Cryptocurrency Derivatives Exchange ‘Crypto Facilities’ Launches Bitcoin Cash (BCH) Futures Contract

On Friday (17 August 2018), UK-based cryptocurrency derivatives exchange Crypto Facilities Ltd announced that it is launching a Bitcoin Cash (BCH) futures contract.

The exchange, which is regulated by UK's Financial Conduct Authority (FCA), is planning to launch the new product on its platform at 15:00 (UTC).

Reportedly, this product was added because BCH is a top 5 cryptocurrency (currently fourth-largest by market cap), and Crypto Facilities is confident that it will be just as successful as its exisiting futures products with crypto traders/investors for maximizing profits and/or for managing risk exposures.

The firm was founded by Dr. Timo Schlaefer, a former executive director (Vice President of Qunatitative Modelling) at Goldman Sachs, and Jean-Christophe Laruelle, a Software Architect at BNP Paribas and Societe Generale. It was launched on 26 February 2015, and since then has seen an ever-increasing demand for crypto derivatives.

Initially, it offered just one product: a forward contract on the Bitcoin (BTC) price with three expiry dates. It later added futures contract for XRP (10 October 2016), Ether (11 May 2018), and Litecoin (20 June 2018).

Two years ago, in a Reddit Q&A (subreddit "BitcoinMarkets), Dr. Schlaefer, who is the CEO of Crypto Facilities talked about the useful of crypto derivatives:

"If you just want to invest in bitcoin, i.e. buy and hold, you won’t need derivatives. They are very useful however for frequent trading as fees are typically much lower than in regular spot trading. With futures you can also go short, i.e. profit from price declines. This also allows you to get rid of bitcoin risk that you may not actually want without selling your bitcoins. For instance, a bitcoin payment processor may need to hold a certain amount of bitcoins to run the business but may not want to have exposure to bitcoin. In this scenario, shorting a bitcoin Futures will remove this risk without selling the bitcoins."

"Futures also provide interesting trading and arbitrage opportunities. Typically, they trade somewhat away from the bitcoin “spot” price, and this price differential can be locked in to make a low-risk profit. There is also the opportunity to trade the differential between different Futures on the same platform or across different platforms, or between Futures and the spot price."

Crypto Facilities also offers cryptocurrency indices and reference rates to financial institutions, trading firms and data vendors worldwide:

Crypto Indices Screenshot.png

On 14 May 2018, CME Group and Crypto Facilities launched the CME CF Ether-Dollar Reference Rate (Ether Reference Rate), which provides a daily benchmark price in U.S. dollars at 4 pm London time, and CME CF Ether-Dollar Real Time Index (Ether Real Time Index), which allows users access to a real-time Ether price in U.S. dollars." The Ether Reference Rate and Ether Real Time Index are calculated by Crypto Facilities and are based on transactions and order book activity from Kraken and Bitstamp. 

At press time, according to data from CryptoCompare, BCH is trading at $547.12 up 3.69% in the past 24-hour period.


Featured Image Credit: Interface Image Courtesy of Crypto Facilities


Top-Tier Crypto Exchanges' Volumes Climb Back to One-Third of Total Market Share

The aggregate trading volume of top-tier cryptocurrency exchanges has increased by 61.2% during the month of January, while the volume of lower-tier crypto exchanges increased 46.4%.

According to CryptoCompare’s January 2020 Exchange Review, the trading volume of top-tier crypto exchanges – those rated AA-B according to its Exchange Benchmark – climbed last month to represent 29.3% of the total trading volume in the space.

The rise is significant as in December, the cryptoasset data provider’s report showed top-tier cryptocurrency exchanges were seeing their trading volumes drop as they lost market share to lower-tier crypto exchanges, those rated C-F. At the time, they represented 26.4% of the cryptocurrency market’s total trading volume.

top tier trading volumesSource: CryptoCompare Exchange Review

The report further found that exchanges that charge taker fees represented 76% of the total volume last month, while those that implement the controversial trans-fee mining (TFM) model represented 22%.

It also found that regulated bitcoin derivatives are still dominated by the CME, whose total trading volumes went up 145.6% since December. Grayscale’s Bitcoin Trust product (GBTC) saw its total trading volume rise 131% since December.

As for derivatives trading on cryptocurrency exchanges, in January OKEx represented the majority of daily derivatives volumes, trading $4.96 billion per day and capturing 31.1% of the total market share. Huobi traded $4.29 billion a day for 26.9% of it, while BitMEX traded $3.13 billion for 19.6%.

Pure crypto-to-crypto exchanges notably represented 75.4% of the market’s trading volume, in a similar proportion to the last two months. The stablecoin space, per the report, is still dominated by Tether’s USDT, as it still represents 94% of the total Bitcoin trading volume into the top four stablecoins.

Decentralized Exchanges Lose Trading Volume

CryptoCompare’s report also addresses decentralized cryptocurrency exchanges, noting IDEX was the largest one in January. It traded a total of $10 million as its trading volume went up 25.4%, and it was followed by Switcheo and Bitsquare. While these platforms’ volumes went up, DEXs as a whole have been losing volume.

dex CHARTSource: CryptoCompare Exchange Review

According to the report they have diminished 88% since early 2019 to now represent a small fraction of the global spot exchange volume. In January, decentralized trading platform traded $17.8 million in total, representing 0.003% of the market. In January 2019, for comparison, they traded $148 million.

Featured image via Unsplash.