023 Coin Telegraph

bitcoin futures

The surge in CME Bitcoin futures open interest has helped the regulated derivatives platform attain a 25% market share in Bitcoin futures.

The Chicago Mercantile Exchange (CME), a regulated derivatives exchange that lists Bitcoin (BTC) futures, now stands just behind Binance in terms of notional open interest to rank second in the list of BTC futures exchanges.

The CME’s open interest hit $3.58 billion on Oct. 30, pushing the regulated derivatives exchange platform to jump two positions from the previous week. The CME overtook Bybit and OKX with $2.6 billion and $1.78 billion in open interest, respectively, and is just a few million away from Binance’s $3.9 billion.

*Bitcoin Futures Exchange rankings by open interest. Source: Coinglass*

The standard Bitcoin futures contract offered by CME is valued at five BTC, while the micro contract is worth a tenth of a Bitcoin. Perpetual futures, instead of ordinary futures contracts, are the main focus of open interest in offshore exchanges, as they come without an expiration date and use the funding rate method to maintain their price parity with the market price.

Bitcoin open interest refers to the total number of outstanding Bitcoin futures or options contracts in the market. It measures the amount of money invested in Bitcoin derivatives at any given time. The open interest measures the capital flowing in and out of the market. If more capital flows to Bitcoin futures, the open interest will increase. However, if the capital flows out, the open interest will decline. Hence, increasing open interest reflects a bullish sentiment, whereas a declining open interest indicates bearish sentiment.

CME’s rising OI not only helped the regulated futures exchange to climb to the second spot among futures crypto exchanges but also saw its cash-settled futures contracts exceed 100,000 BTC in volume. The rising interest of traders in the Bitcoin futures market has also propelled CME to gain 25% of the Bitcoin futures market share.

A majority chunk of investment into CME futures has come via standard futures contracts indicating an influx of institutional interest as Bitcoin registered a massive double-digit surge in October, helping it reach a new one-year high above $35,0000.

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Binance Crypto Exchange Launches Futures Trading for Ethereum-Based Altcoin That’s Surged Over 50% in a Week

October 26, 2023 The Daily Hodl

Volatility Shares cancels ETH futures ETF launch, ‘didn’t see the opportunity at this point in time’

October 2, 2023 Coin Telegraph

Coin Telegraph

The company’s co-founder and president, Justin Young, told Cointelegraph in an email that plans to launch at a later date were “TBD.”

Volatility Shares, a financial firm offering a range of exchange-traded fund (ETF) products, canceled its plans to launch an Ether (ETH) futures ETF on Oct. 2, citing changes in the market.

In an email with Cointelegraph, the company’s co-founder and president, Justin Young, confirmed the cancellation:

“You are correct — we did not launch today. We didn’t see the opportunity at this point in time.”

However, when asked if the company still planned to launch an ETH futures ETF at a later date, Young responded, “Of course,” adding that “plans are TBD.”

Ether futures ETFs track the prices of ETH futures contracts — agreements to trade the asset at a specific time and price in the future. Essentially, they allow investors to be involved in ETH trading without having to actually hold any of the cryptocurrency.

Volatility Shares was previously positioned to be the first firm to offer an ETH futures ETF. The United States Securities and Exchange Commission was expected to approve the first such product on Oct. 12, but concerns over the previously impending Oct. 1 U.S. government shutdown reportedly prompted the SEC to move the timeline for approval up.

As of Oct. 2, several firms have begun trading ETH futures ETFs, including Valkyrie, VanEck, ProShares and Bitwise.

Pretty meh volume for the Ether Futures ETFs as a group, a little under $2m, about normal for a new ETF but vs $BITO (which did $200m in first 15min) it is low. Tight race bt VanEck and ProShares in the single eth lane. pic.twitter.com/F9AHtrVcVf
— Eric Balchunas (@EricBalchunas) October 2, 2023

As Cointelegraph’s Turner Wright recently wrote , “Bills for the good or ill of digital assets would be halted amid a shutdown, and financial regulators, including the Securities and Exchange Commission and Commodity Futures Trading Commission, would be running on a skeleton crew.”

In a twist, the U.S. government managed to avoid the shutdown by passing a stopgap measure to keep services funded through Nov. 17, with the Senate voting 88-9 to pass the measure. U.S. President Joe Biden signed it into law immediately.

Invesco Galaxy applies for spot Ether ETF

September 29, 2023 Coin Telegraph

Coin Telegraph

Investment firms Invesco and Galaxy Digital allegedly filed for a spot Ethereum ETF with the U.S. SEC on Sept. 29.

Asset managers keep pursuing digital asset products, with Invesco and Galaxy Digital allegedly filing for a spot Ether (ETH) exchange-traded fund (ETF) on Sept. 29.

Bloomberg ETF analyst James Seyffart disclosed the filing on X (formerly Twitter), even though the application hadn’t been uploaded to the SEC’s public database at the time of writing.

Invesco Galaxy just filed for a spot Ether ETF, I think this is the 3rd of 4th one of these, have to check tho.. pic.twitter.com/SIJVu8VzFk
— Eric Balchunas (@EricBalchunas) September 29, 2023

A spokesperson for Invesco declined to confirm the application, stating that products still being registered cannot be commented on. Cointelegraph reached out to Galaxy but did not immediately receive a response.

With the Sept. 29 filing, Invesco and Galaxy join a growing line of investment managers seeking regulatory approval for a spot ETH ETF. On Sept. 27, the SEC delayed decisions on previous applications from ARK 21Shares and VanEck, extending the deadline until Dec. 25–26. “The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein,” said the SEC.

Although a spot Ether ETF may not be available for a while, futures-based Ether ETFs should be available as soon as next week. On Sept. 28, investment firms started gearing up to add ETH futures vehicles to their portfolios. VanEck, for instance, published a statement about its upcoming Ethereum Strategy ETF — tickered EFUT — which will be listed on the Chicago Board Options Exchange in the coming days.

Another company debuting a futures crypto ETF is Valkyrie. The asset manager will begin offering exposure to Ether futures through its existing Bitcoin Strategy ETF, now rebranded as Valkyrie Bitcoin and Ether Strategy ETF. A Valkyrie spokesperson told Cointelegraph that the firm’s Bitcoin Strategy ETF will allow investors access to Ether and Bitcoin (BTC) futures “under one wrapper.”

Likewise, Bitwise submitted an updated prospectus for their equal-weight Bitcoin and Ether futures ETF on Sept. 28, which is also expected to go live next week. According to Seyffart, Proshares also applied and Kelly ETFs partnered with Hashdex to deliver futures Ether ETFs in the coming days.

Ether is trading in the green at the time of writing at $1,666, driven by euphoria over the debut of futures ETFs.

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Coinbase Secures Approval To Offer Pepertual Futures Crypto Trading to Non-US Customers

September 28, 2023 The Daily Hodl

Ethereum futures ETFs could start trading next week — Bloomberg analyst

September 28, 2023 Coin Telegraph

Coin Telegraph

An impending US government shutdown may be accelerating the launch of Ethereum futures ETFs, analysts suggest.

Ethereum futures exchange-traded funds (ETFs) could start trading for the first time in the United States as early as next week, according to Bloomberg analysts.

On Sept. 28, Bloomberg Intelligence analyst James Seyffart said it was “looking like the SEC is gonna let a bunch of Ethereum futures ETFs go next week potentially.”

His comments were in response to fellow ETF analyst Eric Balchunas who said he was hearing that the SEC wanted to “accelerate the launch of Ether futures ETFs.”

“They want it off their plate before the shutdown,” he said, adding that he's heard the various filers to update their documents by Friday afternoon so they can start trading as early as Tuesday next week.

Looking like the SEC is gonna let a bunch #Ethereum futures ETFs go next week potentially https://t.co/YoBD1d1ay8
— James Seyffart (@JSeyff) September 28, 2023

The U.S. government is expected to shut down at 12:01 am ET on Oct. 1 if Congress fails to agree on or provide funding for the new fiscal year, which is expected to impact the country's financial regulators among other federal agencies.

Neither specified their sources for this latest update on the long list of crypto ETFs in the queue.

There are 15 Ethereum futures ETFs from nine issuers currently awaiting approval, according to the analysts in a Sept. 27 note.

The analysts gave Ethereum futures ETFs a 90% chance of launching in October with Valkyrie’s Bitcoin futures product (BTF) poised to become the first to hold Ethereum exposure on Oct. 3.

“We expect pure Ethereum futures ETFs to start trading the following week thanks to Volatility Shares’ actions.”

However, “we don’t expect all of them to launch,” said the analysts.

Bitcoin price eyes $28K as Binance legal battle spurs bullish momentum

September 20, 2023 Coin Telegraph

Binance

Discover how margin and option metrics hint at Bitcoin's path to $28,000 amid the Binance legal battle.

The ongoing legal battle between the Binance cryptocurrency exchange and the U.S. Securities and Exchange Commission (SEC) took a surprising turn on Sep. 18.

Magistrate Judge Zia M. Faruqui rejected the SEC's request for access to Binance.US's systems. Instead, the Federal Magistrate suggested that the SEC should formulate specific discovery requests.

While this decision only temporarily postponed the need for Binance to demonstrate the separation between Binance.US's custody solution and Binance International, the market responded positively.

Bitcoin (BTC) surged to its highest level in three weeks, breaking above the $27,000 resistance. Traders are now wondering whether the rally has been supported by leverage or genuine spot buying demand.

This is where metrics related to Bitcoin derivatives could potentially provide the solution.

Investors must wait three weeks for further rulings

Judge Faruqui scheduled a follow-up hearing for Oct. 12 and called upon the involved parties to submit a status report before the event, as reported by Yahoo Finance. What might have seemed like a setback for the SEC, at least for the time being, could potentially increase the risks for Binance.

Binance's founder and CEO, Changpeng “CZ” Zhao, remains steadfast in asserting that Binance.US has never utilized Binance International's custody solutions, despite a document from Binance.US on Sep. 15 suggesting otherwise. Nevertheless, the SEC has yet to produce clear evidence of Binance attempting to mislead the court.

Regardless of the current evidence, or more accurately, the absence of reliable information provided by Binance, the outlook for Bitcoin bulls has significantly improved for the next three weeks, with no anticipated changes until the upcoming court hearing.

To gauge the increasing optimism among professional traders, let's examine Bitcoin's margin and derivatives metrics.

Bitcoin margin, options show clear path toward $28,000

Margin markets offer valuable insights into the positioning of professional traders as they enable investors to increase their exposure through stablecoin borrowing.

Conversely, Bitcoin borrowers can speculate on a cryptocurrency's price decline. A declining indicator suggests that traders are becoming less bullish, while a ratio exceeding 30 typically indicates excessive confidence.

*OKX stablecoin/BTC margin-lending ratio. Source: OKX*

Recent data reveals that the margin-lending ratio for OKX traders has dropped to its lowest point in three months, standing at 19x, down from 27x just a week ago. These findings suggest that the overwhelming dominance of leverage long positions has diminished, although the current ratio still favors the bulls.

Market sentiment can also be assessed by analyzing whether more activity is occurring through call (buy) options or put (sell) options.

A put-to-call ratio of 0.70 indicates that put option open interest lags behind the more bullish calls, implying a bullish momentum. Conversely, a 1.40 indicator favors put options, signifying bearish sentiment.

*BTC options volume put-to-call ratio. Source: Laevitas.ch*

The put-to-call ratio for Bitcoin options volume has recently shifted from favoring put options at 1.50 to a balanced 1.04 level on Sep. 20, indicating a reduced interest in protective puts.

Notably, since Sep. 18, BTC options volume has either been neutral or slightly favored put options, suggesting that professional traders were caught off-guard by the price rally above $27,000.

Both Bitcoin margin and options markets indicate a balanced demand between long and short positions. From a bullish perspective, this suggests that excessive leverage hasn't been utilized as Bitcoin's price climbed from $26,500 to $27,500 on Sep. 19.

However, bears may find solace in the fact that even as Bitcoin's price reached its highest level in three weeks, there was limited enthusiasm from buyers in the margin and options markets.

Nonetheless, the data does hint at buying support from spot orders, possibly indicating that big entities, or so-called whales, are accumulating regardless of price.

Now, BTC and other crypto bulls have a window of three more weeks, until Oct. 12, when the Federal Judge will convene another hearing and potentially issue orders that could pose challenges for Binance.US. In the meantime, a Bitcoin price rally above $28,000 is certainly on the table.

futures

The U.S. budget issue sparks Bitcoin’s institutional hope

Not everything is rosy for Bitcoin, and exchange risks loom

Investors must wait three weeks for further rulings

Bitcoin margin, options show clear path toward $28,000

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