30th August 2022 > > BTC and ETH futures.

tl;dr

Institutional adoption of cryptos continues apace.

Market Snap

Market Wrap

Perpetual futures funding rates indicate a persistent overhang of negative sentiment towards BTC.

Occasional Series – Meghan

“I was told that my marriage was celebrated in the same way as when Nelson Mandela was released from prison”.

The scary part is that she believes this.

Curious Cryptos’ Commentary – EUR denominated futures contracts

It is too easy to get sucked into looking at the headline price of BTC, and thinking that is all that matters, whether we are in a bull or a bear market for risk assets generally.

Meanwhile, the business of building crypto solutions to the world’s problems continues in the background.

Innovation and development don’t just stop because central banks engaged in the biggest manipulation of markets ever seen (aka quantitative easing) to try to bail out profligate governments who collectively forgot that crowding out private enterprise with public spending only ever ends in a painful readjustment for those employed in the productive part of the economy.

Likewise, institutional money continues to demand more products, and better access to crypto markets.

We have seen recently that Blackrock have publicly stated the increasing demands being made on them by their institutional clients for cryptos. As the world’s largest asset manager (AM) with $10 TRILLION assets under management (AUM) this is a clear indication of the growing adoption of cryptos.

Goldman Sachs continues to extend its crypto coverage, with its trading desk offering bespoke, over-the-counter crypto solutions for its institutional client base. Even if you agree with the famous description of the bank penned by a writer for the Rolling Stone magazine that almost descends into lizard-based conspiracy theories, you cannot argue that Goldman Sachs is not the pre-eminent and most successful investment bank of all time.

The CME (Chicago Mercantile Exchange) has now announced the launch of EUR denominated futures in BTC and ETH.

Tim McCourt, Global Head of Equity and FX products at CME said:

“Our new Bitcoin Euro and Ether Euro futures will provide institutional clients, both within and outside the U.S., with more precise and regulated tools to trade and hedge exposure to the two largest cryptocurrencies by market cap.”

I think we can be sure that the demand for this product originates outside the US.

…

This may seem like small news, hardly worth mentioning, but I disagree with that assessment.

Though futures products – inherently leveraged as they are – are not, in my opinion, a suitable investment vehicle for retail investors, they are incredibly useful for institutions.

The CME would not launch this product without being sure of the underlying demand, and the liquidity that will result from that demand.

Other financial products can be built on top of these new EUR denominated futures contracts, with an obvious client base.

So whilst you are furiously using dollar cost averaging (DCA) to improve the long-term profitability of your crypto portfolio (I am always a big fan of bear markets for that very reason) just remember that a low dollar price does not slow the pace of crypto adoption.