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Bitcoin futures impact price more than spot markets: Wilshire Phoenix



A new report from investment firm Wilshire Phoenix claims that the Chicago Mercantile Exchange’s, or CME’s, cash-settled Bitcoin futures trading products affect Bitcoin’s price even though they do not directly involve actual real Bitcoin (BTC).

“The findings of Wilshire Phoenix indicate that CME Bitcoin Futures contribute more to price discovery than its related spot markets,” said an Oct. 14 report from Wilshire Phoenix, adding:

“A leading futures market suggests the existence of a robust base of traders who may trade on such markets for many reasons such as trust in the exchange venue and lower latency.”

Price discovery essentially refers to how each actual Bitcoin is valued on the market — its going market rate, or spot price. Wilshire’s report essentially found that these CME products affect the price of BTC more than the actual BTC itself, which trades on crypto-native exchanges. 

Launched in December 2017, CME’s Bitcoin futures do not handle spot Bitcoin. Participants trade contracts tracking the price of Bitcoin on the crypto markets, paying out those contracts into U.S. dollars at expiration. These contracts pay out based on a price index called the CME CF BRR, which comprises a price for BTC based on values seen across a number of spot crypto exchanges, called constituent exchanges. The CME’s futures products have yielded notable interest in the years since their launch. 

Even though the CME’s Bitcoin futures deal only in cash, crypto traders and participants pay attention to their price action — particularly chart gaps frequently referred to as “CME gaps”. 

These gaps are made when spot BTC opens the next trading day above or below the close of the previous day, based on spot BTC’s 24-hour trading schedule, as compared with the CME’s set hours of operation for the products. Bitcoin’s spot price has been known to travel back to any gaps left on the price chart. 

One aspect highlighted in the report is that the CME trades more total volume than any single spot exchange included in its CF BRR, the report detailed, adding: “which also facilitates price discovery within the futures market.” Additionally, CME Bitcoin futures participants trade notably bigger positions on average:

“A relative number of small trades in a given market is typically statistically insignificant for price discovery purposes. The average trade size on the CME futures market facilitates its lead in price discovery versus the Constituent Exchanges.”

The report also noted the presence of other mainstream futures markets affecting spot prices across other asset classes, so the findings are not out of the ordinary. 

“There are 85 institutions holding open positions in Bitcoin futures, this represents a similar number versus other CME futures in major currency markets such as the Swiss Franc, US Dollar Index, and Fed Funds,” Wilshire Phoenix partner and report co-author Alexander Chang told Cointelegraph.

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PayPal Forays into Crypto Market as Bitcoin Price Explodes Past $12,400



  • Bitcoin is now trading at the highest price seen in well over a year, with bulls aiming for $13,000 as its strong uptrend gains momentum
  • Today, news regarding PayPal’s foray into the crypto market provided the benchmark cryptocurrency with a serious boost
  • Its price surged all the way up to highs of nearly $12,500 before meeting some resistance, but it does appear to be poised for further gains
  • This recent uptrend has come about in the absence of any immense bullishness in the stock market, with BTC incurring independent momentum
  • Where it trends next will likely depend on how long it can stay above $12,000

After struggling to gain momentum throughout the past few weeks, Bitcoin has now entered a firm bull trend as its price rockets up towards fresh yearly highs.

The cryptocurrency is currently trading at the highest price seen since earlier this year, with bulls appearing to be in firm control of its short-term trend.

This trend is now leading BTC up towards $13,000 – a level that has not been breached since the June of 2019 rally that sent the crypto towards $14,000.

This time is different than before, as the benchmark cryptocurrency is being driven by immense underlying strength.

PayPal’s decision to provide its users with access to buying, selling, and storing cryptocurrency is one catalyst behind today’s move.

Bitcoin Rockets Towards $13,000 as Buying Pressure Mounts

At the time of writing, Bitcoin is trading up just under 4% at its current price of $12,380. This marks a massive surge from its recent lows of $10,200 set just a few weeks ago.

The cryptocurrency is facing some resistance at $12,500, it seems, as sellers are aggressively offloading their holdings each time its price reaches this level.

This rally will likely persist in the near-term if bulls continue holding BTC above $12,000.

PayPal Sparks a New Sense of FOMO Amongst Investors

The latest leg higher came about following reports of PayPal entering the crypto market, allowing users to buy, sell, and store Bitcoin and other digital assets like Ethereum.

As Reuters reported earlier today:

“PayPal joins the cryptocurrency market, allowing customers to buy, sell and hold virtual coins including bitcoin using the company’s online wallets.”

This is the latest major name in FinTech to involve itself with the nascent market, as Square recently made headlines with its decision to purchase $50 million worth of Bitcoin to be held on its balance sheets as a reserve asset.

Featured image from Unsplash.
Pricing data for BTCUSD from TradingView.

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Study finds CME drives Bitcoin price, but it excludes stablecoin volumes



On Oct. 14, Wilshire Phoenix investment firm released its Efficient Price Discovery report, which detailed how CME Bitcoin (BTC) futures impact Bitcoin price discovery.

The firm concluded that “CME Bitcoin futures contribute more to price discovery than its related spot markets.” And the researchers also suggested that:

“CME Bitcoin futures have grown to become significant, this is not only demonstrated through trading volume and open interest, but also by influence on spot price formation.”

Wilshire’s analysis correctly states that price discovery in traditional markets is a contested topic. The report also adds that studies on price formation often find that the futures markets lead most of the time, but this doesn’t mean their conclusions about CME Bitcoin futures are absolute.

According to the report, CME Group, the leading derivatives venue, trades $5.15 trillion per day across its multiple markets. According to Nasdaq data, this number compares to the $430 billion in daily volume seen in the U.S. stock market.

This data shows that the trend of derivatives volumes surpassing spot exchanges by tenfold is the norm rather than an exception.