Crypto Derivatives Maintain Strong Demand, Exec Says – The Street Crypto: Bitcoin and cryptocurrency news, advice, analysis and more – TheStreet

Welcome to The Ask, where each week Crypto Investor interviews essential voices doing the work to make crypto ‘mainstream.’ Exchange lightly edited.

This week, editor-in-chief Michael Bodley spoke to Gary Worrall, CEO of Crypto Facilities. The UK-based Kraken subsidiary specializes in the trading of derivatives. Worrall spoke about derivative flows and touched on reaction to Bitcoin ETFs getting the greenlight in the U.S.

What kind of exposures are institutional European investors looking for in terms of derivatives? What are you hearing from the market?

Worrall: (We were originally trading) as a broker-dealer license. So, I mean, in a regulated way, I guess these products have been trading for two, three years, maybe a little bit longer. You know, I think, as you probably expect, the majority of the volume and open interest is in Bitcoin and eth. I think there’s a mix. 

You know, I think our longest-term contract, for example, is a semi-annual on the Bitcoin and eth. I think there’s not too much demand for longer than that at this point. Crypto, I think, (moves in) sometimes quicker cycles than maybe in traditional. But we also offer a perpetual future, which tends to be our most popular. 

Obviously, that’s a shorter time horizon. (The contract) effectively auto settles or rolls over every four hours. So, you could technically keep that position open for longer. But that by far is our most popular product.

Have you been paying attention to Bitcoin ETF approvals in the U.S.? I’m wondering what the reaction has been in the UK.

Worrall: Yeah, I mean, you’ll see ETFs I think as an important part of the industry maturing and growing and allowing new investors to access the assets effectively. So, we keep an eye on that as an industry as a whole. 

For example, one of the other Kraken subsidiaries, CF benchmarks. They provide the index for CME and for ourselves, and, obviously, the ETF is effectively based off the CME contract. So, you know, we’re kind of all involved in that the same kind of infrastructure has been built out behind the scenes effectively to offer these products out. 

Where do you expect flows to go derivative-wise in terms of volume through the end of the year? Looking forward to next year, are you projecting an increase?

Worrall: 2021 has been a pretty big year for us. I think we’re sort of 4x, what we were in 2020 already. Obviously, you know, a lot of our volume is driven by the volatility in the underlying (markets.) (Toward the end of the year) there tends to be a bit more volatility, potentially. So that normally is good for our business model. Hard to say … But I think we’re probably hoping for a strong end of the year.

What happens if more of a crypto bear market sets in and prices become suppressed? Do you think there’s going to be lower institutional interest if that happens?

Yeah, I think so. I mean, derivatives still form a part of the price discovery. Obviously, you know, when things are bearish, there’s probably less interest in interest in the lying asset and therefore there’s less (money flowing toward it in) general, but I think there’s still a place for it  for people taking a longer view or looking to trade a little more capital efficiently. So, those things still stand even in a bear market, even if the volumes are a little bit lower, as you’d see across all kinds of crypto products.

Welcome to The Ask, where each week Crypto Investor interviews essential voices doing the work to make crypto ‘mainstream.’ Exchange lightly edited.

This week, editor-in-chief Michael Bodley spoke to Gary Worrall, CEO of Crypto Facilities. The UK-based Kraken subsidiary specializes in the trading of derivatives. Worrall spoke about derivative flows and touched on reaction to Bitcoin ETFs getting the greenlight in the U.S. Subscribe for full article

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