2023 proved to be a breakthrough year for cryptocurrencies as it brought notable shifts that made digital assets more established and widely accepted. Goldman Sachs, a leading global investment management firm, said that the crypto market experienced expansion of regulated exchanges for complex financial products like derivatives.
Platforms like Coinbase Derivatives, CBOE, Eurex, GFO-X, AsiaNext, and 24 Exchange saw growth in centrally-managed options that provide structure.
The report said the market became more like an organization in the market for derivatives. This was most clear in the bitcoin (BTC) and ether (ETH) futures and options trading at CME. There, futures, and options trading for these went up steadily.
By Q4, CME had become the number one exchange for bitcoin futures based on how many contracts people were holding. People holding contracts are called open interest. Open interest means the total number of futures or options deals that investors are still involved in. It shows how many positions are still active.
Bitcoin And Ether Futures Trading Surges
The report said that interest in bitcoin and ether was the same for the first nine months of the year. But in October, when prices changed, big investors got interested.
October price action brought along interest from institutional investors, who took the opportunity to position themselves for a potential spot BTC ETF approval and/or hedge exposure via derivatives, the report said.
More people wanted to buy or sell Bitcoin using future contracts in the last three months of the year than ever before. The report shows there was more interest in using futures to make money from Bitcoin price changes or protect against them.
Trading of ethereum futures stayed behind bitcoin futures all year. Ethereum futures volumes were between 20% to 50% of the size of bitcoin futures. But this might change in 2024 if ethereum is also approved to have investment funds that people can directly buy and sell.
Crypto ETFs: Global Regulatory Landscape
Net inflows for bitcoin products swelled before an expected ETF decision. Exchange-traded products and futures ETFs, tracking crypto assets or future contracts, saw $1.9 billion enter in the last quarter. ETPs follow indexes like ETFs or ETNs. Futures ETFs use futures instead of direct holdings. ETFs let people invest without owning assets.
ETFs dealing with cryptocurrencies must follow tight rules from regulators like the SEC in America. These agencies have been slowing or turning down many requests for funds tied to digital money due to worries over market trickery, deception, and protecting investors.
in just 2023, regulators globally permitted or launched several crypto-related ETFs. Examples include VanEck’s Bitcoin Strategy Fund (BTF), WisdomTree’s Crypto Strategy Fund (WTC), Valkyrie’s Bitcoin Strategy Fund (BTF), Grayscale’s Bitcoin Trust (GBTC), and Bitwise’s Crypto Industry Innovators Index Fund (BITQ).
Related Reading | Related Reading | FTX Debtors Settle Crypto Claims At Bankruptcy Date