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Paul Tudor Jones' Bet on Bitcoin Supported by CME’s Bitcoin Futures CFTC Data and PwC’s Latest Crypto Report

Paul Tudor Jones: The Great Monetary Inflation

Billionaire hedge fund manager Paul Tudor Jones was reportedly looking to buy Bitcoin to hedge against inflation as central banks across the world are printing money to relieve economies affected by the coronavirus pandemic. Jones is one of Wall Street’s most seasoned and successful hedge fund managers, CEO and founder of Tudor Investment Corp, a hedge fund that managed $8.4 billion assets under management as of March 30, based on data from the Securities and Exchange Commission.

Jones compared Bitcoin to gold by saying that the digital currency reminds him of the role that gold played in the 1970s. Jones was well known for his correct prediction of the 1987 market crash and shorted Japanese equities several years later before Japan’s economy crashed.

Jones said in an investor letter, called The Great Monetary Inflation, “The best profit-maximizing strategy is to own the fastest horse. If I am forced to forecast, my bet is it will be Bitcoin.” As money-printing will push traditional investors to gold, he believes that the world will then “crave new safe assets,” which may be beneficial to Bitcoin. He added, “Quite often, how the markets respond will be at odds with your priors. But remember, the P&L always wins in the long run. With that in mind, in a world that craves new safe assets, there may be a growing role for Bitcoin.”

Last week, Arthur Hayes, CEO of one of the world’s largest crypto exchanges, BitMEX tweeted that Jones has made the right move to invest in cryptocurrencies such as Bitcoin, and has removed career risks by doing so.

PwC’s latest crypto hedge fund report

In an annual report by Elwood Asset Management and consulting firm PricewaterhouseCoopers (PwC), the value of assets under management at cryptocurrency hedge funds has soared to $2 billion, doubling the value in 2019.

With over 50 funds surveyed, most crypto hedge funds trade Bitcoin (97%), and Ethereum was the next most popular crypto (67%). Around half of the crypto hedge funds trade derivatives or were active short sellers.

The coronavirus pandemic has led to an inquiry of how hedge fund managers reduce counterparty risks, as the use of independent custodians has also surged from 51 percent in 2019 to 81 percent in Q1 of 2020. Henri Arslanian, the co-author, and PwC Global Crypto Leader said, “The changes the crypto hedge fund industry has seen in the past 12 months, from additional regulatory clarity to the accelerated implementation of best practices are great examples of how fast the industry is becoming increasingly institutionalized.”

The report also highlighted that of the 150 active crypto hedge funds around, about 63 percent were launched in 2018 or 2019. The launch of the actively managed crypto funds is also highly correlated with the price of Bitcoin. As the price of Bitcoin surged exponentially in 2018, it became a breeding ground for new crypto funds. There was also a correlation observed at the end of 2019, as Bitcoin faced a bear market, there was also a decline in new fund launches.

According to CFTC data, CME Group Bitcoin futures saw a record number of large open interest holders this week, at 66. Long open interest from hedge funds trading Bitcoin futures also high an eight-month high, reaching over $15 million on May 5.

Google Makes $1B Equity Investment in CME Group, Both Firms Chart a Decade Long Partnership

Search engine and cloud service giant Google has invested the sum of $1 billion in taking up a non-voting equity stake in CME Group, the world’s largest derivatives marketplace.

As the trading platform unveils, a decade-long partnership deal has been inked with the tech giant as it looks to migrate its operations to the cloud.

The embrace of Google’s tech capabilities will help CME Group bring additional value into its ever-expanding derivatives marketplace. Starting from 2022, CME Group said it will start migrating its data onto the Google Cloud while also moving its clearing service and the entirety of its markets to the cloud.

“Through this long-term partnership with Google Cloud, CME Group will transform derivatives markets through technology, expanding access and creating efficiencies for all market participants,” said Terry Duffy, Chairman, and Chief Executive Officer, CME Group.

“To ensure a smooth transition, we will work closely with clients to implement a phased approach. This partnership will enable CME Group to bring new products and services to market faster – all in a flexible and scalable environment that will create a wide range of opportunities for the marketplace.”

The partnership between both entities is not uncommon in the digital asset trading ecosystem and the broader blockchain industry. Back in October 2020, Google Cloud revealed it would join the EOS community and ventured into becoming a block producer candidate for Block. one’s EOS public blockchain network as reported by Blockchain.news at the time.

The integration of cloud infrastructure by cryptocurrency exchanges is also a growing trend by the day. Crypto.com has also tapped Amazon Web Services (AWS) as its preferred cloud provider to provide enhanced scalability and security for its millions of users.

While many crypto proponents believe blockchain and its accompanying innovations can directly threaten big tech, crypto-linked firms are notably exploring avenues to co-exist and return value as more growth initiatives are pursued across the board.

CME Group to Launch Euro-Denominated Bitcoin, Ether Futures on August 29

CME Group, the US leading and most diverse derivatives marketplace, announced on Thursday that it will launch Bitcoin Euro and Ether Euro futures on August 29. The move is part of CME’s efforts to expand its cryptocurrency derivatives offering services.

The financial derivatives exchange termed the launch as important as enabling Bitcoin users to trade Euro-dominated Bitcoin (BTC) and Ether (ETH) futures contracts on the regulated exchange.

Tim McCourt, Global Head of Equity and FX Products, CME Group, talked about the development: “Ongoing uncertainty in cryptocurrency markets, along with the robust growth and deep liquidity of our existing Bitcoin and Ether futures, is creating an increased demand for risk management solutions by institutional investors outside the U.S. Our Bitcoin Euro and Ether Euro futures contracts will provide clients with more precise tools to trade and hedge exposure to the two largest cryptocurrencies by market cap.”

CME will unveil Euro-denominated Bitcoin and Ether futures to help meet the rising demand for regulated and expanding, non-USD crypto derivatives.

According to CME, offerings of Euro-denominated Bitcoin and Ether futures contracts could accelerate increasing demand for crypto products from institutional investors.

The products will provide crypto derivative alternatives because the euro, the official currency of 19 out of 27 EU member countries, is the second-most-desired currency in global currency reserves.

CME designed the Bitcoin Euro and Ether Euro futures contracts to match their U.S. dollar-denominated counterparts.

The derivative exchange stated that it will size Bitcoin Euro and Ether Euro futures at five Bitcoins and 50 Ethers per contract. Such new contracts will be cash-settled, based on the CME CF Bitcoin-Euro Reference Rate and CME CF Ether-Euro Reference Rate, which serve as once-a-day reference rates of the euro-denominated price of Bitcoin and Ether.

Rising Infrastructure for The Crypto Investor

CME’s Bitcoin Euro and Ether Euro futures are the latest investment products to be launched tied to a cryptocurrency.

In March, CME launched Bitcoin and Ether options on the micro futures contracts of the two largest cryptocurrencies by market capitalization: Bitcoin (BTCUSD) and Ether (ETHUSD).

Last year, the exchange witnessed interest in crypto assets from retail investors, especially Millennials and Gen Zs, reaching new heights.

That was the part of the reason that led CME, in March this year, to launch micro futures to offer more affordable options for investors seeking to gain exposure to Bitcoin and Ether derivative products.

And so far, the company has continued to expand its suite of cryptocurrency derivatives offerings further.

In October last year, the ProShares Bitcoin Strategy ETF (BITO), the first ETF linked to Bitcoin, started trading, providing investors with the opportunity to gain exposure to Bitcoin returns in a convenient, liquid and transparent manner.

Shortly afterwards, several similar Bitcoin ETFs unveiled their trading services which track the future price of the coin.

CME Group Rolls Out Ether Options for Upcoming Merge

CME Group, a leading derivatives marketplace, has launched the options of Ether futures, given that the much-anticipated merge has been pushing demand.

Tim McCourt, the global head of Equity and FX products at CME Group, pointed out:

“As market participants anticipate the upcoming Ethereum Merge, a potentially game-changing update of one of the largest cryptocurrency networks, interest in Ether derivatives is surging.”

Since the merge is slated for September 15, CME Group intends to offer more flexibility with the Ether options. Leon Marshall, the global head of sales at Genesis, stated:

“The launch of the new Ether options contract ahead of the highly anticipated Ethereum Merge provides our clients with greater flexibility to trade and hedge their Ether price risk.”

The merge is anticipated to be the largest software upgrade in the Ethereum ecosystem because it will change the consensus mechanism from proof-of-work (PoW) to proof-of-stake (PoS).

Therefore, the new options will complement CME Group’s Ether futures, which have recorded a 43% surge in average daily volume year-over-year.

Rob Strebel, the head of relationship management for DRW, said:

“As ether transitions through the anticipated merge this week, we expect we’ll continue to see strong demand for this Ether options contract.”

Since the Ethereum merge has been awaited with bated breath by the crypto community, the network’s speculative action has skyrocketed, Blockchain.News. The open interest shown in the ETH network highlighted that buying pressure outweighed selling.

On the other hand, a hard-fork mechanism is expected to be deployed within 24 hours after the merge.

CME Group Proposes Direct Crypto Derivatives Trading to Regulators

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CME Group, a US-based financial derivatives exchange, has proposed to regulators its plan to offer derivatives trading directly to retail customers.

According to The Wall Street Journal’s report on Saturday, CME Group filed paperwork to register as a so-called futures commission merchant (FCM).

Retail investors typically trade derivatives through third-party brokers such as TDAmeritrade. If regulators approve the CME’s plans, then individual consumers would be able to trade derivatives directly through CME rather than through brokerages.

Market participants talked about the new development. “This is notable and comes as no surprise. The CME Group has desired direct relationships with clients for as long as I can remember,” said CoinFund president Christopher Perkins, who commented on the Journal’s reporting via LinkedIn social media.

Joseph Guinan, CEO of the FCM Advantage futures, also stated if CME’s application is approved. Its entry into the futures brokerage space would be not only a game changer but also a dramatic concern for all FCMs (Futures Commission Merchants) should CME sets fees lower than such brokers.

A CME spokesperson also commented that the company’s commitment to the FCM model and the significant risk management remains an unwavering benefit to all industry participants.

CME’s move is a turnaround plan which follows a similar service offering proposal launched by FTX.US in April. CME’s plan is similar to FTX.US’s proposal to allow consumers to post margins and trade crypto derivatives directly on its platform.

In May, the Commodity Futures Trading Commission (CFTC) sought public comment on a request from FTX.US to modify its derivatives clearing organization (DCO) license to offer a new type of crypto margin trading to U.S. retail customers.

CME Group and ICE both opposed FTX.US’ proposal to offer central clearing of margin products directly to retail customers, which was defended by the crypto industry and the FIA (Futures Industry Association) – a global industry organization for the futures, options, and listed derivatives markets – in a Congressional hearing. FTX US’s proposal was considered deficient and poses a significant risk to market stability and market participants.

In May’s hearing before the House Agricultural Committee, U.S. lawmakers were sceptical of the FTX’s proposal for an automated collateral system to be used for crypto and other digital assets in futures markets.

Cryptocurrency derivatives trading on centralized exchanges rose to $3.12 trillion in July, a 13% monthly increase, as crypto prices maintain efforts to gain recovery from the recent market crash. The crypto market plunged in May and June as worries about Federal Reserve interest rate hikes and high inflation prompted investors to ditch risky assets.

As of July, the derivatives market made up 69% of total crypto volumes, up from 66% in June, and helped push overall crypto volumes on exchanges to $4.51 trillion in July. The rise in derivatives trading volume indicates an increase in speculative activity as traders believe there is room for further upside in the crypto rally.

Three Metaverse Reference Rates From CME Group

Derivatives marketplace CME Group is planning to develop reference rates in addition to real-time indexes for a total of three distinct crypto assets that are part of the metaverse. This would make it possible for investors to monitor price data in a more precise manner by using a method that is often used in traditional finance.

The company made the news on January 5 that CME Group and CF Benchmarks will begin offering reference prices for Axie Infinity Shards (AXS), Chiliz (CHZ), and Decentraland’s MANA commencing on January 30.

The reference rates and indexes are not products that can be traded, but investors can use them to “price sector-specific portfolios, develop structured products, and manage price risk around various Metaverse-based projects,” as explained by Giovanni Vicioso, head of cryptocurrency products at CME Group. The CME Group was kind enough to provide us with this information.

Calculations for the real-time indexes and reference rates for AXS, CHZ, and MANA will make use of price data from a minimum of two different cryptocurrency exchanges. In addition to LMAX Digital and itBit, the following exchanges are included here: Bitstamp, Coinbase, Kraken, and itBit.

Every day at 16:00 local time, the reference rates for the assets will be published with prices in United States dollars. These prices will be published (00:00 GMT). Each and every real-time index will be made accessible for use by the general public each and every second of each and every day.

CoinMarketCap estimates that Chiliz, the most successful of the aforementioned metaverse enterprises, now has a market worth of 742.1 million dollars. This information was obtained from the Chiliz website.

AXS is now valued at roughly $686.5 million, whereas MANA is currently at approximately $597.2 million according to the market.

The CME Group has been fairly active in the cryptocurrency sector, offering micro-sized options for Bitcoin and Ether at the end of the previous year.

The popularity of metaverse tokens increased during the most recent bull market in cryptocurrencies as dozens of projects promised to build digital replicas of the real world.

CME Group and CF Benchmarks to Introduce APAC Reference Rates for Bitcoin and Ether

CME Group, a leading global derivatives marketplace, in collaboration with CF Benchmarks, a prominent provider of cryptocurrency benchmark indices, has announced the launch of two new APAC-specific reference rates for Bitcoin and Ether. These rates, named the CME CF Bitcoin Reference Rate APAC (BRRAP) and CME CF Ether-Dollar Reference Rate APAC (ETHUSD_AP), are set to be introduced on September 11. They will offer a daily reference rate for the U.S. dollar value of these two digital assets, with the publication time slated for 4 p.m. Hong Kong/Singapore time.

Giovanni Vicioso, the Global Head of Cryptocurrency Products at CME Group, highlighted the significance of these new rates by stating, “Year-to-date, 37% of total crypto volume at CME Group has been traded during non-U.S. hours, with 11% of trades originating from the APAC region.” He further emphasized that these APAC reference rates would enable market participants to hedge cryptocurrency price risks more effectively, aligning closely with their portfolio timings.

These newly introduced rates will supplement the existing CME CF Bitcoin and Ether reference rates, which are published at 4 p.m. London and New York times, respectively. The primary purpose of these rates is to serve as benchmark rates for the settlement of all related CME Group futures contracts.

Sui Chung, CEO of CF Benchmarks, expressed enthusiasm about the launch, noting the ongoing rapid adoption of crypto. He mentioned, “As variants, these benchmarks will be calculated and administered to the same exacting standards enjoyed by their existing London and New York counterparts.” Chung emphasized the role of these benchmarks in bolstering investor and institutional confidence in crypto financial products.

This move by CME Group and CF Benchmarks is indicative of the growing institutional interest in cryptocurrency within the Asia Pacific region. The introduction of these reference rates is expected to cater to the needs of institutions and investors in the APAC region, providing them with accurate BTC and ETH prices during the Asia trading day.