Bitcoin rose to a new record high over the course of the week. This is primarily due to demand from institutional clients. They can now trade crypto assets via a regulated crypto spot platform operated by Deutsche Börse.
March 14, 2024 FRANKFURT (Frankfurt Stock Exchange). After the "sell the news" reaction following the approval of the first Bitcoin spot ETFs in the US, cryptocurrencies have resumed their upward trajectory in recent weeks. And how. Bitcoin has risen by 90 percent since the correction low in January. In the past six months, the price has almost tripled.
Hartmut Giesen from Hamburg-based Sutor Bank believes the main reason for the impressive rally is the enormous inflows from Bitcoin ETFs. "This time it is not private investors who are driving the market, but institutional investors". According to his calculations, Bitcoin ETFs are currently buying up to ten times more Bitcoin than is being produced by the miners. The specialists at 21Shares point out that Blackrock's Bitcoin ETF alone has attracted capital amounting to 10 billion dollars in less than two months. It took the first gold ETF two years to attract the same amount of capital flows.
Crypto trading in Europe: outflows for Bitcoin, inflows for Ether
Benjamin Dean from WisdomTree also currently sees an "imbalance between supply and demand", which he believes is also linked to the upcoming Bitcoin Halving in April. This is a regular halving of the reward for Bitcoin miners. Nevertheless, exchange-traded Bitcoin products in Europe recorded net outflows in February, which is attributed to shifts into the new Bitcoin spot ETFs in the US. According to Dean, "this mainly affected synthetic Bitcoin products, which have been suffering outflows in Europe for years".
The situation is completely different for the second-largest cryptocurrency, ether. According to 21Shares' monthly report, the corresponding products recorded by far the largest net inflows in February. This is probably mainly due to rumors surrounding the approval of Ether spot ETFs in the United States. Since the dip in January, the price of ether has risen even more strongly than bitcoin. The crypto specialist at WisdomTree believes that the long-term underperformance against Bitcoin could be reversed in the long term. "The BTC/ETH ratio is something to keep an eye on in the coming months, when Ether ETFs could be introduced in the US."
Profiting from rising prices with leveraged products
In Vontobel's derivatives trading, however, investors continue to focus on the "mother of all cryptocurrencies", as David Hartmann puts it. 85% of all trades in the crypto sector over the past four weeks were attributable to Bitcoin. Among the predominantly traded leverage products, long structures were in particularly high demand with a share of 92%. According to the derivatives specialist, three now moderately leveraged mini long futures on the Bitcoin future (DE000VM98EU0, DE000VM922G2 and DE000VD07JC7) were bought the most. However, customers are also increasingly focusing on Ether products. In relative terms, the 300% increase in demand for executed trades is significantly greater than for Bitcoin products (130%). However, this is also starting from a much lower level.
Regulated crypto spot platform of Deutsche Börse
Interest in crypto assets is also increasing among institutional investors. Deutsche Börse has responded to this. The Deutsche Börse Digital Exchange (DBDX) crypto spot platform launched last week provides interested clients with a comprehensive range of innovative and secure solutions from a single source and across the entire value chain. DBDX offers a fully regulated and secure ecosystem for trading, settlement and custody of crypto assets and utilizes the existing connectivity of market participants. It is supported by Crypto Finance (Deutschland) GmbH.
DBDX is seen as an important step in the necessary further development of the market for digital assets.
By establishing trustworthy markets for crypto-assets that are characterized by transparency and security and in which the processes comply with regulatory requirements, the integrity and security of the entire market is to be strengthened. Initially, trading in Bitcoin and Ether will be possible via the crypto spot platform. The first transactions on DBDX have already been traded and settled by ICF Bank and Bankhaus Metzler as pilot customers.
Bernhard Wenger from 21Shares believes that the introduction of DBDX "will have a positive impact on institutional adoption and consequently also on crypto ETCs". The new offering provides investors with additional options. For Jan Altmann from the ETC Group, regulated and transparent trading venues for cryptocurrencies are "always welcome". In his opinion, they provide more confidence for the group of investors who still view cryptocurrencies with skepticism. "I think that more market participants like Deutsche Börse can get more investors excited about this segment." He also hopes to see an increase in liquidity in crypto ETPs on Xetra when professional trading participants trade on DBDX.
By Thomas Koch, 14 March 2024 © Deutsche Börse AG<
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Thomas Koch is a CEFA investment analyst, investment specialist for structured products and certified certificate consultant. He has been a freelance journalist covering events on the capital markets since the beginning of 2006.
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