It feels a bit silly to talk about traditional markets when the crypto space outperforms by so much. Since the last morning update, on the 30th of December, a lot has happened. Sure, the S&P and the Nasdaq are up, treasuries are up and the dollar is down but all of them by marginal amounts. Maybe gold is the good surprise, back above $1,900 after a number of ‘up’ days.
Yesterday, we saw the return of the dollar and treasuries against equities and gold. While markets welcomed the resolution in the US stimulus bill, the new coronavirus strain reported in the UK (and the ensuing lockdowns) dampened some of the enthusiasm.
Macro and Crypto Markets
What are derivatives? Derivatives have been around for millennia; their use can be traced back to ancient times when people bartered with one another to trade perishable goods such as grain and livestock. They gained widespread popularity during the rise of the financial services sector, when newer valuation techniques were created in the 1970s and rapidly developed the derivatives market. It is difficult to imagine modern finance without derivatives now.
The extreme volatility of the cryptocurrency markets has long caught the attention of the traditional financial space. However, what started out as outright dismissal has gradually led to increased participation and now, some may argue, institutional traders are leading the charge. As the regulatory framework has become clearer and the infrastructure more resilient and robust, institutional crypto trading has taken off in earnest.
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