Markets

ANALYSIS: CME to capitalize on crypto and capital growth with product enhancements | News

Published

9 months ago

30 July, 2024

ANALYSIS: CME to capitalize on crypto and capital growth with product enhancements | News

CME Group, which has seen record trading volumes in recent years, plans to capitalize on innovations in its equity and cryptocurrency markets to drive further growth as continued uncertainty fuels activity in its flagship products.

Speaking to FOW ahead of the announcement of all-time record quarterly results last week, CME’s global head of equities, foreign exchange and alternatives said the U.S. group will leverage the approval of the First ether exchange-traded funds (ETFs) in the US to make changes to its growing market in crypto-ratio futures.

“We’re still looking for better ways to allow the market to trade bitcoin versus ether, which means more dynamic contracts around the ratio,” Tim McCourt said in an interview. “We have a fixed approach today, but we’re looking for improvements like physical delivery built into those contracts. The physical market is becoming more attractive as the ETF market develops and adoption grows, the barrier to receiving the underlying is receding.”

The second quarter saw a spike in usage of CME’s Ether/Bitcoin Ratio futures, as ether benefited from ETF approval speculation and bitcoin underperformed relativey. This dynamic drove opportunities as the basis shifted (see chart 1) with over $260 million (£202 million) of notional traded in the period, a quarterly record. The overall crypto complex saw average daily futures volume increase 117% year-over-year to 79,000 contracts, including a record for its micro ether contracts, according to data released by the exchange.

Graph 1

Source: CME Group

CME remains the market leader in bitcoin futures open interest, with $10.6 billion in open interest as of July 30, according to Coinglass data. CME has surpassed Binance as the leading venue for interest opened at the end of October last yearand has maintained that leadership position ever since. For McCourt, this was a justification for his focus on the most traded currencies.

“The fact that we’ve been able to maintain a leadership position in bitcoin and micro bitcoin futures in terms of open interest reinforces our belief that there is real strength in being the traditionally regulated venue in this space,” he added. “This has been a source of pride for the team here at CME, and we continue to focus on bitcoin and ether contracts for our tradable complexity and the regulatory clarity that exists there versus alternatives.”

CME is also considering building out the crypto options market it launched at the beginning of 2020. Options volume on its flagship bitcoin futures peaked at 12,763 contracts traded in March 2023, according to FOW Data, but that’s still just a fraction of the activity in CME’s futures market. The U.S. group traded 4,381 crypto options in June compared with 248,962 futures, the data showed. The company has has strengthened its industry expertise with the hiring of Priyanka Jain in its New York office this month as a director specializing in equity and cryptocurrency products.

“Options is growing, but there’s still a lot we can do to stabilize it,” McCourt said. “We’ve brought in some expertise with a new hire and are actively exploring ways to adapt our offering to the market structure that options traders are familiar with in this space. Traders typically have very short-term strategies, are used to short-term settlement windows and after-hours execution.”

Overall, CME Group’s second quarter marked the first period since 2010 that it saw annual growth in both average daily volume and open interest across all of its asset classes.

“When I look back over the last couple of years, the one thing that has been consistent across all the lines of business that I’m responsible for is that uncertainty has only increased,” McCourt said. “That’s true across all asset classes, both in how inflation is impacting not just the interest rate market but also the knock-on effect in the equity market. That can be at odds with other signals from macro data, so we see market moves that require hedging and repositioning.”

This has been driven by uncertainty, but it has also created opportunities among traditionally siloed markets, creating a unique environment for McCourt since he joined CME as managing director and global head of equities in April 2013.

“I’ve been at CME Group for over 11 years, and the fact that this wave of uncertainty is affecting all markets in one way or another is unique in 2024,” he added. “If you look at open interest in the first two quarters, all asset classes are up, options volumes are up. While we’re at a short-term low in equity volatility during that period, there’s significantly more volume than other comparable periods.”

McCourt started as an equity derivatives trader at JP Morgan in 2000, spending a decade at the U.S. investment bank before taking a delta one role at Royal Bank of Scotland. That experience in over-the-counter (OTC) markets has come in handy as CME has developed a deep pipeline of “futuristic” OTC alternatives like dividend and total return futures. That market grew 22% year over year to 111,000 contracts in average daily volume for the second quarter, according to CME results.

“The higher interest rate environment creates opportunities for people to trade in equity markets,” he said. “Which means that even with general alignment on the direction of travel for equity index levels, the cost of capital can vary by participant, thus affecting trading strategies as people disagree on things like the current value of dividends or the forward curve. Some of those things combined have helped drive that trend in options volume. We’ve made significant improvements that have enhanced that effect, with things like strike array optimization, block rule changes, and market maker protections coming together to support that demand.”

On August 26, CME plans to list its first S&P 500 Total Return Adjusted Interest Rate (AIR) futures based on the U.S. risk-free interest rate (SOFR).

The U.S. group has a range of total return futures on equity indices, including those based on the Nasdaq, Russell, Dow Jones and FTSE indices, but the most traded is the one based on the S&P 500 TRF, which refers to its fixed effective federal funds rate, with 344,000 lots in June, up 99% from a year ago, according to FOW Data.

Overall growth in options on the exchange was 11% higher year-over-year in the second quarter, reaching a record daily average of 5.2 million contracts, according to data released by the exchange, which included a 28% increase in options on stock indices, to 1.6 million lots.

Media reports last month quoted Robinhood executives as saying it wanted to support CME crypto contracts on its retail-focused exchange. While McCourt declined to comment on the move, he said the Chicago-based exchange group has a long history of supporting retail flow into its markets.

“We’ve been harnessing the power of retail for years, it’s one of the fastest-growing parts of the business at CME Group,” he said. “The E-mini micro complex we introduced in 2019 remains the most successful product launch in our history. When we look at the launch of that suite across asset classes and the launch of event contracts, it’s certainly true to say that we’ve pivoted toward designing contracts with that single, active trader in mind.

“The exchange now has over 140 distribution partners worldwide and we are always looking for more. The growth of the cryptocurrency market has led to the advent of financial technology-oriented distribution platforms.”

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Markets

Bitcoin, Ethereum See Red as Markets Crash on Volatility

Published

9 months ago

1 August, 2024

Financial Block Staff

Bitcoin, Ethereum See Red as Markets Crash on Volatility

Bitcoin AND Etherealalong with the rest of the top 10 cryptocurrencies by market cap, appear to be in hibernation on Thursday morning.

At the time of writing, the Bitcoin Price is still below $65,000 and 2.2% lower than it was this time yesterday, according to CoinGecko data. Things are worse for the Ethereum Pricewhich is 3.7% lower than 24 hours ago at $3,185.22. The drop in ETH’s price is identical to that of Lido Staked Ethereum (stETH), a liquid staking token for Ethereum.

In recent days, falling prices have led to the liquidation of derivative contracts worth $225 million, according to Coin glassAnd about half of that, about $100 million, was liquidated in the last 12 hours.

When a trader is liquidated, it means that their position in the market has been forcibly closed by an exchange or brokerage due to a margin call or insufficient collateral. Margin is especially important when it comes to leveraged positions, which allow traders to control a multiple of their deposit, such as opening a $10,000 position with only $1,000 in their account.

Now that Bitcoin has been in the red for three days in a row, there is a chance that the world’s oldest and largest cryptocurrency could sink even further, BRN analyst Valentin Fournier said in a note shared with Decrypt.

“Bitcoin has closed in the red for three days in a row, with one-way trading showing limited resistance from bulls. Ethereum had a slightly positive Monday with strong resistance from bears who have won the last two days,” he wrote. “This momentum could take BTC to the $62,500 resistance or even the $58,000 territories.”

Looking ahead, Fournier said BRN’s strategy will be to “reduce exposure to Bitcoin and Ethereum and find a better entry point after the dip.”

This is despite Federal Reserve Chairman Jerome Powell’s comments yesterday on interest rates being widely regarded as accommodating and indicative of FOMC rate cuts in September.

Singapore-based cryptocurrency trading firm QCP Capital said the rally in stocks, which sent the S&P 500 up 1.6% from Wednesday’s close, was not felt in cryptocurrency markets.

“Cryptocurrencies have seen a broad sell-off overnight and into this morning,” the firm wrote in a trading note. “The market remains poised as traders pay close attention to daily ETH ETF outflows and further supply pressure from Mt Gox and the US government.”

Meanwhile, the other top-ranking coins are showing mixed performance.

Solana (SOL) is down 7.2% since yesterday to $169.13. Things are even worse for its most popular meme coins. In the past 24 hours, the most popular meme coins Dogwifhat (WIF) are down 12% and BONK (BONK) is down 9%, according to CoinGecko data.

Their dog-themed competitor, Ethereum OG Dogecoin (DOGE), the only meme coin in Coingecko’s top 10, is down nearly 4% since yesterday and is currently trading at $0.1205.

XRP (XRP) dropped to $0.608, which is 7% lower than it was at this time yesterday.

Binance’s BNB Coin (BNB) has kept pace with BTC and is currently trading at $571, down 2.4% from yesterday. Toncoin (TON), the native token of The Open Network, is down just 0.4% over the past day.

This leaves the stablecoins USDC (USDC) and Tether (USDT), both of which are stable as they maintain their 1:1 ratio with the US dollar.

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Markets

XRP Market Activity Drops During Ripple-SEC Talks: Price Steady

Published

9 months ago

1 August, 2024

Financial Block Staff

Ripple (XRP) Market Witnesses Calm During SEC-Ripple Meeting

The Securities and Exchange Commission (SEC) will hold another closed-door meeting with Ripple on Thursday, as the market hopes for a possible resolution to the legal battle between the two entities.

However, the cryptocurrency market remains relatively bearish, with the price and trading volume of XRP down in the last 24 hours.

Ripple holders take no risk

At press time, XRP is trading at $0.60. The altcoin’s price has dropped 6% over the past 24 hours. During that time, trading volume was $27 million, down 27%.

The SEC met before with the digital payment company on July 25. While the outcome of that meeting remains unknown, the Sunshine Act Notice for Thursday’s meeting includes one additional topic of discussion from the July 25 closed meeting: the instituting and resolving injunctive relief. That has market participants speculating whether a settlement is imminent.

In an exclusive interview with BeinCrypto, Ryan Lee, Lead Analyst at Bitget Research, noted that:

“This meeting will discuss possible resolution options for the Ripple Lawsuit. The founder of Ripple Labs said that a legal settlement could be announced soon. If an official settlement plan is released, it could positively impact XRP’s price movement.”

However, an assessment of XRP’s price movements on a 4-hour chart shows a spike in bearish bias as the market awaits the outcome of this crucial meeting. Its Moving Average Convergence/Divergence (MACD) indicator readings show that its MACD line (blue) has crossed below its signal line (orange).

XRP 4 Hours Analysis. Source: Trading View

Traders use this indicator to gauge price trends, momentum, and potential buying and selling opportunities in the market. When an asset’s MACD is set this way, it is a bearish signal that suggests selling activity is outweighing buying momentum.

Additionally, the altcoin relative strength index (RSI), at 46.08, is currently below its neutral 50 line and in a downtrend. This indicator measures overbought and oversold market conditions for an asset.

To know more: How to Buy XRP and Everything You Need to Know

xrp rsi XRP 4 Hours Analysis. Source: Trading View

At 43.83 at the time of writing, XRP’s RSI suggests a growing preference among the market participants for tok in distribution.

XRP Price Prediction: Derivatives Traders Exit Market

The XRP derivatives market has also seen a decline in trading activity over the past 24 hours. According to Coinglass, derivatives trading volume has plummeted 18% and open interest has dropped 10% during that period.

Open interest refers to the total number of outstanding derivative contracts, such as options or futurethat have not yet been resolved. When it drops, traders close their positions without opening new ones. This is a bearish signal that reflects a lack of confidence in any potential positive price movement.

According to Lee, the outcome of the meeting with the SEC “would have a significant impact on the price movement of the token.” If the outcome is favorable, the price of the token could rise towards $0.75 in August.

To know more: Ripple (XRP) Price Prediction 2024/2025/2030

XRP Price Prediction XRP 4 Hours Analysis. Source: Trading View

On the other hand, if no favorable resolutions are reached, the price could plummet to $0.50.

Disclaimer

In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto strives to provide accurate and unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult a professional before making any financial decisions. Please note that our Terms and conditions, Privacy PolicyAND Disclaimers They have been updated.

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Markets

Bitcoin’s Dominance Hits Three-Year High, But Analysts Say Altcoins Are Ready to Rebound

Published

9 months ago

1 August, 2024

Financial Block Staff

Bitcoin's Dominance Hits Three-Year High, But Analysts Say Altcoins Are Ready to Rebound

Bitcoin is now the dominant force in the cryptocurrency market, surpassing 53% of the total cryptocurrency market, a stronger share than it has been in the past three years.

Bitcoin’s market cap now stands at $1.27 trillion, second according to CoinGecko data. In contrast, the total cryptocurrency market cap is $2.43 trillion, with Ethereum occupying 15.9% of the market, worth $389 billion.

Bitcoin’s rise to dominance this year is unusual, as altcoins typically do better than Bitcoin in a bull market. While meme coins made a strong comeback during Bitcoin’s rally to all-time highs earlier this year, the so-called “wealth effect” It has not been appreciated as much by mid-range coins, such as Ethereum and Cardano.

“ETF flows fundamentally alter market dynamics,” he wrote Meltem Demirors, former chief strategy officer at CoinShares, tweeted Wednesday: “BTC gains no longer translate to alts and the longer tail of crypto.”

Bitcoin’s takeover has continued even as the market cap of Tether (USDT) continues to grow, the world’s largest stablecoin and the third-largest cryptocurrency after BTC and ETH. Stablecoins are backed by fiat currencies and are excluded from some measures of Bitcoin dominance due to fundamentally different value models.

The surge continued to pace even after the launch of Ethereum spot ETFs last week, which ironically culminated in a news sell-off event, and net outflows from new investment products since they were launched. This went against the predictions of K33 Search so far, which predicted that ETFs would catalyze ETH’s growth over the next five months.

Despite the poorer performance of the alts, there is reason to believe that they are ready to bounce back very soon.

CryptoQuant CEO Ki Young Ju said Tuesday that whales are “preparing for the next altcoin rally,” as limit buy orders for assets other than BTC and ETH are on the rise.

The executive shared a chart showing how the “cumulative difference between purchase volume and sales volume” has increased in recent months.

“The indicator measures the difference between buy and sell orders over a year,” CryptoQuant told Decrypt. A buy/sell order is a pre-set request to buy or sell a cryptocurrency if it hits a certain price level, which creates resistance and support levels.

“If the trend is up, it means that more people are placing buy orders, showing strong interest in buying,” CryptoQuant said.

By Ryan-Ozawa.

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Markets

XRP and SOL Retrace as BTC Price Drops to 2-Week Lows (Market Watch)

Published

9 months ago

1 August, 2024

Financial Block Staff

Bitcoin Returns Toward $60K, XRP Defy Negative Sentiment (Market Watch)

After Monday’s crash, in which BTC fell by several thousand dollars, the scenario has repeated itself once again in the last 12 hours, with the asset falling to a 2-week low of $63,300.

Alt coins followed suit, with most of the market in the red today. SOL and XRP lead the way from the higher cap alts.

BTC Drops To $63.3K

After a violent Thursday last week, when BTC crashed to $63,400, the asset went on the offensive over the weekend and surged above $69,000 on Saturday, as the community prepared for Donald Trump’s appearance at the 2024 Bitcoin Conference in Nashville.

His speech was followed by more volatility before the cryptocurrency settled around $67,500 on Sunday. Monday started off rather optimistically for the bulls as bitcoin hit a 7-week high of $70,000.

However, he failed to maintain his run and conquer that level decisively. On the contrary, he was rejected bad and dropped to $66,400 by the end of Monday. Tuesday and Wednesday were less eventful as BTC remained still around $66,500.

The last 12 hours or so have brought another crash. Bears have pushed the leading digital asset down hard, which has fallen to a 2-week low of $63,300 (on Bitstamp), leaving over $200 million in liquidations.

Despite the current rebound to $64,500, BTC’s market cap has fallen to $1.270 trillion, but its dominance over alts is recovering and has reached 52.6%.

Bitcoin/Price/Chart 01.08.2024. Source: TradingView

The Alts are back in red

Ripple’s native token has been at the forefront of the market challenge in recent days as pumped up to a multi-month high of over $0.66. However, its run was also interrupted and XPR fell by more than 6% in the last day to $0.6.

The other big loser among the larger-cap alternatives is SOL, which has lost 8% of its value and is now struggling to get below $170.

The rest of this altcoin cohort is also in the red, with ETH, DOGE, BNB, AVAX, ADA, SHIB, and LINK all seeing drops between 2 and 5%.

The total cryptocurrency market cap lost another $70 billion overnight, falling below $2.4 trillion today on CG.

Cryptocurrency Market Overview. Source: QuantifyCrypto SPECIAL OFFER (sponsored)
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