Well-Known Crypto Settled Derivatives Players Pose Challenges To BitMEX

September 30, 2019 02:00 PM
Volumes on crypto-settled derivatives markets continue to grow
Crypto-settled derivatives offer more liquidity than spot markets
In almost every case, such products restrict trading access to US individuals and companies
Crytpo and Bitcoin Market Cap Story of Day

Crytpo and Bitcoin Market Cap Story of Day





Crypto-Settled Derivatives Markets Have Continued To Grow In Popularity - According To Some Data, Several Well-Known Players Are Beginning To Pose Legitimate Challenges To BitMEX

Volumes on crypto-settled derivatives markets, primarily denominated in bitcoin, continue to grow. In the last two-years, BitMEX has set itself apart as the clear number 1 and in many cases created a model for copy-cat adoption. In posting daily volumes that have topped well over USD 10B a slew of other platforms have entered the fray and many of the world's largest spot exchanges now have some exposure to crypto-settled derivatives. In using the last 24-hours as a proxy, crypto-data platform Skew reports USD 3.2B equivalent of futures volume on BitMEX but also ~2B for Huobi, ~1B for bitFlyer and ~500M for CoinFlex (chart). Binance, which only launched their derivatives platform earlier in the month, is reported at USD 440M equivalent.

Crypto Takeaway: Crypto-settled derivatives are now responsible for considerably more liquidity than spot markets. That said, using traditional markets as a proxy, there is still plenty more growth available. Many of these crypto-platforms are restrictive to some of the largest money managers. In almost every case, such products restrict the US, among other regions and, due to their crypto-settled nature, restrict the many funds which do not have offering memorandums that allow participation in physical crypto. Furthermore, with items such as 'leaderboards,' little in terms of high-touch sales coverage and embedded open chat forums (i.e 'trollboxes'), they are far from delivering an 'institutional experience.' Ultimately, we have maintained that licensed cash-settled derivatives remain the most compelling opportunity in the space with the best chance of pulling these money managers off the sidelines.

About the Author

FRNT Financial is a technology and sales layer that offers institutional and accredited investors access to various forms of exposure to crypto-assets. You can subscribe to FRNT Financial Morning Note at https://www.frnt.io/morningnote