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MakerDAO & DAI, Bitcoin Trading Volume is Fake, CME Futures – COIN360
March 25  |  1 min read

Do You Believe?

BeQuant Analytics, a daily cryptocurrency market analysis contributor

Decentralized Finance (DeFi) adoption is set to accelerate moving forward, and the pain thresholds associated with higher borrowing rates may have been severely underestimated, especially given the broad-based valuation collapse of cryptocurrency assets over the course of 2018. As such, the base case scenario for being long Ethereum still stands, even in spite of the recent stability hike by MakerDAO/Dai. As a guide, a total of 58 addresses participated in the recent stability fee hike, representing 0.58% of MKR crypto holding addresses, of which 73.2% voted in favour of the highest hike, 17.9% in favour a 2% increase, and just 8.9% to maintain the status quo. Another reason why DAI coin’s reaction to rate hikes has been less forceful is that rather than acquiring Dai on crypto exchanges, those closing out CDPs instead borrowed Dai on Dharma Lever, where borrowing rates are currently subsidized at 0.1% APR. Borrowing, rather than purchasing, allows CDP holders to maintain long exposure to ETH. As DeFi Pulse indicates, the total amount of USD locked in DeFi platforms is $331.4M with MakerDAO accounting for the vast majority of the locked funds. Leverage is here to stay and innovative approaches to leveraging trading positions will only gather more momentum as professional money managers enter the cryptocurrency markets.

Finally, a report published by the SEC and Bitwise Asset Management will remind new entrants into the fast-growing asset class that there's more to this market than meets the eye. In particular, despite the slowing down of the ICO market, there still seems to be plenty of fake in the Bitcoin trading volume. The key takeaways of the report are as follows:

A. 95% of reported BTC spot volume is fake

B. Likely motive is listing fees (can be $1-3M)

C. Real daily trading volume is ~$270M

D. 10 cryptocurrency exchanges make up almost all real trading

E. Most of the 10 are regulated

F. Spreads are <0.10%. Arb is super-efficient


  • CME Bitcoin futures will expire on 29.03.19 – Ahead of the expiration set for the coming week, the spread between March and the Perpetual contract stands at a mere 7bps, which is as to be expected considering what’s coming. However, the June to Perpetual contact spread is also only 40bps, which is historically very expensive. This is likely linked to heavy participation in the front month, which significantly skews the longer-dated contracts. Expect the spread to re-widen after the March contracts expire.

Thank you for reading,

The BeQuant’s Analytics team