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Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
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Not sure if this is out of the video or not but isn't this exactly how the Crypto 2017 meltdown started? Bitcoin went up, people invested some of their profits in Altcoins, then when Bitcoin went back down, all the Altcoins crashed?
Contract sizes are just simply TOO big for retail. CME really needs to 'gear down'/ 'step it back' as mentioned above. 1/10th size (5ETH) would be a start. The trade volume would be 20-50X on day 1. Sad.
CME Needs to call Elon Musk to get him to 'sponsor' a DOGE COIN Future built as a Micro product... It would simply close about 10 other futures markets and clean up the 1000's of unnecessary coins... just saying. Someone has to think further out than only offering an "S&P Pit Full sized like" contract on these Cryptos.
David was obviously a little rusty (and low) on margins. Early in the presentation he said Bitcoin margin started at 37%, implying that as it became more mature it would reduce. It's now 42%. He said that Ether margins would probably be higher than Bitcoin but guessed they would around 30%. He also said margins are not known yet. Margins are actually 50% as announced by the CME last week. https://www.cmegroup.com/notices/clearing/2021/01/Chadv21-045.html
I believe some of his volatility commentary was incorrect specifically that either the annualized or daily volatility calculation is wrong. Given Ether trades 7 days a week not just 5 days a week shouldn’t annualized volatility be 19.1 (square root of 365) times the daily volatility not 16x. Also, if we assume normal distribution (bad assumption I know) doesn’t a 3 SD move happen once in every 370 trading days, not once in every 200. (Φ(-3) = 0.00135. 2 tails = 0.0027. 1/0.0027 = 370)
Question I wish I could have asked?
Why does the CME have spread implieds switched off for crypto currencies. While I know this falls in the equity division (?!?) and that the equity index products don't have implieds switched on, the nature of the products are extremely different. On the day of the presentation (Thursday 4th) 99.8% of ES volume was in the front month, while only 81.9% of the Bitcoin volume was in the front month.
That was asked in the presentation - while he didn't say no, it was clear there is no immediate plans for them.
Also with regards to 'other cryptos' if you look at CMEs timeline for both Bitcoin and Ether they launched their 'reference rate' at least a year (even two?) before the actual contract. Since they currently don't have a reference rate for any other crypto's I would speculate that there are no new ones coming in the near future.
While I wish they were smaller as well, I think the size was dictated by the fact that people will spread these versus the Bitcoin contract. Currently you would need to do that on an approximate 2:1 basis. If they made it 1/10th the size it would be a 22:1 basis.
I assure you that everyone knows this. That's not what's stopping it. What's stopping it is getting market makers on board. Market makers are necessary to close the bid ask spread. Retailers alone, no matter how much demand they may represent, won't do it. And the crypto space just isn't aged enough for most market makers.
At least, that's my opinion. I would like to believe this is true. If I'm wrong, I invite anyone to explain why. Because I would like to know. Until then, this is what I will believe.
Record $6.5B futures open interest signals traders are bullish on Ethereum
The open interest on Ethereum futures hit a record $6.5 billion as ETH rallied to $1,750 and traders increased their leverage.
