Crypto Weekly (Oct. 23rd, 2019)
Weekly recap...
- Bakkt futures hit ATH, will launch options contracts on 12/9/19
- Is quantum computing a threat to BTC?
- Several hurdles expected to improve by year end; still risk-off for BTC
Center Story
1. Bakkt futures just needed a little time... options launch coming next
Bakkt futures daily trading volume has taken off. Was media too quick to judge? Wouldn't be first time.
Variations of "Bakkt futures volume has been disappointing" have been a common refrain since Bakkt's launch at the end of September. But, contract volume rocketed to 640 contracts (~$5mm) on Wednesday. Sustained volume growth will be a sign that price discovery mechanisms in crypto are improving.
One of the key benefits from Bakkt's contract design outlined by Bakkt's CEO, Kelly Loefller, is that prices do not rely on spot trade data:
It is widely reported that the vast majority of trading volume – greater than 90% – is impacted by manipulation, wash trades and other fraudulent activity. This means that for the first time, a benchmark futures price for bitcoin is being set without referencing the unregulated spot market.
Bakkt announced it will be launching the first regulation options contract for BTC futures on 12/9/19. Contract features below...
Capital efficienc...Reports you may have missed
CORE STRATEGY: REMAINING TACTICALLY CAUTIOUS, TGA RUNDOWN + EARLY JAN FLOWS COULD PRODUCE NEEDED SPARK In our view, this cycle is far from over. However, until bonds find a bottom and the USD peaks, it’s prudent for more tactically-minded crypto investors to remain nimble and ready to capitalize on opportunities once a trend reversal is confirmed. While this could happen as early as next week due to early-January inflows, additional...
CORE STRATEGY: FOCUS ON MAJORS, KEEP HEAD ON SWIVEL UNTIL BONDS/DXY RELENT We think it's right to expect a bounce into year-end, potentially starting tomorrow if PCE data comes in soft. In our view, this cycle is far from over, but until bonds find a bottom and the USD tops, it’s likely best for the more tactical investor to stay nimble and prepared for opportunities upon confirmation of this trend...
CORE STRATEGY Our base case assumes that the macro environment will remain accommodative for crypto through year-end. However, in light of recent market action, we remain alert for signs of a local top (not a cycle top). That said, it is difficult to justify a risk-averse stance at this stage and think it is right to lean into this altcoin rally. Source: TradingView, Fundstrat Source: TradingView, Fundstrat STRONG DOLLAR +...
Today's employment numbers broadly met investor expectations, placating a nervous market. Risk assets rallied, aligning with our view that yesterday's de-risking would not persist through today. Yields continued their downward trajectory, and Fed funds futures also declined, reflecting the market's adherence to the Fed's dovish messaging. Yields Falling: Source: TradingView Fed Funds Futures Showing More Cuts: Source: TradingView Oil prices nearing YTD lows likely assisted in alleviating near-term concerns about...
