CRYPTO MOVERS AND PRICES
CRYPTO STORY OF THE DAY
Yesterday, Bitfinex (BFX) Released Two Derivative Products For The First Time - The Products Come With New Sets Of Geographical Restrictions Which Underscores A Trend In The Space - We View The Release / Announcement As, On Balance, Mixed For The Sector
The derivatives offerings, which are BTC and ETH perpetual swaps, are extremely similar to those innovated by BitMEX (BM). The BFX products also offer 100x leverage and use the same interest rate mechanism. The products further mirror BitMEX in that, like BM's recent announcement, they are not going to be made available to US 'persons' and a slew of other country's residents, many of which coincide with regions where BFX has offices, notably Canada and Switzerland. The most significant difference between the BM and BFX products is that while BitMEX settles exclusively in BTC, BFX products settle in Tether (USDt).
We see this announcement as on balance mixed. On the one hand, new products, which expand the ecosystem (regardless of how similar they are to others), are a net positive for space. That said, the decision to restrict certain regions further proves a narrative we have been highlighting in that crypto liquidity is becoming increasingly fragmented. With G7 regulators beginning to set their feet in the space and get aggressive, the largest Asian liquidity pools are avoiding many developed markets altogether to be safe. With BFX restricting these new products in regions beyond the US, the concern is that they will move to do so with their entire platform. We've characterized this segregation of liquidity as a near term challenge adding downside risk for space and one of the contributors to the recent pullback.