The anticipation that 2019 will be the year for mass institutional crypto investment is building. The number of long awaited futures contracts and exchange traded funds to ease institutions in is growing. Added to that list is a European derivatives exchange which is gearing up to launch its own crypto products.
Deutsche Börse Enters The Markets
According to The Block Eurex has been meeting with industry experts and market makers in recent weeks in the lead up to the launch of its own crypto investment products. The firm is a derivatives exchange operated by Germany’s Deutsche Börse. Citing ‘people familiar with the matter’ the report adds that initial futures contracts will be based on the top three; Bitcoin, Ethereum and Ripple’s XRP token.
Eurex has joined the likes of the Intercontinental Exchange (ICE), VanEck, and ErisX which are all angling to get physically delivered crypto contracts onto the markets this year. The prolonged US government shutdown has hampered regulatory processes and delayed the launch of many crypto related products.
According to German-based publication Wirtschaftswoche, the Deutsche Börse has been mulling crypto futures since December 2017; “We are thinking about futures, with which private investors and institutional investors can protect existing investments in bitcoin or set for falling prices of the cyber currency,”
In addition to the big names like Bakkt a number of other prominent crypto companies are looking to enter derivatives markets including BitMEX, BitFlyer, and OKEx. Demand is also on the increase as only this week the CME recorded their highest ever volume of traded Bitcoin contracts at 18,338. Although futures only provide the ability to bet on a future price they still signal a huge uptick in institutional interest. CEO of crypto derivatives exchange CoinFLEX, Mark Lamb, added;
“The space has been moving into this direction for a long time. Traders are all about the efficiency of their capital and maximizing the return on equity. Futures just make much higher returns more possible as they are really great for arbitrage and other complex strategies.”
Similar products such as Grayscale’s Bitcoin Trust are also generating a lot of interest with over $800 million invested in Bitcoin exchange traded notes this month. ETN’s are equivalent to shares correlated to the price of Bitcoin rather than owning the asset directly.
A few years ago these investment vehicles would have been unheard of but in a rapidly evolving market with the promise of big returns the institutions do not want to miss out.