RESEARCH
BEQUANT Crypto&Coffee
The market continued to surge higher, as bullish news continued to flood the market. Despite the ongoing upside, the flow in the options market is less over exuberant and more measured, something that is very rarely said for digital assets. In fact, even as the spot advances towards $50k mark, the actual skew has shifted higher, signifying protection demand (granted this may be for various reasons). The same can be said for Ethereum, where the skew positioning would seem counterintuitive given the recent squeeze higher but it is worth remembering that yield farming activities require assets and not all market participants are content with running a naked position, hence the desire to hedge. Still, similarly to Bitcoin, spot is expected to remain bid. In terms of actual news flow, CoinDesk reported that BNY Mellon, the world's largest custodian bank with some $41 trillion in assets in its safekeeping, is moving into crypto. Announced Thursday, BNY Mellon will roll out a new digital custody unit later this year, to help clients deal in digital assets, including cryptocurrencies. Furthermore, US capital markets are ready for a bitcoin exchange-traded product, U.S. Securities and Exchange Commissioner Hester Peirce said on CoinDesk TV Thursday. The regulator playfully known as "crypto mom" said people are already eager to trade a bitcoin ETP, "and so if we don't give them the natural way, which I think would be an ETP, they are going to look for other (less optimal) ways to do it." While PayPal could be to central bank digital currencies (CBDCs) what private banks are to physical dollars. The company's CEO, Dan Schulman, laid out a vision during its investor day on Thursday for PayPal's digital wallets being the means by which central banks distributed CBDCs to consumers across income levels. The bullish sentiment did not escape the DeFi markets, with SushiSwap posting gains of close to 20% as market participants reacted to a whole host of positive developments. First, it was reported that Coinbase Custody will support deposits and withdrawals for Sushi Swap. Furthermore, it also came to light that Grayscale has filed to register a whole host of trusts that include DeFi assets, such as Aave, Compound, Uniswap, Sushiswap and many others. DeFi may still be seen as risky side of digital assets ecosystem but considering the exponential growth in the total value locked, which currently stands at $40 billion, Grayscale's move to introduce various additional platforms shows growing appetite from the more institutional crowd. Thus, the current valuation will also rise accordingly as a result of further capital inflow.
