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CME plans to launch bitcoin trading on the spot market

CME plans to launch bitcoin trading on the spot market

created Simon peters21 May 2024

After weaker than expected inflation data from the US, we saw a positive week for cryptocurrency markets. The total capitalization of the cryptocurrency market increased by 6%. by approximately $130 billion. The total market capitalization is currently USD 2,36 trillion, or approximately 30%. from the record high of $3 trillion in 2021. US indices also reached record highs after the release of inflation data. In recent weeks, bitcoin has become particularly correlated with US stock markets. As we enter the second half of the year, the macroeconomic climate, and most importantly inflation data and potential interest rate cuts, will play a key role in the direction of bitcoin (and cryptoassets more broadly) prices for the remainder of this year.

The likelihood of Ethereum spot ETF approval increases as the deadline approaches

On Monday Ethereum increased by as much as 19%. – hopes for the approval of the spot ethereum ETF have increased significantly. The Securities and Exchange Commission (SEC) has asked exchanges to update their 19b-4 filings for spot ethereum ETFs before the May 23 deadline.

Despite the progress so far, there is no guarantee that the ETFs will launch on or shortly after May 23, as S-1 registration statements must also be approved for the ethereum spot ETF to launch. This may take weeks or even months.

By publishing on the "X" platform, Eric Balchunas, senior ETF analyst at Bloomberg who has reported extensively on spot bitcoin ETF approvals, increased his odds of approval of the spot ethereum ETF from 25%. up to 75 percent

The Wisconsin State Investment Board buys bitcoin

The State of Wisconsin Investment Board (SWIB), which is responsible for managing the assets of the Wisconsin Retirement System, disclosed in its latest 13-F filing that it holds shares of BlackRock's iShares Bitcoin Trust (IBIT) worth approximately $100 million, as well as just over $63 millions of dollars in GBTC Grayscale.

The disclosure makes SWIB the first government institution to publicly announce holdings in bitcoin spot ETFs. However, they constitute a small amount in relation to the total value of managed assets.

As bitcoin continues to integrate into the mainstream financial ecosystem through investment vehicles such as spot ETFs, the SWIB announcement could prompt other state and public pension funds to explore similar investments.

Other notable buyers of bitcoin spot ETFs recently disclosed in 13F filings include BNP Paribas, Wells Fargo, UBS, Morgan Stanley and JP Morgan Chase. Their exposures are also quite small relative to their total assets.

13F is a quarterly report submitted to SEC by all institutional investment managers with assets under management of at least USD 100 million, disclosing their holdings. Forms must be submitted within 45 days of the last day of the quarter.

CME plans to launch bitcoin trading on the spot market

As reported, CME (Chicago Mercantile Exchange), the world's largest futures exchange, plans to launch spot bitcoin trading. It is possible that this will happen via their EBS currency trading system in Switzerland.

The CME already hosts bitcoin and ethereum futures trading, and the introduction of spot bitcoin could greatly appeal to institutional investors who would prefer to buy and sell the cryptocurrency directly on a regulated market. This could also please traders who enjoy arbitrage (taking advantage of the price difference between futures and spot prices) and value the ability to perform these activities in one place.

The plan, although not yet finalized, shows how traditional financial institutions and legacy trading venues want to capitalize on growing interest in bitcoin and other cryptocurrencies from institutional investors. They may also attract the attention of the wealthy who may have been hesitant about exposure to this sector a few years ago.

Vanguard appoints new 'bitcoin-friendly' CEO

Vanguard, one of the world's largest asset managers, with over $7 trillion in assets under management, last week announced the appointment of former Blackrock executive Salim Ramji as its new CEO, effective July 8. Ramji will succeed Tim Buckley, who in January said Vanguard would not offer spot bitcoin ETFs to its brokerage clients, retiring and stepping down as president and CEO.

This is seen as an interesting nomination by the cryptocurrency community. While at Blackrock, Ramji led the iShares global business, ultimately overseeing the launch of the IBIT bitcoin spot ETF.

Although Ramji quickly abandoned the idea of ​​reversing the earlier decision and Vanguard offered its clients a bitcoin spot ETF or launched its own bitcoin ETF, who knows what might happen in the future. Especially considering his experience so far. It is also difficult to predict a situation when customer demand for exposure to cryptocurrencies (via traditional investment instruments such as bitcoin spot ETF) will increase.

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About the Author
Simon peters
eToro analyst. A graduate of the Faculty of Mechanical Engineering at Brunel University in London. He is CFA UK Level 4 certified in Investment Management.