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Bitwise Report 2.0: Bitcoin [BTC] futures continues growth; volume over 50% of its Spot counterpart

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Bitwise Report 2.0: Bitcoin [BTC] Futures continues growth; volume over 50% of its Spot counterpart
Source: Pixabay

Amidst the price rally fever that is gripping the Bitcoin [BTC] spot market, contractual products are continuing to surge. A new report by Bitwise Asset Management, continuing from where their March report left off, attests to the growth of the Futures market, in consequence of the April rally.

On a month-on-month basis, Bitcoin Futures saw a massive bump in April trading at an average of 10,000 contracts daily, peaking on April 4, with over 22,000 contracts traded. To put that number in perspective, in March 2019, the average contracts traded was less than 4,000. Despite the high standards set in April, the average daily contracts traded in May, with 25 days gone has exceeded 14,000 and still looks to grow, given the price performance of Bitcoin.

Source: Bitwise

Bitwise also contends the “critical importance,” of the “size” of the BTC futures market, as it is a key factor in the evaluation of the Bitcoin ETF, for which Bitwise is one of two key applicants.

Another key finding of the report, referencing their earlier report detailed the value of Bitcoin futures market to their spot equivalent in terms of “real volume.” The BTC futures market, in April, accounted for 48 percent of the spot market, in terms of “real” volume, and 2.43 percent when the “reported” volume was analyzed. The March report highlighted the futures market to be one-third of its “real “spot equivalent, hence there was a considerable jump to 48 percent noted.

Bitwise also tabled the BTC futures market against their spot competitors based on the individual average daily volumes [ADV] of the exchanges, for the month of April, in each category. On the basis of this assortment, the CME would take the top spot with $257.79 million ADV or 31.35 percent, followed by Binance, $217.6 million ADV or 26.46 percent and Bitfinex $78.16 million ADV or 9.5 percent. CBOE is the only other futures competitor at the 10th spot with $9.86 million ADV or 1.19 percent.

Furthermore, the report charted the “regulated” Bitcoin as a percentage of real Bitcoin spot volume on a month-on-month basis and saw a considerable spike in the past two months, as the price surged. Notably, for the first time since derivative products were launched in December 2017, the Futures market amassed over 50 percent in proportion to the spot market, in May 2018.

Back in March, when the first report was released, the Futures market was less than one-third of their competitor’s value, and grew substantially to over 45 percent in April as prices surged and Wall Street moved on their XBT. With CME, Grayscale and even the phasing-out CBOE seeing their volumes rise, the April push was compounded in May and the proportion rose above the half-way mark.

Source: Bitwise

The SEC previously mentioned that one of the key factors behind the ETF approval was the performance of the BTC Futures market and its reaction to the Spot counterpart trading. Addressing this “requirement”, Bitwise concluded:

“The bitcoin futures market would clearly not satisfy that requirement if the bitcoin spot market were really trading $11 billion per day, but our new understanding of the true size of the bitcoin spot market reshapes this discussion considerably.”





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Analysis

Bitcoin continues to hover over $9,000; did Facebook’s Libra prolong bullish swing?

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Bitcoin continues to hover over $9,000; did Facebook's Libra prolong the bullish swing?
Source: Unsplash

Over a week ago, Bitcoin was trading at $7,650 and was rebounding off $8,000 for the second time in a matter of days. Now, the largest cryptocurrency in the market has marked a 13-month high and is trading for the third consecutive day over $9,000. So, what happened over the past week to move the prices by that margin?

Well for starters, everyone’s favorite Satoshi Nakamoto, Craig S Wright, was handed another court order by a US district court to prove who he thinks he is, or else, possibly, be charged. Or was it because of a little known company called Facebook releasing their own cryptocurrency with backers like Visa, MasterCard, Uber, PayPal, among others?

We think it’s the latter.

Project Libra, the hotly-anticipated digital asset by Facebook, was unveiled on Tuesday, complete with its own blockchain, wallet, and participants paying a $10 million entry fee to partake in the project’s internal governance. Many have described Libra as being revolutionary for the world of FinTech and an important channel for the remittance and retail payments industry. Some have even suggested that it could be “bullish for Bitcoin.”

Given the rapid BTC price rally and pertinent Libra developments in the ensuing week, some argue that the $9,000 ascendance would not have materialized without Facebook. Bitcoin well and truly broke the $8,000 mark on June 13, with the announcement nearing. A steeper price incline was seen on June 15 when, in one day alone, the price surged from $8,200 to $8,800 as news of the “Libra Consortium” broke out.

On June 16, the $9,000 mark was officially broken for the first time since May 2018, sustaining itself well into June 18, the official day of the Libra launch. Correction was expected as Libra’s formal launch saw sentiments high, but since this was a mere tickle for the industry ahead of any formal launch in 2020, the market was expected to duck back down below $9,000. However, around 24-hours after the announcement, the price continues to hover above $9,100.

Source: Twitter

To add to the above, the sentiment around Bitcoin is higher than its ever been since May, when the price was around $8,000. As detailed by The Tie, the cryptocurrency market’s response to Project Libra has been “positive,” despite the king coin falling against the US Dollar by 0.75%. Social media chatter on the rival platform, Twitter, has also seen a surge, with the Bitcoin tweet volume rallying to its highest point yet and mentions of Bitcoin with “Libra,” “#Libra,” or “Facebook,” accounting for over 7,000 tweets, with a vast majority of them positive.

Libra is a digital asset meant to transact via a blockchain and be stored in an online wallet, confirming to the core pillars of digital assets on one end. On the other, it is centralized, backed by a basket of fiat currencies and supported by several payment players which ardent crypto-proponents would like to replace.

Whichever way you look at it, Facebook is still bringing in a massive user base into the world of digital assets, allowing them the channel to engage in online payments and providing them their own wallets, all on a blockchain. Hence, it bears no surprise that Bitcoin is responding positively.





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