JPMorgan says that the widening gap between the Bitcoin spot price and the futures price is an indication institutional investors are yet to fully access the cryptocurrency market.
As Bitcoin breaks above the $60k level comfortably, Basis trading continues to widen in most cryptocurrency exchanges. A new report by JPMorgan Chase & Co (NYSE: JPM) indicates the launch of Bitcoin exchange-traded funds (ETF) in the United States will be a key in normalizing the Bitcoin futures market.
“Launching a bitcoin ETF in the US will be the key to normalizing the pricing of bitcoin futures, in our view,” the US bank’s analysts wrote in an April 9 report. Moreover, the bank noted that the June Bitcoin contract listed on the CME recently traded at a 25% annualized premium.
According to market data provided by Skew, Bitcoin’s June expiry futures listed on major cryptocurrency exchanges such as Binance, Huobi, OKEx, BitMEX, and Deribit are currently drawing an annualized premium of 44% to 48%.
“With the premium on bitcoin futures expanding to as high as 40% per annum for the June expiry, there is a lot of interest from cash and carry traders to arbitrage the premium and lock-in risk-free gains,” Pankaj Balani, co-founder and CEO of the Singapore-based Delta Exchange
JPMorgan Opinion on Bitcoin ETF and Futures Market
In the report, JPMorgan noted that the widening gap between the Bitcoin spot price and the futures price is an indication institutional investors are yet to fully access the cryptocurrency market. According to the bank, institutional investors are prohibited from accessing the crypto market by regulatory restrictions.
As a result, most institutional investors access the cryptocurrency market through exposure from the CME futures or the Grayscale Bitcoin Trust. However, some institutional investors are not ready to be exposed to the highly perceived crypto volatility especially fueled by speculative trading.
A Bitcoin ETF could trigger a huge influx of institutional money to the crypto market that would in turn help stabilize the spot trading. Consequently, the difference between the futures and the spot trading is expected to decline and normalize according to JPMorgan analysts.
“Over a longer horizon, using just Coinbase prices, the monthly tracking error of BRR versus 4 p.m. LST mids has at times been 2% or higher over the past year. Backtesting the performance of basis trades [carry trades] against spot levels as of the same time results in an annualized tracking error of more than 10% over the past year,” JPMorgan analysts noted. “The richness of bitcoin futures likely reflects in part inefficiencies in replicating the BRR to which they settle, particularly without direct access to the spot market.”
Bitcoin price has broken out of a major resistance level and was trading around $62,732.97 according to CoinGecko at the time of reporting. The asset is up 4.2% in the past 24 hours and has seen its market capitalization spike to around $1.17 trillion.
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Mike Novogratz’s Galaxy Digital Announces Acquisition of Crypto Custodian BitGo
4 days ago
May 5, 2021
In a major development, crypto investment management and financial services provider Galaxy Digital Holdings announced the acquisition of popular and leading crypto custodian BitGo. This acquisition adds a feather to the cap of Galaxy Digital that seeks to offer a full-service platform for institutional players. Earlier we’ve already reported that there were such rumors. And […]
In a major development, crypto investment management and financial services provider Galaxy Digital Holdings announced the acquisition of popular and leading crypto custodian BitGo. This acquisition adds a feather to the cap of Galaxy Digital that seeks to offer a full-service platform for institutional players.
Earlier we’ve already reported that there were such rumors. And now they have got confirmed.
Speaking about the acquisition, Wall Street veteran and Galaxy Digital founder Mike Novogratz said:
“The acquisition of BitGo establishes Galaxy Digital as a one-stop-shop for institutions and significantly accelerates our mission to institutionalize digital asset ecosystems and blockchain technology. The power of the technology, solutions, and people we will have as a result of this acquisition will unlock unique value for our clients and drive long-term growth for our combined business. We are excited to welcome Mike Belshe and the talented BitGo team to Galaxy Digital.”
The article will be updated with new information soon.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
Dogecoin Price Jumps Ahead More Than Half a Dollar
4 days ago
May 4, 2021
Within the past 24 hours, we have seen Dogecoin (DOGE) jump ahead and grow over 30% in price. With DOGE climbing the crypto ladder at a rapid pace, in the early hours of Tuesday, the coin price reached a new milestone and crossed the $0.50 barrier.
The value of Dogecoin was $0.389421 and reached $0.541900 overnight–a 39% increase in price. As Dogecoin continues to grow in the crypto market, the digital currency has taken observers by surprise who have mocked and joked about coin–an intention by the creator himself. Despite the ongoing jokes, Dogecoin has had the last laugh so far, as it turns out to be one of the most profitable jokes in the crypto realm, as evidenced by the phenomenal surge in just 4 months.
Taking a quick look at how far Dogecoin has progressed since Jan 1, 2021, the coin valued at less than one cent at the time. Now, approaching May 2021, the coin has grown 10,922% and sits at just over half a dollar. However, this rapid turn of events for Dogecoin also points to the coin’s 50% price drop back in mid-April–both signaling to investors to be aware of the quick changes in the crypto market. Influencers also have the ability to alter the market as we observed earlier this year, in February. Elon Musk shared his thoughts on the crypto coin on his social media platform, which reduced almost 25% of Dogecoin’s growth within a few hours.
Dogecoin Popularity Surpasses Tether (USDT)
With Dogecoin’s current market capitalization of more than $52 billion, the cryptocurrency company has surpassed Tether (USDT), Twitter, and U.S. car manufacturer Ford. AssetDash’s data suggests that Dogecoin’s empire is an estimated $52.5 billion, which is $400 million higher than that of Tether as it is currently sitting at $52 billion. Ford’s market value is approximately $45.1 billion whereas Twitter is sitting at $43.1 billion.
There has been speculation that the coin surged because of Elon Musk’s upcoming appearance on Saturday Night Live as a guest host.
To learn more about Dogecoin’s previous successes this year, click here.
Tether Zips Past $50B and Heats Up the Crypto Market
5 days ago
May 3, 2021
Tether (USDT), the world’s largest stablecoin, just reached a market capitalization of $50 billion at the end of April 2021. A definitive sign that the cryptocurrency bull market is warming up, the Tether supply has grown by more than a factor of 10 over the last 12 months. Calculating the breakdown, that roughly accounts for 25% growth in the span of a month.
CTO of Tether Paolo Ardoino, has commented on this success stating, “Crossing a market cap of US$50 billion represents an incredibly important milestone for Tether.” Furthermore, he acknowledged that the success of Tether was a blueprint for a future in the banking system and as a Central Bank Digital Currency. Tether has gained recognition for its pivotal role for the future of digital currency. As the first stablecoin in the cryptocurrency industry, USDT holds a unique position as it is currently the most liquid and often used dollar-pegged token on the market. Additionally, USDT remains one of the top quoted currencies for Bitcoin and Ether trading pairs.
Last month, USDT made up approximately 66.1% of the overall stablecoin market. In comparison, the USD Coin (USDC) is the second-largest stablecoin and is worth just under $11 billion. There has been some conversation and concerns in the crypto community regarding Tether and speculation about its reserves. However, Tether was quick to put concerns to a rest and an assurance report from Cayman Islands-based Moore Cayman provided confirmation that USDT tokens are, in fact, fully backed by reserves.
Not too long ago, Tether had settled an $18.5 million fine with the Office of the New York Attorney General. Allegedly, Tether had misrepresented the degree to which the USDT coins were backed by fiat collateral. Fiat-backed currency is government-issued or government-supported currency. As such, Tether agreed to produce periodic filings, which now proves its reserve status. Thus, the assurance report comes a month after the settlement agreement.
For more information on cryptocurrency growth and upcoming opportunities, click here.
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