Friday, June 30, 2023

BTC against the signals, crypto custody, a new CME product and more...

“Never follow anyone else’s path. Unless you’re in the woods and you’re lost and you see a path. Then by all means follow that path.” – Ellen DeGeneres ||

Hello everyone! I expect some of you are getting ready to enjoy a long holiday weekend in the US. If so, and even if you’re not, I hope the sun shines and the drinks are cold.

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Programming note: The daily Crypto is Macro Now will publish on Monday, July 3, but not on Tuesday, July 4.

WHAT I’M WATCHING

BTC narrative. Despite better-late-than-never market acceptance that there will be no rate cuts this year, BTC is holding up remarkably well. This sends a strong signal. More on this below.

Crypto derivatives. The CME Group will launch ETH/BTC ratio futures on July 31, if approved by regulators. That one of the world’s largest derivatives exchanges is expanding its crypto offering is an encouraging sign of growing interest from US institutional investors. It will be intriguing to see how this product does, given that BTC futures volumes on the CME have grown significantly this year, while those for ETH are still below January levels.

NFT engagement. Lacoste joins the brands experimenting with community engagement via NFTs. Yesterday, they announced the launch of “The Mission”, in which the brand’s UNDW3 NFT holders can access a series of “quests” which unlock further rewards. The gamification of collecting? We’re likely to see more initiatives like this since they seem to work (witness Starbuck’s successful NFT-based rewards program), and since launching them is getting easier with the proliferation of NFT-as-a-service platforms such as that launched this week by Crossmint and that offered by SAP.

Crypto custody. The loss of approximately $80 million of customer funds held by crypto custodian Prime Trust, disclosed last week by the Nevada Department of Business and Industry, is a worrying signal that crypto custody has not totally been “solved”, as many believed. The issue stems from astonishingly poor key management (from a regulated trust company!) rather than from a problem with the assets or the blockchains, although it is a cold reminder that centralized custody may be convenient but carries risks. The thing is, institutional investors have to use third-party custodians. We can hopefully assume that others such as Coinbase have been smarter with internal processes, but this event is likely to trigger calls for tighter regulation on digital asset custodians, which will be a good thing. Trusted custody is a key pillar of crypto investment, there should be no doubt whatsoever that customer funds are safe.  

MARKETS

Against the signals