The Importance Of Bitcoin Futures Has Been Understated According to the JP Morgan Team
Bitcoin Futures, while starting off with a certain dose of skepticism in the minds of companies like J P Morgan, may, in fact, be far more important that any in the market care to have previously thought. This is according to recent statements made by J P Morgan Chase.
Some recent reports from Bitwise, the Cryptocurrency Asset Managment company, as well as the research organization – the Blockchain Transparency Institute. Each of these organizations indicate that there is only a small percentage of reported trading that may actually be authentic. As a result, if only around 5 percent of reported during trading in May worth around $725 billion is actually genuine, it would mean that the actual volume of Bitcoin trading on crypto exchanges over this month is $36 billion. This is all according to a report written by JP Morgan strategists such as Nikolaos Panigirtzoglou during Friday, working in conjunction with data from the analytics firm – Coinmarketcap.
This newly published statistic is in stark contrast with the estimated aggregate volume of around $12 billion on the CME and CBOE futures contracts, according to JP Morgan, this on its own being a jump from the $5.5 billion previously discovered back in April of this year, as well as a monthly average of around 1.8 billion dollars during the first quarter of this year.
One of the implications of this report is that,
“The importance of the listed futures market has been significantly understated,” according to Panigirtzoglou, who further discloses that “the report by Bitwise credits the traded futures as an important development in allowing short exposures that enabled arbitrageurs in properly engaging in arbitrage, and that the futures share of spot Bitcoin volumes increased sharply in April/May.”
Bitwise further added within the report filed with the support of the United States Securities and Exchange Commission (SEC) back in March that some exchanges have since been found guilty of artificially inflating their trading volumes in order to pull themselves higher up within rankings. This would allow them to attract more users to their platform and, as a result, generate more fees from them. CoinMarketCap.com, which operates as a well known and large-scale aggregator of market analytics from the cryptocurrency world, had previously stated that concerns regarding these kinds of inaccuracies “are valid.”
“The overstatement of trading volumes by cryptocurrency exchanges, and by implication the understatement of the importance of listed futures, suggests that market structure has likely changed considerably since the previous spike in Bitcoin prices in end-2017 with a greater influence from institutional investors,” JPMorgan said.