The Zhitong Finance App learned that by the close of the US stock market on Thursday, the cryptocurrency exchange Coinbase (COIN.US) had plummeted by more than 9% to $199.170, falling below the $200 mark. Earlier, some media reported on Thursday that due to the strong interest of institutional customers, the Chicago Mercantile Exchange (CME), the world's largest futures exchange, may soon provide the exchange's customers with a Bitcoin spot trading path.
Cryptocurrency prices generally rose on the same day. The CoinDesk 20 Index, which tracks the 20 largest digital tokens by market capitalization, including Bitcoin, has risen 0.91% over the past 24 hours. Bitcoin's price has risen more than 4% in the last week, continuing to profit from Wednesday's better-than-expected US inflation report. Since the beginning of this year, with the general rise in cryptocurrency prices, the stock price of the cryptocurrency exchange Coinbase has risen by nearly 20% so far this year, and the quarterly increase in the first quarter was even more than 50%. The stock price adjusted sharply in the early second quarter due to a decline in expectations of the Federal Reserve's interest rate cuts.
The Chicago Mercantile Exchange (CME), headquartered in Chicago, has a history of over a century and is the world's largest futures exchange and financial market futures trading empire.
From its inception until now, Coinbase has been lucrative due to its status as the most trusted cryptocurrency exchange in the US, but this advantage could be completely changed if CME officially joins in. Investors are beginning to worry that once a huge traditional financial giant like CME opens up Bitcoin trading channels, crypto asset exchanges such as Coinbase may face a very severe competitive situation, and the various advantages of exchanges such as Coinbase may completely disappear in front of CME.
CME has been designated as a “systemically important financial market utility” by US regulators, which means it will be subject to the US government's stricter regulatory system, but it also means safer investor protection guidelines. The title “systemically important” often means that the government will never let the Chicago Mercantile Exchange go out of business during any financial crisis; its importance is comparable to Wall Street commercial banking giants J.P. Morgan Chase and Bank of America.
According to reports, Bitcoin futures contracts have previously been traded at CME for a long time. The Chicago Mercantile Exchange is already the largest Bitcoin futures exchange in the US in terms of open positions.
Institutional investors are increasingly interested in investing in cryptocurrencies
According to media reports, the exchange said it has been holding meetings with traders who want to trade Bitcoin on a regulated exchange market. Unlike Coinbase, which mainly serves retail investors in the cryptocurrency market, if CME successfully launches a Bitcoin spot trading path, institutional participants may occupy an important position.
Some analysts said that a common reason Wall Street financial institution traders are generally unwilling to access digital assets is that they lack a high level of trust in cryptocurrency exchanges, especially after a series of cryptocurrency exchange participants with bad credit have come to light in recent years, including FTX, a crypto trading agency that was once very popular in the cryptocurrency market. The agency declared bankruptcy due to a debt hole exceeding 10 billion US dollars.
According to information, the recently launched Bitcoin spot exchange traded fund (Bitcoin ETF) not only enabled retail investors to participate, but also attracted a large number of investment institutions from around the world. ETFs can be said to provide a safer way to invest in cryptocurrencies. This also reflects the enthusiasm of institutional investors to invest in Bitcoin, a cryptocurrency. More concerns may come from the transaction security level. In the first three months alone, more than 500 institutions participated in trading Bitcoin ETFs, allocating more than $10 billion in these issued ETF funds alone. The rest, over $40 billion, came from retail investors.
Among institutional participants, the hedge fund Millennium Management, which holds at least four Bitcoin ETFs with a total value of around $2 billion, stands out. Additionally, Steven Cohen's Point72 Asset Management and Elliott Investment Management are active participants in this field. Other investors include the Wisconsin Investment Commission, Bank of Montreal, and companies from Hong Kong, the Cayman Islands, Puerto Rico, Switzerland, etc.
Investment banking giant Morgan Stanley is also a significant holder of Bitcoin ETFs. According to market insight company Fintel, Morgan Stanley purchased 4.27 million Grayscale Bitcoin Trust (GBTC) shares worth $269.8 million on May 15. This investment act shows that Wall Street financial giants are incorporating Bitcoin, the world's largest market capitalization cryptocurrency, into their portfolios.
Stephane Ouellette, CEO of FRNT Financial, pointed out that the growth of Bitcoin ETFs cannot be attributed solely to retail investors' purchases; Wall Street portfolio managers, major institutional investors, and investment banks have begun experimenting with entering this field.