This podcast episode features Dennis, a crypto derivatives trader at SEBA bank, and Marty, a crypto native. The discussion revolves around the recent shift in Bitcoin and Ethereum volatility, the impact of Ethereum’s transition to proof of stake, and the potential approval of a Bitcoin ETF. The hosts also delve into the Swiss regulatory framework for digital assets and the state of the structured product market in crypto.
Bitcoin vs. Ethereum Volatility Shift
- Volatility Reversal: The podcast highlights a recent shift in the volatility relationship between Bitcoin and Ethereum. Ethereum’s volatility, which had been trading under Bitcoin’s for most of the year, has now reversed. This change coincides with Ethereum’s transition to proof of stake and its increasing use as a yield asset.
- ETF Influence: The BlackRock ETF filing for Ethereum and the ongoing narrative around the approval of a Bitcoin ETF are discussed as potential reasons for the volatility shift.
- Market Impact: The hosts also mention the recent XRP pump and dump incident and its impact on the market, as well as the structural factors affecting the Ethereum volatility market, including the overrider supply and the impact of margin requirements.
Swiss Regulatory Framework
- Regulatory Clarity: Switzerland’s regulatory framework for digital assets is highlighted for its early entry into the crypto market and the legal clarity it offers. This framework supports businesses dealing with blockchain technology and maintains an open dialogue with the industry.
- Investor Protection: Switzerland’s structured product markets, regulated by finma, are known for promoting investor protection and transparency. This attracts high net worth individuals seeking capital protection and tax efficiency.
- Regulated Entities: The advantages of dealing with a regulated entity, such as legal clarity, high compliance standards, and reduced risk of fraud and malfeasance, are discussed.
Structured Product Market in Crypto
- Market Trends: The structured product market on crypto has seen a decline in volumes, with most activity happening in ETps and plain vanilla options. Exotic structured products have demand in the market, but it may be too early for big institutions to adopt them due to cautiousness.
- Institutional Adoption: Institutional adoption of structured products may be supported by ETFs and mass adoption, but it is not there yet. Clients are more comfortable putting capital with regulated entities rather than on offshore exchanges due to additional services offered, such as custody, lending, and staking solutions.
- Access Limitations: Onboarding and regulatory frameworks can limit access to structured products and derivatives for institutional clients.
- Bullish: The podcast expresses a bullish sentiment towards the Swiss regulatory framework for digital assets, praising its early entry into the crypto market, legal clarity, and support for businesses dealing with blockchain technology.
- Neutral: The sentiment towards the volatility shift between Bitcoin and Ethereum is neutral. While the hosts discuss the potential reasons and impacts of this shift, they do not express a clear positive or negative sentiment.
- Bearish: A bearish sentiment is expressed towards the current state of the structured product market in crypto, noting a decline in volumes and the cautiousness of big institutions towards adopting exotic structured products.