22nd June 2022 > > Germany.

tl;dr

The pace of crypto innovation out of Germany is about to ramp up.

Market Snap (at time of writing)

Market Wrap

BTC threatening to test the 2-handle to the downside again.

Occasional Series – Scottish Referendum

As Nicola Sturgeon plans for a hard border between England and Scotland I feel it is my duty to visit our very first overseas office to reassure staff that we remain committed to our ongoing global expansion. After all, the principle of self-determination is embedded deeply in international law and every country deserves the right to decide its own sovereignty.

Anyway, what that means is no CCC tomorrow. Sorry.

Curious Cryptos’ Commentary – Deutsche Boerse (DB)

Exciting news out of Germany, a country whose politicians and regulators have been very welcoming to crypto businesses and investments, mindful of the tax dollars that will accrue in the future.

In June 2021, DB purchased a controlling stake in Crypto Finance AG whose core business is to provide asset management, brokerage, and custodial solutions to institutional clients:

https://www.cryptofinance.ch/en/

There are already several crypto exchange traded products (ETPs) trading on the DB, but management have identified a much bigger opportunity to develop and extend the range and type of those products.

We know this as an announcement has been made of a partnership between DB and crypto data provided Kaiko:

https://www.xetra.com/xetra-en/newsroom/press-releases/list-press-releases/Deutsche-B-rse-partners-with-Kaiko-to-extend-its-market-data-offering-in-the-crypto-sector-3126576

As explained in the press release:

“Kaiko collects tick-level trade data from over 100 Centralised Exchanges (CEXs) and Decentralised Exchanges (DEXs) for both spot and derivatives markets and continuously adds new exchanges and new assets. Kaiko covers about 96 per cent of the tick-level trading data from various DEXs and includes a majority of blockchain protocols such as Ethereum or Avalanche. The tick-level trading data collected from CEXs comprises more than 150,000 instruments for spot and derivatives markets.”

Pricing of ETPs is driven by usual market forces, but there is always a price discrepancy – a premium or a discount – between the fair value of an ETP and its actual price.

For instance, the Grayscale Bitcoin Trust (GBTC) was trading at a discount of 34% last week, implying that if the BTC spot price was $20k, investors in GBTC were paying just $13k per BTC.

In the case of GBTC, it is a simple matter to calculate the premium or the discount. More complicated products require detailed, extensive, and accurate prices which is exactly what Kaiko will now be producing on behalf of DB.

This is only happening because of demand from institutional investors. We should expect a rapid expansion in the range and type of crypto ETPs out of Germany, attracting more investment dollars into the crypto space.