September 2019 Crypto Analysis - What Is The Expected Impact of New Derivatives Products?
Research View - Options on the Futures1
In September 2019, the total marketcap of the cryptocurrency and digital asset industry remained quite flat for most of the month, with a total valuation remaining below $300 billion. Large altcoins exhibited some minor rebounds with Ethereum and XRP, trading respectively above $200 and $0.30 in mid-September. However, the market tanked on September 24th and since then, Bitcoin has been traded around $7800-8,000 (Ethereum around $170).
From the trading perspective, the industry continues its fast development with the creation of new derivatives platforms and products. Firstly, Binance launched two derivatives platforms: Binance Futures and Binance JEX. Following a widely anticipated wait, Bakkt launched the first physically-settled futures contract on Bitcoin on September 23rd. Despite low volumes post-launch, these are likely to pick up in the medium term. On the other hand, the CME confirmed its plans to launch Bitcoin options in Q1 20202, which will lead to new opportunities for all market participants, such as miners and traders, to build complicated trading positions.
The question of price oracles was once again put on the front, in line with the rapid growth of decentralized financial protocols. Following last month's announcement by Compound of its Open Oracle System, Binance Launchpad was able to help Band Protocol raise successfully $5.85 million on September 17th3. Likewise, ChainLink announced its dedicated connection to Binance’s API4.
October 2019 promises to be an exciting month with many questions waiting to be answered. Will gas fees on Ethereum keep increasing? Will the Telegram Open Network launch? Where will the Bitcoin dominance head to?
Crypto spot markets
Table 1 - Main assets by market cap (data as of September 29th UTC midnight)
| Ticker | Name | Monthly change (%) | Avg. daily Binance volume (USDT) | EOM marketcap in USD |
|---|---|---|---|---|
| BTC | Bitcoin | -16.09% | 657.5 M (-16.5%) | $145.6 B |
| ETH | Ethereum | -0.24% | 205.9 M (69.1%) | $18.4 B |
| XRP | XRP | -7.02% | 79.3 M (47.4%) | $10.0 B |
| LTC | Litecoin | -15.87% | 59.7 M (1.4%) | $3.4 B |
| BCH | Bitcoin Cash | -21.46% | 43.4 M (6.0%) | $3.9 B |
| BNB | BNB | -29.55% | 69.9 M (-21.1%) | $2.4 B |
| EOS | EOS | -15.96% | 74.3 M (85.1%) | $2.6 B |
| XLM | Stellar Lumens | -6.61% | 19.3 M (336.5%) | $1.2 B |
| XMR | Monero | -17.05% | 22.8 M (13.9%) | $968 M |
| ADA | Cardano | -16.77% | 10.2 M (47.3%) | $972 M |
Table 2 - September 2019’s monthly top 3 gainers on Binance.com
Table 3 - September 2019's monthly top 3 losers on Binance.com
Table 4 - New CEX listings in September 2019
| Ticker | Name | Pair asset(s) | Listing date |
|---|---|---|---|
| CHZ | Chiliz | BTC, BNB, USDT | September 5th |
| BUSD | Binance USD | USDT | September 20th |
| BEAM | Beam | BTC, BNB, USDT | September 20th |
| XTZ | Tezos | BTC, BNB, USDT | September 23rd |
| HBAR | Hashgraph | BTC, BNB, USDT | September 24th |
Furthermore, it is worth noting that Tron (TRX) was added as a quote currency in the ALTS markets on September 4th, with the creation of two new trading pairs against BitTorrent (BTT) and WINk (WIN).
On-chain markets on Binance DEX
In September 2019, 9 new listings were approved. In comparison, 21 assets were listed in August and 41 in July.
Table 5 - New DEX listings against stablecoin in September 2019
| Ticker | Name | Pair asset(s) | Listing date |
|---|---|---|---|
| THKDB | TrueHKD Binance | BNB | 4th September |
| IDRTB | Rupiah Token | BNB | 16th September |
In September 2019, two new stablecoin quote assets were added to the Binance DEX:
- Rupiah Token (against BNB).
- True HKD (against BNB).
As discussed in one of our previous reports about stablecoins, one of the axes of innovations from stablecoin providers is the support for new collaterals. Specifically, these new offerings offer additional channels for global remittance and the ability to hedge against fiat currency risk. Besides, new stablecoin currencies should allow greater price efficiency with non-USD fiat exchanges, and could potentially lead to the creation of FX markets on-chain (as long as their respective circulation supplies become large enough).
Chart 1 - Volumes on Binance DEX (in $ million)
Sources: Binance Research, Binance Chain
While experiencing, for a third consecutive month, a decrease in volume (in line with the overall decrease in the price of BNB), Binance DEX maintained high volumes amongst all decentralized exchanges5 with a median daily volume of $2.2 million. Despite the addition of two new stablecoins, the volume on stablecoin pairs only accounted for less than 2% of the total exchange volume, possibly owing to a restricted number of assets available i.e., 8 pairs with 5 base assets traded.
Borrowing and lending markets
Table 6 - New pairs eligible for margin trading in September 2019
| Ticker | Name | Pair asset(s) | Date |
|---|---|---|---|
| ATOM | Cosmos | BTC, USDT | September 17th |
| DASH | Dash | BTC, USDT | September 18th |
| ZEC | ZCash | BTC, USDT | September 18th |
| MATIC | Matic Network | BTC, USDT | September 24th |
On the lending side, new subscriptions were offered for many new assets such as ChainLink (LINK), Monero (XMR), DASH, EOS, Litecoin (LTC), XRP, and ZCash (ZEC).
Table 7 - Overview of lending subscriptions in September 2019
| Ticker | Maturities | Lending rate range (annualized) | Borrowing rate range (annualized) |
|---|---|---|---|
| BTC | 14 days | 3 - 3.25% | 5.84 - 7.30% |
| BNB | 14 days, 28 days | 6 - 10% | 87.60 - 109.50% |
| USDT | 14 days, 28 days | 8 - 10% | 8.02 - 10.03% |
| ETH | 14 days | 6% | 5.84 - 7.30% |
| ETC | 14 days | 7% | 11.68 - 14.60% |
| ADA | 14 days | 6% | 5.84 - 7.30% |
| XRP | 14 days | 6 - 7% | 5.84 - 7.30% |
| LTC | 14 days | 7% | 5.84 - 7.30% |
| DASH | 14 days | 3.5% | 5.84 - 7.30% |
| ZEC | 14 days | 3.5% | 5.84 - 7.30% |
| XMR | 14 days | 3.5% | 5.84 - 7.30% |
| LINK | 14 days | 6% | 5.84 - 7.30% |
| EOS | 14 days | 6% | 5.84 - 7.30% |
Views from Binance Trading
This section is prepared by Binance Trading, one of the world’s most liquid OTC desks for cryptocurrencies and digital assets6. The content reflects solely the views of Binance Trading.
Red, red, and more red
The month of September was a bloodbath for the crypto-markets. Bitcoin stayed above $10,000 for most of June through September but has since plummeted to $8,000. Altcoins saw a brief glimpse of hope before the BTC price drop, lowering Bitcoin dominance to 67% at one point (dominance levels reached 71% in early September). Despite the sudden BTC price drop, **altcoins have managed to hold up relatively well, and BTC dominance levels are currently around 68%. We initially expected this sudden drop in the price of Bitcoin to bring BTC dominance higher. However, unlike historical cases (i.e., altcoin prices dropping more than BTC), altcoins did not fall more than BTC. Some of these altcoins even obtained gains in BTC terms. One potential explanation may be related to the greater availability of stablecoin pairings7.
One possible reason, explaining Bitcoin’s price drop, could be the general indifference towards the much-hyped release of Bakkt, as BTC prices dropped over $1,000 a day or so after trading began. Could it be another classic case of the "buy the news, sell the rumor" phenomenon that occurs in the crypto-industry? Bakkt was touted by many "crypto-observers" as an additional primary channel to bring large institutional flows into cryptocurrency and digital asset markets. It may certainly still do so in the future, as illustrated by the CME futures sluggish start and subsequent pick-up in volumes. Short-term wise though, Bakkt’s disappointing start seems to have been a contributing factor to the recent price decline.
Our OTC desk predominantly saw sell flows, even more so than in recent months. Many traders moved out of their altcoin positions throughout this month, and out of BTC positions when prices were hovering around $10,000. It hasn't been long since BTC dropped to $8,000, but there weren't many traders looking to "buy the dip." It seems as though traders are unsure about whether BTC will go back to the $10,000 range, or drop even further, and are waiting before taking any measures. Once again, BTC dominance will need monitoring as altcoins gained some ground on BTC for the first time in a few months.
- Finished on September 29th 2019. Futures markets will be covered in these reports, starting next month.↩
- https://www.cmegroup.com/cme-group-futures-exchange/options-bitcoin-futures.html↩
- https://medium.com/bandprotocol/band-protocol-binance-launchpad-summary-de2b8cb1e39a↩
- https://docs.chain.link/docs/binance-chainlink-testnet↩
- Compared to IDEX, Uniswap, Waves, Kyber, Switcheo.↩
- If you wish to trade large volumes with an efficient settlement procedure and competitive quotes, join Binance Trading on Telegram or send an email to tradedesk1@binance.com. Please reach out to one of the official traders on the channel, confirm your account and get ready to exchange the world.↩
- This idea was also developed by Binance Research in its first report about crypto-correlations. One section discusses the importance of USD and stablecoins pairings.↩