After the news that the Chicago Mercantile Exchange Group (CME Group), the world’s largest futures exchange, plans to launch bitcoin spot trading, the stock price of Coinbase, a US-listed cryptocurrency exchange, plummeted by over 9% on the 16th due to potential strong competitors.
(Global’s largest futures exchange, CME, plans to launch bitcoin spot trading, making basis arbitrage more convenient.)
(Coinbase’s analysis of the post-halving market for Bitcoin and the variables brought by the global economy.)
The world’s largest futures exchange, CME Group, revealed yesterday that it plans to launch bitcoin spot trading. It has already started discussions with traders who want to buy and sell bitcoin in regulated markets. Currently, CME offers bitcoin futures trading, and introducing spot bitcoin trading would make it easier for investors to engage in basis trading.
Perhaps due to this news, the stock price of Coinbase, a US-listed cryptocurrency exchange, plummeted by 9.48% to $199.07 on the 16th.
(Source: Google)
Facing strong competitors
If CME enters the bitcoin spot trading market, it will be bad news for Coinbase. Although the majority of Coinbase’s revenue still comes from transaction fees charged to retail investors, the company’s first-quarter financial report indicates that its consumer trading revenue was $935 million and institutional revenue was $85 million. However, with the increasing interest of traditional institutions in cryptocurrencies, the pressure they bring to native exchanges should not be underestimated.
Earlier this year, with the approval and listing of bitcoin spot ETFs, Wall Street and financial institutions have shown increased interest in cryptocurrencies. This is also reflected in Coinbase’s performance. The consumer trading volume in the first quarter of this exchange increased by 93% compared to the previous quarter, and institutional trading volume increased by 105%. The revenue growth of Coinbase’s institutional business also exceeded that of its consumer business.
CME is the largest bitcoin futures exchange in the United States. According to Coindesk, the Chicago Mercantile Exchange (CME), headquartered in Chicago, has a history of more than a century and has been designated as a “systemically important financial market facility” by US regulatory agencies. This means that CME is subject to stricter regulations, and many investors believe that the government will never allow CME to collapse under financial pressure. In terms of open interest contracts, CME is already the largest bitcoin futures exchange in the United States.
A common reason why traders do not want to engage with digital assets is the lack of trust in cryptocurrency exchanges. The recently launched bitcoin spot ETF provides traders with a safer way to obtain exposure to bitcoin. Bitwise previously estimated that in the first quarter, over 700 institutions held positions in bitcoin spot ETFs, with total assets under management reaching $5 billion.
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