The Derivatives Magazine #31
Last week, the total market capitalization remained within the narrow corridor of 719 - 800 billion USD. The market continues accumulating the consequences of the FTX exchange's collapse and looking for new possible reasons for growth. This week, the immediate attention of traders will be focused on macro statistics and the actions of the central banks of the United States and the European Union, where the refinancing interest rate and market conditions for the next few months will be determined.
The derivatives and spot trading market continues to go down. As the data of the analytical platform Glassnode shows, the volume of Bitcoin derivatives trading has been actively declining for more than a month, having almost halved to the level of 8.5 billion USD.
An additional confirmation of the decrease in activity is a decrease in the volume of Ethereum spot trades. Before the Merge in September, the spot market stabilized and competed with derivatives. However, after that, the spot market decline continued, indicating the absence of an active, long-term buyer and the dominance of speculative trading in the market.
Currently, the crypto market feels relatively confident compared to traditional markets. Fears of a global recession have less impact than local news, and it is likely that the most negative events in the crypto industry have already happened. Further developments will largely be determined by the conditions for the inflow of new liquidity—access to capital (the refinancing rate from the Central Bank) and regulation at the legislative level.
On Monday, it became known that the story with the former CEO of the FFTH exchange, Sam Bankman-Fried, is coming to its logical conclusion. The authorities of the Bahamas arrested him at the request of the American authorities. The SEC, the CFTC, and the Prosecutor of the Southern District of New York brought charges. Based on official statements, the former crypto investor is accused of deceiving investors, fraud, and money laundering. You can read more about how the exchange collapsed in our FTX Game Over special issue. Now, it's time to take responsibility for the many rash decisions and practices that the growing market of 2020-2021 covered up.
The press and government agencies do not ignore another participant in the FTX epic - the head of the competitor exchange and a former investor in FTX CZ. According to reports by the Reuters news agency against a group of managing managers, including CEO Binance, the US Department of Justice has been conducting a preliminary investigation since 2018. The subject of the study was a possible violation of the sanctions regime by the exchange - providing access to Iranian and Russian crypto traders. In addition, Binance may have been used in the past as an intermediary point for laundering money obtained illegally - from hacking by hackers and scammers. This article caused a heated discussion on social networks and led to a significant outflow from the balance sheets of the exchange - about 2 billion USD. However, unlike its competitor FTX, Binance coped with the panic much better, and at the moment, the exchange is not experiencing significant withdrawal problems.
US CPI Index
On Tuesday, preliminary data on inflation were released, which turned out to be better than market forecasts. Inflation in the US was only 7.1%, declining for the second month in a row. This trend allows the Fed to at least slow down the pace of rate hikes and possibly even put this process on pause shortly. This news has supported the market and allows us to look at the next week with great optimism.
This overview was prepared by the analytics department of the Biqutex, an innovative crypto derivatives exchange. Trade an extended list of instruments (Perpetuals Swaps, Futures, Options, Calendar Spreads etc.) with up to 125x leverage and deep liquidity!