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0 CommentsCryptocurrency is slowly tending from being a marginal idea backed by crypto enthusiasts to a solid alternative asset class held by many respectable U.S. institutions. And the speed of this transition is growing day by day, as noted by Benzinga.
The current moment is interesting in that the common belief was that governments would be opposed to crypto and will attempt to regulate their presence in the market down to a minimum. The very existence of an alternate means of exchange, aside from sovereign fiat currencies, it seemed might be considered a threat, and the fact that this hasn’t happened yet is somewhat surprising. Even Senator Elizabeth Warren’s recent claims with her aggressive call for regulating cryptocurrencies seemed to gain not much support. At the time, an actual sovereign nation (El Salvador) recognized Bitcoin as a legal tender.
Bitcoin and Ethereum futures
The greatest milestone in the way of transition of cryptocurrencies is that CME Group launched futures contracts for both Bitcoin and Ether.
CME has a stringent regulatory history and has a long track record of offering deeply liquid institutional derivative products. As CME futures contracts are geared mostly toward institutional use, their growth reflects and raises the level of Bitcoin and Ether adoption. Yet we can see its tenfold growth in less than 5 years, since 2017 when the first Bitcoin futures contract launched, and currently trades around $5 billion worth per day.
The interesting fact is that notional volume in futures and other derivatives exceeded cryptocurrency spot volume during the massive correction occurring in May. Partially, it was a way to avoid capital gains taxes in long-held crypto, but also it showed the huge institutional involvement already participating in the crypto market. The recent launch of CME Micro Bitcoin futures contracts, designed for both institutions and advanced traders, is already mirroring the perspective of creating a promising additional marketplace for liquidity.
Ether gains market share
Last year, Bitcoin’s leadership in the crypto world looked unbeatable. Bitcoin shared for 70% of the cryptocurrency market in total, backed by big names like Stanley Druckenmiller, Paul Tudor Jones, and Elon Musk. However, since then, BTC’s share has dropped to 40% of the total crypto market, while ETH’s raised to 15%. The dynamics of both assets reflect the growing interest in Ether. Year to date, Bitcoin upped by 41%, while Ether has added an astonishing 255%.
Whether some differences in the technology may have attracted investors into Ethereum more than Bitcoin, or it may just be a desire to diversify. In any case, the new market situation shows that there is space for more than one dominant coin.
Although if the prices of such highly volatile assets seem unpredictable, two things look clear:
- The most obvious the new participants are new buyers, not sellers, and this pushes prices up.
- After each month passes without substantial opposition, crypto becomes more rooted.
At least, it’s too early to assume which of the current leaders in the crypto sector will survive and prevail is settled. Things in the crypto world are changing rapidly.
