Amid the crypto turmoil, there was a jolt this week when the Chicago Mercantile Exchange (CME) surpassed Binance in Bitcoin futures trading volume. What are the causes? We return to this in Cryptic Analysis after the major news.
Block 1: Essential news
- FMI: MNBC is coming!
Kristalina Georgieva, Director General of the International Monetary Fund (IMF), expressed his enthusiasm for Central Bank Digital Currencies (CBNC) during a speech at the Singapore Fintech Festival, envisioning a future where they will replace traditional currencies. In particular, she highlighted the advantages of MNBCs, such as economic resilience, financial inclusion in less burdened regions and their lower cost compared to physical cash. Georgieva also warned against private currencies such as cryptocurrencies and called on the public sector to quickly adapt to technological developments. She focused on the development of cross-border payments and the creation of a common platform for MNBC trading, while remaining cautious about the uncertain future of MNBC in the face of more flexible and decentralized private currencies.
- Commerzbank acquires cryptocurrency license
Commerzbank, the second largest bank in Germany, got a license to offer cryptocurrency custody services, becoming the first major German bank to receive this authorization. The license granted by the German financial regulator BaFin enables the bank to develop a secure and regulated platform intended primarily for institutional clients. Jörg Oliveri del Castillo-Schulz, Chief Operating Officer of Commerzbank, emphasized the importance of this step in the bank’s commitment to innovative technologies and digital assets.
- Chicago Board Exchange Launches Margin Trading for BTC and ETH
The Chicago Board Exchange (CBOE), the largest options exchange in North America, announces the launch of Bitcoin and Ether margin futures contracts, planned for next January. According to his press releasethe upcoming arrival of margin trading for BTC and ETH is only the first step and “ more unique and revolutionary offers » should see the light of day during 2024, subject to regulatory approval.
- JPMorgan introduced a blockchain payment system
JPMorgan introduced a programmable blockchain-based payment system using smart contracts to automate payments based on predefined conditions. This innovation enables almost instantaneous fiat currency transfers, without human intervention, which is unprecedented in the traditional banking sector. The system, which Siemens already uses for scheduled transfers, represents a significant step forward, even as banks remain wary of decentralization and cryptocurrencies. The development is part of a growing trend of financial institutions exploring blockchain applications while avoiding cryptocurrencies.
Block 2: Cryptic analysis of the week
The Chicago Mercantile Exchange (CME) recently dethroned Binance, the global cryptocurrency exchange giant, as the leading bitcoin futures trading center by volume. This phenomenon, known in the industry as “flipping”, represents a moment rare enough to be highlighted and signifies the growing interest of institutional players in crypto-assets.
CME occupies a leading position in futures contracts
As a reminder, futures contracts, a type of derivative product, allow you to bet on the future price of Bitcoin by committing to buy the asset at a predetermined price on a future date.
CME, with its image of a traditional, established financial platform, stands in stark contrast to the more informal and opaque atmosphere of native cryptocurrency platforms such as Binance. This shift in transaction volumes could indicate a significant change in the dynamics of the Bitcoin market.
The increase in activity at CME is often seen by industry experts as an indicator of growing institutional involvement in the cryptocurrency space. This trend is reinforced by the increase in open interest in CME futures contracts, which is likely stimulated by the spectacular increase in the price of Bitcoin since the beginning of the year (+120%), which inevitably attracted institutional interest in the cryptosphere.
Other factors such as speculation surrounding the Bitcoin Spot ETF and Halving Day also play a role in this market dynamics. Let’s quickly return to these last two factors.
Matt Hougan, Chief Investment Officer at Bitwise, suggests that the enthusiasm for the Bitcoin Spot ETF is not yet fully captured by the market. However, given his position at a cryptocurrency investment firm, his views could be tinged with an optimistic bias toward the market.
There is also talk that Halving Day, a planned event that will halve the amount of newly issued bitcoins, which is set to take place next year – April 18, 2024 to be exact – is already integrated or not in its current price. A reduction designed to limit the supply of bitcoins in circulation should, in theory, increase their value by making them more scarce. At least that’s the theory.
However, those who believe in market efficiency could argue that this known and planned event is already factored into the current price of Bitcoin. One might think that a pre-planned event that 99.9% of Bitcoin holders know about and eagerly await should be factored into the price. Efficiency, or lack thereof, in the cryptocurrency market remains a topic of debate, as does the broader debate about market predictability and the exploitation of perceived inefficiencies.
Finally, the increase in CME Bitcoin futures volume could also reflect changes in market share and regulatory issues that Binance faces in various jurisdictions.
As with many aspects of the cryptosphere, certainty is fleeting and the only constant seems to be the unpredictability of the market. At this point, only one thing is certain: Binance has left its CME crown to the futures market. But for how long?
Block 3: Tops & Flops
(Click to enlarge)
Block 4: Reading of the week
Mirai’s Confessions: The Three Young Hackers Who Built the Web-Slaying Monster Finally Tell Their Story (Wired, in English)
Another Fintech Leaving Cryptocurrencies(Information in English)
Cathie Woord talks Bitcoin, Sam Bankman-Fried and the future of artificial intelligence (WSJ, in English)