TradFi execs say crypto derivatives will play larger role in Bitcoin’s future

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Bedroom crypto traders and analysts have frequently expressed concern at Bitcoin’s (BTC) inability to overcome its all-time high, but professionals from the Chicago Mercantile Exchange (CME), TradingView and TJM Institutional Services believe that the launch of a spot Bitcoin exchange-traded fund (ETF) will play a key role in sending BTC’s price to the highs traders dream of. 

Consensus panel on the future of crypto derivatives markets. Source: Ray Salmond/Cointelegraph

While speaking at Consensus on the role crypto derivatives will play in tomorrow’s market, TradingView general manager Pierce Crosby explained that derivatives have always been an integral part of the crypto traders’ experience, but trading on centralized exchanges available from 2015 to 2022 meant many spot and margin traders had their “face ripped off” by high fees and slippage.

Crosby said:

“On the retail side of things, the ETF is a great way for investors to quickly buy in and get out of the asset when necessary, primarily because you’re paying very low fees to get in and out.”

Regarding the potential impact that the spot Bitcoin ETF should have on BTC’s acceptance as a “valid” investment asset and its future price discovery, CME Group global head of cryptocurrency products Giovanni Vicioso said, “ETFs have brought in sidelined investors who were not comfortable with the centralized exchanges,” suggesting that “the deep liquidity of the CME contracts and the growth in their volumes” could be beneficial to Bitcoin’s price discovery.

Bitcoin: A canary in the coal mine or a corollary to stocks and commodities?

From 2017 until 2021, a handful of analysts predicted that Bitcoin would be a hedge against inflation and an asymmetrical performer against the stock market. The topic remains somewhat contentious among the investing crowds, but TJM Institutional Services managing director Jim Iuorio said that despite the correlation, or lack thereof, recent United States Treasury auctions are a red flag.

Iuorio said:

“Seven of the last 10 longer-duration Treasury auctions have been disappointing — some of them abysmal. My base case belief is the Fed will have to step in to support the market.”

Related: 3 solid indicators predicting BTC price rise to $75K in June

Iuorio explained that he believes the U.S. Federal Reserve will eventually have to cut rates and start easing again, and historically, loose monetary policy has been beneficial to stocks, risk assets and Bitcoin.

Regarding Bitcoin’s perceived correlation with traditional markets, Crosby said:

“We’re starting to see some of the larger institutional players attempting to shift the narrative that crypto is not just another corollary to tech stocks, the NASDAQ and QQQ.”

Crosby explained that crypto market price action at times does follow stocks, gold and oil and that crypto is also negatively impacted by internal black swans like the implosion of FTX exchange and large centralized decentralized finance businesses, but “once the market realizes that the crypto sector has little to do with its supposed corollary, we see the crypto market begin to recover.”

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