Markets

Credit Intermediation, Capital Efficiency Needed in Crypto

Published

10 months ago

15 May, 2024

Credit Intermediation, Capital Efficiency Needed in Crypto

Cryptoasset trading is typically pre-funded, so credit intermediation, in the form of prime brokers, and capital efficiency are necessary for the asset class to be adopted by traditional financial institutions (TradFi).

A panel discussed the institutionalization of exchanges and their evolution at the Tradetech DigiAssets conference in London, on May 15th. Participants agreed that the collapse of crypto exchange FTX led to a necessary fight for quality, as it highlighted the importance of counterparty diversification, the requirement for institutional-grade technology, and the need for regulated custodians.

Chantal Bradford, Deribit

Chantal Bradford, head of EMEA institutional sales at centralized crypto options and futures exchange Deribit, told the panel that more traditional financial institutions (TradFi) are entering the crypto market. As they become more active, they ask more questions, such as how sites are managed and audited, how funds are segregated, whether they are regulated in a credible jurisdiction, and resilience.

Bradford continued that Deribit was connected to a network of third-party custodians before FTX’s collapse, but customers didn’t use them, and that has now changed.

Block trading volumes on Deribit have increased from 10% to between 35% and 40% since Bradford joined the company in February 2022, which she said highlighted the growth of institutional trading. She continued that tradFi institutions are allocating to native crypto firms rather than trading themselves.

Banks typically provide prime credit intermediation and brokerage services, but regulations currently do not allow them to trade crypto assets on a spot basis. A comparison was made with the forex market, where the rise of prime brokers in the market has led to hedge funds and market makers overtaking banks as the main liquidity providers, and a huge expansion in trading volumes.

“Prime brokerage needs to improve as institutions don’t want to connect to 20 exchanges,” she added. “Prime brokers can take this currency risk and improve capital efficiency for institutional adoption.”

David Newns, chief executive of SDX, the blockchain-based exchange owned by Switzerland’s SIX Group, agreed on the panel that capital efficiency is key for institutions.

David Newns, SDX

“AsiaNext allows intraday, even hourly, margin payments and allows cross-margining between spot and futures trades,” he added.

Newns is also chairman of AsiaNext, the Singapore-based digital asset exchange that launched crypto derivatives trading earlier this year. AsiaNext is a joint venture between Japan’s SBI Digital Asset Holdings and SIX Group. AsiaNext also intends to launch trading in digital securities, real-world tokenized assets and sustainability-focused listings.

Bradford added that Deribit also allows for portfolio margins. In February this year, Deribit said in a statement that it has integrated with Fireblocks, a self-custody technology provider, to allow trading companies and asset managers to trade on the exchange from an on-chain wallet, which eliminates the risks of counterparty.

Regulation

Newns said regulatory divergence in a multipolar world will influence the evolution of the crypto market.

He highlighted that the Swiss regulator has been working with the industry for many years to provide a framework for digital assets and encourage innovation. For example, in March this year, two Swiss digital bonds were settled in SDX using a wholesale central bank digital currency (wCBDC) that is part of the Swiss National Bank’s Helvetia III Project.

Jorge Familiar, treasurer of the World Bank, said at a Swiss National Bank event that the organization is considering issuing a digitally native Swiss franc bond, which could be settled using the central bank’s wholesale digital currency, according to Ledger Insights.

In the Middle East, Deribit Group’s Dubai entity said in a statement in April this year that it had become the first derivatives exchange to receive a conditional Virtual Asset Service Provider (VASP) license from the country’s regulator, which covers both spot and derivatives trading. The license will not be operational until the company fully satisfies all remaining conditions.

At the same time, Deribit said it was moving the company’s global headquarters to Dubai and appointed Luuk Strijers, previously chief commercial officer, as chief executive.

Bradford said: “We are also applying for a MiFID license in the European Union. Deribit’s business is 80% institutional and more TradFi institutions are joining, which we hope will continue.”

Also in the Middle East, Abu Dhabi approved Coinbase Asset Management’s Project Diamond, the US-listed crypto firm’s platform for issuing digitally native securities.

In the UK, Albert Weatherill, partner at financial services group law firm Norton Rose Fulbright said in a blog that he participated in the latest FCA policy roundtables on the regulation of regime trading venues and other intermediaries in crypto assets.

Albert Weatherill, Norton Rose Fulbright

Weatherill wrote that addressing operational resilience, cybersecurity and governance remained high on the agenda, in addition to conflict management, market access agreements and order management and execution.

He believes the sweet spot for regulation would not be to try to fit crypto into the existing UK investment business or create an independent regime for the new asset class.

“The sweet spot would be somewhere in the middle – leveraging much of what we already have where it works (which it generally does), but ensuring that any regime adapts appropriately to reflect the specifics of the crypto asset landscape,” he wrote. “It’s not 90% existing and 10% new, but it increasingly appears that the effectiveness and adequacy of our regulatory framework will depend on what we do with that 10%.”

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Markets

Crypto Markets Rebound as Spot Bitcoin ETFs Attract Massive Inflows

Published

8 months ago

17 July, 2024

FinCrypt Staff

Crypto Markets Rebound Ahead of Early Ethereum ETF Approval

This week saw $722 million worth of Bitcoin spot ETF inflows, including the largest daily inflow in a month.

Cryptocurrency markets rallied on Wednesday, driven by inflows into spot Bitcoin exchange-traded funds (ETFs).

The price of Bitcoin (BTC) is up 3% over the past 24 hours to last change hands at $65,200, according to CoinGecko. Ethereum (ETH) is up 2% and is trading at $3,471. Solana (SUN) and Polkadot (POINT) increased by 4%.

Bitcoin spot ETFs saw $422 million in daily inflows on Tuesday, the highest in the past 30 days, according to Far side data, . The all-time record for a single day was $1.05 billion on March 12.

Among Tuesday’s top contributors, BlackRock’s IBIT led with $260 million in inflows, followed by Fidelity’s FBTC with $61 million. This week has already seen more than $722 million in inflows.

Among the top 100 cryptocurrencies by market cap, Worldcoin (WLD) led with a 28% increase, followed by Helium (HNT) with 20% and Lido DAO (LDO) with 15%.

Worldcoin, a decentralized identity project led by OpenAI CEO Sam Altman, announced is extending the lockups for early investors and team members. This means that tokens will be gradually released through 2029, instead of the original 2027 plan. Token unlocks are generally seen as a negative because they increase supply and early investors can sell their tokens for profit.

Meanwhile, XRP, the token of the XRP Ledger network, jumped 8% after the CME and CF benchmarks introduced new indices and reference rates for XRP.

U.S. stocks faced a downturn on Wednesday. The S&P 500 fell 1%, while the Nasdaq Composite and Dow Jones Industrial Average both fell 2%.

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Markets

Altcoins on the cusp of a major breakout – WLD, AR, and INJ prices could surge by 20% in the coming days

Published

8 months ago

17 July, 2024

FinCrypt Staff

Altcoins on the cusp of a major breakout – WLD, AR, and INJ prices could surge by 20% in the coming days

Crypto markets appear to have been taken over by the bulls as major tokens have surged above their crucial resistance zone. Bitcoin surged above $65,000 while Ethereum was above $3,500, and XRP, which had remained passive for quite some time, surged over 40% in the past few days to hit $0.6. The uptrend has been captured in most altcoins, with Worldcoin (WLD), Arweave (AR), and Injective (INJ) leading the rally. Here’s what to expect for these tokens in the coming days.

Worldcoin (WLD) Price Analysis

O Worldcoin Price has been trading inside a descending wedge since it marked a new ATH near $12 in the final days of Q1 2024. The recent price action helped the price break out of the upper resistance of the wedge, breaking above the crucial resistance zone between $2.21 and $2.39. Market sentiments have changed, but technicals suggest that the bulls may remain passive for a while, which could offer some room for a bearish pullback.

The price broke out of the wedge with a significant increase in volume, but the current volume suggests that the bulls have taken a step back. Meanwhile, the RSI is about to reach the upper boundary, which could attract bearish forces. Additionally, the DMI has undergone a bullish crossover, but the decline in the ADX suggests that the rally may remain consolidated above the gains. Therefore, the WLD price is expected to maintain a horizontal consolidation between $3 and $3.3 and trigger a fresh rally to $4.4 during the next bullish rally.

Arweave (AR) Price Analysis

Arweave formed a strong base around $25, which helped the rally trigger a recovery during the bearish attack. Mt. Gox and German terror forced the price to fall below $20. However, the recent price action has brought the altcoin within the bullish range and raised expectations of maintaining a decent uptrend for a few more days.

AR price has hit one of the major resistances around $30 to $31.5, which could act as a strong base once overcome. The buying volume is slowly increasing, which could keep the bullish hopes for the rally high. Moreover, the supertrend has just flashed a buy signal, indicating a clean reversal of the trend. Therefore, AR price seems primed to maintain a healthy uptrend and rally above $40. However, if the bulls maintain a similar trend, making new highs above $50 may not be a tedious task for the bulls.

Price Analysis of Injective (INJ)

Injective price has been showing sharp strength since the beginning of the year and hence, the recent turnaround is expected to revive a good uptrend going forward. The bears engulfed the rally to a large extent, but the recent price action suggests that the bulls have regained their dominance. Therefore, INJ price is expected to maintain a strong uptrend with a bearish interference on the way down.

INJ price has surged above the lower support zone and has registered consecutive bullish candles. Although the volume is below the required levels, the OBV is maintaining a sharp uptrend. Furthermore, the Ichimoku cloud lead span B is heading towards the lead span A and a healthy crossover indicates the start of a new uptrend. However, INJ price may be out of the bears’ reach once it secures the resistance zone between $30.77 and $32.12, which seems to be on the horizon.

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Markets

Ethereum at $3.5K, Exchange Supply Hits 34-Month High

Published

8 months ago

17 July, 2024

FinCrypt Staff

Ethereum at $3.5K, Exchange Supply Hits 34-Month High

Ethereum (ETH) supply on exchanges has hit a 34-month high as the asset’s price surpassed the $3,500 mark.

ETH has risen 2.3% over the past 24 hours and is trading at $3,490 at the time of writing. The second-largest cryptocurrency — with a market cap of $419 billion — briefly touched an intraday high of $3,517 earlier today.

ETH Price, Whale Activity, RSI, and Exchange Supply – July 17 | Source: Santiment

Ethereum’s daily trading volume also increased by 7.6% to reach $19.8 billion.

According to data provided by Santiment, the supply of Ethereum on exchanges has reached $19.52 million ETH. This level was last seen in September 2021, when the asset was trading around the same price.

On the other hand, data from the market intelligence platform shows that the number of whale transactions has fallen by 12% in the last day — falling from 8,730 to 7,629 unique transactions per day.

The move shows that the supply of Ethereum on exchanges has been increasing with small deposits rather than large transactions from whales.

Additionally, the ETH Relative Strength Index (RSI) is currently hovering at the 60-mark, per Santiment. The indicator shows that Ethereum is slightly overbought at this price point, but it may not be in a critical position due to its large market cap.

One of the main drivers of Ethereum price increase is ETH spot expectations ETFs in the US Investment products are scheduled to start trading on July 23rd.

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Markets

Bits + Beeps: How to Play the ‘Trump Trade’ in Cryptocurrencies After the Assassination Attempt

Published

8 months ago

17 July, 2024

FinCrypt Staff

Bits + Bips: How to Play the ‘Trump Trade’ in Crypto After the Assassination Attempt

Also, how much will the Fed cut rates (and when)? What will be the inflows into ETH ETFs? And what is the near future for Bitcoin?

Posted on July 17, 2024 at 12:00 PM EST.

Listen to the episode at Apple Podcasts, Spotify, Capsules, Source, Podcast Addict, Pocket molds, Amazon Musicor on your favorite podcast platform.

In this episode of Bits + Bips, hosts James Seyffart, Alex Kruger and Joe McCann, joined by guest Jack Platts, dive into the market reaction to the recent assassination attempt on former President Donald Trump, analyzing how this event will influence the 2024 US presidential election and the cryptocurrency markets.

They also cover potential rate cuts: Could there be a cut in July? How big could the September rate cut be? Could the decision be influenced by the upcoming election?

They also give their predictions on what percentage of BTC ETF inflows the ETH ETFs will reach, and James talks about what he expects for Grayscale’s ETHE (hint: his outlook would be positive for ETH).

Finally, they delve into what’s next for Bitcoin as the German government runs out of BTC and Mt. Gox distributions begin. Just now?

Program Highlights:

Whether Trump’s shooting decided the election and whether the event caused a “flight to safety”
How election markets are becoming a place to watch election probabilities and whether cryptocurrencies “lean right”
Whether rate cuts will occur in July or September and by how much they will cut: 25 bps or 50 bps
How Joe sees the relationship between global liquidity cycles, rate cuts, and the potential rise of Bitcoin
What are the new updates about Ethereum ETFs and their expected launch?
Why Solana Hasn’t Performed Significantly Better Since Trump News
What Market Breadth Indicates About the Current Market Rally and the Impact of Rates on Small Caps
Everyone’s predictions on ETH ETF inflows and how much outflow we’ll see on Grayscale’s ETHE
What’s Next for BTC After German Government Exits Bitcoin and Mt. Gox Giveaways Starting This Week