Crypto Frontline

Cryptocurrencies started the week on a positive tone during the Asian session, following a Bloomberg report suggesting that a new Hong Kong-based exchange will launch futures contracts for Bitcoin, Ether, and Bitcoin Cash.

There seems to be a greater interest for cryptocurrency-related derivatives as compared to the spot market, and that is happening because investors are still waiting for further regulatory clarity. At the present time, the volumes traded on the spot markets are relatively equal with the ones from the derivatives market, an approximately $3 billion per day.

CoinFLEX to compete with Bakkt

We’ve seen in a previous article how the ICE-owned platform Bakkt postponed the launching of the first physically-settled Bitcoin futures contract. Due to this delay, the unit of the UK exchange Coinfloor, previously called CoinfloorEX, and now CoinFLEX (Coin Futures and Lending Exchange) had already claimed it will be the first entity to launch the first physically-backed futures contract.

One of the co-founders of Coinfloor, Mark Lamb, will be the CEO of the new exchange based in Hong Kong, and he had already shown great confidence in the new crypto-related derivatives:

Crypto derivatives could become an order of magnitude larger than spot markets and the main thing that’s holding back that growth is the lack of physical delivery.

Tether involved as well

Another interesting aspect about the CoinFLEX futures contract is the use of Tether – a controversial token which is pegged to the value of the US dollar. There had been some concerns recently about whether the tokens are really backed by the amounts of dollars claimed by its founders.

Despite that, CoinFLEX futures will trade against Tether, which means for a long contract, parties will deliver Tether and receive Bitcoin, Ether, or Bitcoin Cash (depending on the contract involved), and for a short contract, it will be the other way around.

At the time of writing, all major cryptocurrencies are showing significant gains. Bitcoin is up by 6.48%, Ether advanced by 2.96%, and Litecoin, one of the tokens included in our last weekly crypto analysis, is up by 12.2% on a daily basis.

It seems like 2019 will be the year of cryptocurrency-related derivatives, a scenario which seems more and more plausible, considering that regulatory procedures are taking longer than expected and people are not confident to buy cryptocurrencies from the traditional exchanges. It’s sad to see things evolving at a slow pace, but as long as derivatives support token prices, crypto enthusiasts will be happy.