Huobi Global, one of the few international cryptocurrency exchanges that support Ethereum derivatives, is attracting the most trading volume for its ETH Futures judging from statistics. With $449 million worth of ETH trading volume registered in the last 24 hours, Huobi Global’s volume is more than 3X that of BitMEX and more than 20X of Deribit’s. This is barely two weeks before the Istanbul hard fork.
Huobi DM smashing the competition these last couple of days in terms of ETH Futures Volumes. pic.twitter.com/Hd7B7NASdZ
— skew (@skewdotcom) November 26, 2019
Liquidity and Capital Inflow
Derivatives are indispensable in heavily regulated traditional markets. With the participation of regulators who monitor trading systems, preventing market manipulation, Futures and Exchange-traded-funds are preferred investment vehicles for investors who want to hedge their portfolio. However, within the cryptocurrency circles, derivatives approval faces several setbacks.
First, regulators are concerned about manipulation with tactics such as wash trading so rampant. Second, the lack of regulation could mean the exposure of good meaning investors who are honestly seeking opportunities for growth. Therefore, the US SEC is reluctant to act quickly and democratize the space. Although other countries, like those in Switzerland, have taken this step and approved several derivative products of other liquid assets as ETH and XRP, the US SEC is cautious.
Should cryptocurrency derivatives be mainstream, the liquidity of underlying assets would receive a liquidity boost as institutions, always seeking for reassurance flow back, inject millions if not billions of dollars into the market. That no doubt will have a direct effect on crypto prices.
Huobi Global Outages and Service Disruption
While Huobi Global is one of the largest cryptocurrency exchanges in the world, latest news has it that the platform is experiencing an outage that has lasted for several hours now. Contacted, the exchange’s COO, Robin Zhu, told Dovey Wan, the Founding Partner of Primitive Crypto, that the downtime was due to a technical malfunction.
— Dovey 以德服人 Wan ? ? (@DoveyWan) November 27, 2019
Blackouts are common whenever the Singapore-based exchange updates their system. In April, users were left scratching their heads after a severe disruption prevented them from trading. Hours before this, Whale watchers observed a large chunk of BTCs flowing into Huobi Global’s wallet.
— Whale Alert (@whale_alert) April 2, 2019
The US CFTC Could Approve an ETH Derivative Product
Investors expect the U.S. Commodity Futures Trading Commission (CFTC) to approve an ETH-based derivative as per the words of Heath Tarbert, the new Chairman of the agency within the next six months to one year despite the thin volumes of ETH derivative products offered outside the US.
“I’d say it is likely that you would see a futures contract in the next six months to a year. The volume to which it’ll trade, no idea, that’s where the markets decide, but my guess is now that we’ve provided at least … a little bit more clarity on [ether’s eligibility for futures contracts], my guess is market participants will consider that.”