The Commodities Feed: Geopolitical Risks Build

ING

Economic

Commodity

Russia-Ukraine Conflict

Summary:

Oil prices have been somewhat insulated by the growing tension between Russia and Ukraine. However, natural gas prices have been more sensitive to these developments, while gold, as one would expect, has benefitted from safe-haven demand.

Energy – Natural gas proves to be more sensitive to geopolitical risks

Oil prices edged lower yesterday despite growing geopolitical risks related to Russia and Ukraine. Having fired a US made missile into Russia earlier in the week, there are reports that Ukraine has now fired British made missiles into Russia. For oil, the risk is if Ukraine targets Russian energy infrastructure, while the other risk is uncertainty over how Russia responds to these attacks. However, as mentioned earlier in the week, Iran’s pledge to stop stockpiling uranium does counter some of the geopolitical risk, with it potentially reducing some of the supply risks related to Iran ahead of President-elect Trump entering office.

EIA weekly data yesterday showed that US commercial crude oil inventories increased by 545k barrels over the last week with stronger crude oil imports (+1.18m b/d WoW) almost offset by stronger crude exports (+938k b/d WoW). For refined products, gasoline stocks increased by 2.05m barrels, while distillate stocks fell by 114k barrels. The gasoline build came about despite refiners reducing utilisation rates by 1.2pp over the week. Lower refinery activity was more than offset by weaker implied demand. Gasoline demand fell by 964k b/d WoW.

European natural gas has been unable to escape the rising tension between Russia and Ukraine. TTF settled almost 2.5% higher yesterday on the back of this growing geopolitical risk, while the market is also keeping a close eye on Russian pipeline flows to Europe after Gazprom halted supplies to OMV. However, up until now Russian pipeline flows via Ukraine remain stable. Meanwhile, European gas storage has fallen below 90% and is also now just below the 5-year average of 91% for this time of year. The narrowing that we have seen between Asian spot LNG and TTF should mean that Europe starts to pull in more LNG as we move deeper into the winter months.

Investment funds remain bullish towards the European gas market with them increasing their net long by a little more than 47TWh over the last reporting week to almost 273TWh, which is a record high. With storage not as high as initially expected going into the winter and a number of supply risks, speculators continue to favour gas from the long side.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

FxPro

Economic

Cryptocurrency

Market Picture

The cryptocurrency market cap is up 0.3% in 24 hours to $ 3.09 trillion. This slight increase masks an impressive altcoin pullback that failed to cap the 1% rise in BTC. However, sentiment indicators remain in extreme greed territory. Solana is down 3% overnight and around 6% from Tuesday’s high. Litecoin has pulled back 14% from Saturday’s high and is a few steps away from $100.

Bitcoin climbed close to $94K on Tuesday night, updating all-time highs. Unlike last week’s attack, the new highs were not followed by stop orders and margin calls from shorts. Instead, they moved into the $100K-plus area.

Like Litecoin, Ethereum is becoming a boring story. The rally in early November stopped just short of an overbought level, with profit taking at 61.8% of the initial momentum—significantly deeper than Bitcoin and the broader crypto market. Such an adherence to classic technical analysis may be convenient for traders, but it is hardly to the liking of enthusiasts, who have probably moved on to other altcoins.

News Background

In another recalculation, the difficulty of mining Bitcoin exceeded 102T for the first time in history. The average hash rate for the two-week calculation period rose to 755.3 EH/s.

According to JPMorgan, the hash price, a measure of Bitcoin mining profitability, rose 29% in the first half of November. The rally in BTC ahead of the hash rate increase and the increase in transaction fees as a percentage of block reward contributed to the significant improvement in mining economics.

MicroStrategy plans to issue a $1.75 billion five-year bond to be used for BTC acquisitions and general corporate purposes. The company’s reserves have reached 331,200 BTCs, on which it has spent ~$16.5 billion at an average purchase price of $49,874 per coin.

QCP Capital believes the ‘real altcoin season’ will begin after the bitcoin dominance index falls to 58% vs 59.4% now. Before that, by the end of the year, BTC could break through the psychologically important $100K mark.

According to the Financial Times, the Donald Trump-linked Trump Media and Technology Group (DJT) is in the advanced stages of a deal to buy struggling platform Bakkt.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Owen Li

Economic

Forex

UK Inflation Challenge

The UK continues its battle with inflation, and more importantly services inflation which ticked up slightly from September with a print of 5% vs the prior month’s 4.9%. The increase in headline inflation might also be a concern now as the annual inflation rate rose to 2.3% in October 2024, the highest in six months, compared to 1.7% in September.

Markets were expecting an uptick in headline inflation to around 2.2% while the MoM inflation number came in at 0.6% above the estimated 0.5% as well. The concern however remains with the service inflation number which is keeping headline inflation elevated.

Looking more closely at the data and a lot of the stickiness in the October number comes from categories that the Bank considers less important or less likely to show lasting inflation. This would include things like rent, airfares and package holidays which could in part explain the uptick in services inflation.

A good example of this is when looking at the core services inflation which strips out the data of rent and airfare and we have an entirely different narrative. Given there is no single definition for this, however it has been aptly broken down by ING Think which showed the ‘core services number’ had actually dropped from 4.8% to 4.5% in October.

Source: ING Think

This does not change a thing for the BoE when it comes to the upcoming December policy meeting. I still expect a 25bs cut following the recently released GDP numbers from the UK. Growth is beginning to turn sour, much like the European Union. This is something the BoE would like to avoid and in my opinion may factor heavily at the December meeting.

Based on probabilities, market participants are now pricing in around an 85% chance of a hold at the December 19 meeting with a possible rate cut in February given a 50% chance. This should in theory lend some support to the GBP as the US is expected to cut in December and the Bank of Japan is likely to continue hiking rates in 2025. Will such a move and a GBP recovery come to fruition?

Technical Analysis

GBP/USD

From a technical standpoint, GBP/USD rose in the early part of the week but failed to hold onto any material gains. The weakness in the US Dollar Index did not yield any significant gains for the GBP and with the DXY looking at a recovery today, Cable may face further downside pressure.

At present the key level around the 1.2680 handle is proving a tough nut to crack with UK inflation data helping the GBP/USD to break above this level but failing to find acceptance. If a daily candle close above this handle occurs, bulls may be emboldened which could push cable higher.

A move above the 1.2680 handle may face resistance at 1.2750 and 1.28200 (which is where the 200-day MA rests). The next key hurdle for bulls will be the 1.3000 psychological level which may prove to be a hurdle too far.

Looking at the potential for a break to the downside and the most recent swing low at 1.2600 will be the first area of support before the 1.2500 and 1.2450 handles come into focus.

The driving force behind any move is likely to come from the US Dollar Index (DXY) and its performance in the coming days. Further US Dollar strength could facilitate a retest of the 1.2500 handle.

GBP/USD Daily Chart, November 20, 2024

Source: TradingView.com (click to enlarge)

Support

1.2600

1.2500

1.2450

Resistance

1.2680

1.2750

1.2820

GBP/JPY

GBP/JPY has been inching its way lower since topping out just shy of the psychological 200.00 handle. A pullback helped yesterday by renewed safe haven flow also helped GBP/JPY push further away from the 200.00 handle.

Looking at the technicals and we have some mixed signals. We have a death cross formation as the 100-day MA crossed below the 200-day MA hinting at downside momentum. The candlesticks on the other hand show a sharp rejection following the brief stint below the MAs yesterday with the daily candle finishing as a hammer candlestick hinting at further upside.

The mixed signals do not make it easier, however when combining this with the fundamentals, further upside seems more likely in the short-term. The question is will the 200.00 handle prove a step too far for bulls?

A move higher from current prices for GBP/JPY could face resistance at 198 and 199.30 respectively.

A move lower will first require a daily candlestick close below the two MAs resting around the 194.30-194.60 range. A break of this zone could push GBP/JPY toward the 192.50 and 190.00 handles respectively.

GBP/JPY Daily Chart, November 20, 2024

Source: TradingView.com (click to enlarge)

Support

194.30 (200-day MA)

192.50

190.00

Resistance

198.00

199.30

200.00

Source: ACTIONFOREX

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Warren Takunda

Economic

Businesses are bracing for the economic impact of a second Trump presidency, which, if his campaign promises are to be believed, will mean tariffs across nearly all imports to the US, especially those from China.

But amid the gloom over the spectre of a renewed global trade war, some manufacturers may be looking to those who already have a playbook on dealing with aggressive US levies, such as China’s solar companies.

China all but owns the global solar market. Its share in every stage of the solar panel manufacturing chain exceeds 80%, according to the International Energy Agency. Last year it exported a record high of 227 gigawatts (GW) of solar panels – more than the entire installed solar capacity of the United States.

But virtually none of those panels were destined for the US. Less than 1% of the 54 GW of solar panels the US imported last year came from China.

More than a decade of US duties on Chinese solar cells and panels – which are expected to be ramped up further by Trump – have all but eliminated Chinese solar equipment from the US.

This has spurred some Chinese companies to rapidly shift and expand their supply chains overseas in what US government agencies allege is an attempt to dodge US levies – an alleged approach that may be setting an example for other manufacturers.

Because although less than 1% of the US’s solar imports come from China, more than 80% of them come from four countries in south-east Asia: Cambodia, Malaysia, Thailand and Vietnam. Last year, the US Commerce Department concluded that certain Chinese photovoltaic (PV) companies had been re-routing their supply chains through those countries in order to avoid US tariffs.

China’s major PV technology companies have been opening factories in south-east Asia since at least 2016. That year, the world’s third-largest solar manufacturer, Longi, expanded to Malaysia with its first overseas production base, and the launch of a Thai subsidiary. It also has a facility in Vietnam, and this year began construction of another Malaysian project and a joint-venture factory in the US. “The company’s shipment capabilities in the US market are expected to be enhanced,” it said in its 2023 annual report.

In 2022, Longi denied findings by the US Department of Commerce that a Vietnam subsidiary, Vina Solar, was among a number of Chinese companies circumventing tariffs by finishing products in south-east Asia, and said it was obeying US law.

But decision-makers in Washington see the expansions into south-east Asia very specifically as “an attempt to circumvent antidumping and countervailing duties”, said Cory Combs, associate director at Trivium China, a research company.

Longi denied the commerce department’s findings in 2022, and in its interim annual report this year said the “trade barriers” imposed on PV producers had “increased uncertainty” for companies, appearing to suggest that the global expansions were aimed at diversifying supply chains.

Last month, the commerce department announced new preliminary duties on several Chinese solar manufacturers that were exporting from Cambodia, Malaysia, Thailand and Vietnam. The decision follows a complaint from US solar panel companies that alleged Chinese companies were using their factories in those four countries to flood the US market with panels priced below their cost of production.

Longi was not among the solar manufacturers on the list, and it is not clear if the list includes one of its subsidiaries. Longi did not respond to repeated requests for clarification or comment.

Various US tariffs and antidumping duties have since been levied on the industry in the region at either country or company level, or in some cases both, and eyes are on the movements of Chinese industries.

Speaking generally, tariffs “are a bit like whack-a-mole”, said Marius Mordal Bakke, a senior analyst at Rystad Energy, a business intelligence company. As soon as import duties are targeted at one country, companies will up sticks and move to another. Rerouting supply chains costs money, “but as long as you can sell your product for three to four times as much in the US market, then it’s probably likely worth it.”

Next stop: the Middle East

The game of whack-a-mole now seems to be spreading to other parts of south-east Asia, such as Laos and Indonesia. In the first eight months of this year, US imports of solar goods from Indonesia reportedly nearly doubled to $246m, while shipments from Laos have also been surging.

The industry is also moving to the Middle East, said Combs.

“As south-east Asia gets hit harder and harder by these tariffs a lot of Chinese investors are moving into the [Gulf Cooperation Council, or GCC], particularly Saudi Arabia and the UAE and Oman. Does this happen quickly enough that the GCC becomes the next south-east Asia and then also gets hit with anti dumping and all that stuff? That’s already where the conversation is in DC.”

Chinese companies are well aware of the need to tariff-proof their businesses, and there are signs of plans being made to get ahead of Trump’s promised tariffs, on China and elsewhere.

Tongwei, China’s biggest solar company, said in its annual report that many Chinese photovoltaic companies have “started exploring new avenues for growth, including establishing manufacturing facilities overseas”, citing the US, the Middle East and Vietnam as examples, without elaborating on the company’s own plans.

The US solar market is relatively small. In 2023, it accounted for less than 10% of the solar panel global market, according to analysis by Lauri Myllyvirta, the lead analyst at the Centre for Research on Energy and Clean Air. Given over 93% of global production capacity for polysillicon – the raw material to make solar panels – is in China, it will be nearly impossible for the US solar industry to fully extricate itself from Chinese companies.

Indeed, the biggest risk to the Chinese solar industry from the incoming Trump administration may not be tariffs, but politics. “The solar industry in China has positioned itself to supply the solar equipment needed for a rapid global energy transition,” Myllyvirta said. “And it’s quite clear that the Trump administration is going to try and slow down that transition”.

Source: TheGuardian

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Warren Takunda

Economic

December Nasdaq 100 E-Mini futures are trending up +0.09% this morning as investors shifted their focus to a highly anticipated earnings report from AI darling Nvidia.

In yesterday’s trading session, Wall Street’s main stock indexes closed mixed. Super Micro Computer soared over +31% and was the top percentage gainer on the S&P 500 and Nasdaq 100 after the server maker appointed an independent auditor and submitted a compliance plan to Nasdaq. Also, Nvidia climbed more than +4% and was the top percentage gainer on the Dow after Stifel and Truist raised their price targets on the stock. In addition, Walmart rose +3% after the retail giant posted better-than-expected Q3 results and raised its full-year guidance. On the bearish side, Incyte Corp. slumped over -8% and was the top percentage loser on the S&P 500 after halting enrollment in a Phase 2 trial of its chronic spontaneous urticaria candidate targeting MRGPRX2 due to findings from preclinical toxicology.

Economic data released on Tuesday showed that U.S. housing starts fell -3.1% m/m to 1.311M in October, weaker than expectations of 1.340M. Also, U.S. October building permits, a proxy for future construction, unexpectedly fell -0.6% m/m to 1.416M, weaker than expectations of 1.440M.

Kansas City Fed President Jeffrey Schmid said on Tuesday that it remains uncertain how far interest rates can fall, although the initial cuts by the Fed are a sign of confidence that inflation is moving back to its 2% target. “The decision to lower rates is an acknowledgment of the ... growing confidence that inflation is on a path to reach the Fed’s 2% objective - a confidence based in part on signs that both labor and product markets have come into better balance in recent months,” Schmid said.

Meanwhile, U.S. rate futures have priced in a 59.1% probability of a 25 basis point rate cut and a 40.9% chance of no rate change at the December FOMC meeting.

Market participants are awaiting Nvidia’s third-quarter earnings report, scheduled for release after the market close, to gauge future demand for its new Blackwell AI chips, particularly after The Information reported on Sunday that these chips were experiencing overheating issues when connected to server racks designed to hold up to 72 chips.

“After an exhausting election cycle, options show that NVDA results will be the most important catalyst left for the remainder of the year, notable, more so than NFP, CPI, and FOMC,” Stefano Pascale, equity derivatives strategist at Barclays, said in a note Tuesday.

Prominent companies like TJX, Palo Alto Networks , Target , and Snowflake are also set to report their quarterly figures today.

On the economic data front, investors will likely focus on U.S. Crude Oil Inventories data due later in the day. Economists estimate this figure to be -0.1M, compared to last week’s value of 2.1M.

In addition, investors will be looking toward speeches from Fed Governors Lisa Cook and Michelle Bowman.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.417%, up +0.87%.

The Euro Stoxx 50 futures are up +0.42% this morning, partially rebounding from losses in the previous session as investors considered the geopolitical situation and looked ahead to Nvidia’s quarterly results. Construction and bank stocks outperformed on Wednesday. The Office for National Statistics reported on Wednesday that the U.K.’s annual inflation rate rose above the Bank of England’s target in October, suggesting that BoE interest rates are likely to remain higher for longer. Meanwhile, the European Central Bank cautioned on Wednesday in its semi-annual report that the potential for higher trade tariffs heightens the risk of rare but severe shocks to the global economy and poses a threat to financial system stability. In other news, a day after Russia lowered its threshold for a nuclear strike, Reuters reported that Russian President Vladimir Putin is open to discussing a Ukraine ceasefire deal with U.S. President-elect Donald Trump, easing geopolitical concerns. In corporate news, Sage Group Plc soared over +18% after reporting stronger-than-expected full-year operating profit.

U.K.’s CPI, U.K.’s Core CPI, and Germany’s PPI data were released today.

U.K. October CPI arrived at +2.3% y/y, stronger than expectations of +2.2% y/y.

U.K. October Core CPI came in at +3.3% y/y, stronger than expectations of +3.1% y/y.

The German October PPI has been reported at +0.2% m/m and -1.1% y/y, compared to expectations of -0.1% m/m and -1.1% y/y.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.66%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.16%.

China’s Shanghai Composite Index closed higher today. Software and pharmaceutical stocks led the gains on Wednesday. China kept its benchmark lending rates unchanged at the monthly fixing on Wednesday, a move widely anticipated after a significant reduction in borrowing costs last month. Major Chinese banks maintained the one-year loan prime rate at 3.1% and the five-year LPR at 3.6%, according to a statement from the People’s Bank of China. Meanwhile, at an investment summit in Hong Kong on Tuesday, senior Chinese officials reaffirmed their commitment to progressing capital market reforms and further opening the financial sector to foreign investment. In other news, Chinese mutual fund houses announced on Tuesday a reduction in fees for their exchange-traded fund products, responding to authorities’ call to support the nation’s stock market. In corporate news, Beijing Kingsoft Office Software gained over +3% after its Hong Kong unit secured an advertising contract worth $7 million with Xiaomi’s Singapore arm. Investors now look ahead to China’s annual Central Economic Work Conference in December for potential additional stimulus measures to boost the economy.

Japan’s Nikkei 225 Stock Index closed slightly lower today as caution prevailed ahead of Nvidia’s earnings report. Automobile and insurance stocks led the declines on Wednesday. Data from the Ministry of Finance released on Wednesday showed that Japan’s exports rebounded more strongly than anticipated in October, driven by increased demand for chip equipment in China, although concerns persist about uncertainties in the global economy and U.S. trade policy. Also, data showed that Japan’s imports unexpectedly rose to a 3-month high in October. Meanwhile, investors are awaiting Japanese inflation data, set to be released on Friday, which is expected to provide further insight into the monetary policy outlook. In corporate news, Tokyo Gas soared nearly +13% after activist investor Elliott Investment Management disclosed in a regulatory filing that it had taken a 5.03% stake in the company. Also, Seven & I Holdings climbed more than +6% after Japanese broadcaster NHK reported that the founding family of the retail giant plans to finalize a deal to take the company private by the end of its fiscal year in February. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -4.99% to 23.42.

The Japanese October Trade Balance has been reported at -461.2B yen, weaker than expectations of -360.4B yen.

The Japanese October Exports stood at +3.1% y/y, stronger than expectations of +2.2% y/y.

The Japanese October Imports came in at +0.4% y/y, stronger than expectations of -0.3% y/y.

Pre-Market U.S. Stock Movers

Keysight Technologies climbed over +9% in pre-market trading after the company reported better-than-expected FQ4 results and provided above-consensus FQ1 guidance.

Sangamo Therapeutics surged more than +12% in pre-market trading after announcing that the FDA had cleared the commencement of clinical trials for its drug candidate ST-503 in the treatment of intractable pain resulting from idiopathic small fiber neuropathy.

Powell Industries plunged more than -15% in pre-market trading after reporting weaker-than-expected FQ4 revenue.

Source: Barchart

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

ING

Economic

Bunds in demand as Ukraine faces uncertain times

Over the past month, markets have rapidly adjusted to the realities of post-QE and QT. This is most evident in Bund swap spreads, but similar trends were also seen in the USD/EUR cross-currency basis, which has shared the same pattern as risk-premia into the looming year-end was reassessed. The shared trends suggest that concerns about German credit amid political instability were less influential, though they likely contributed to the overall movement.

Tuesday’s market reaction to headlines pointing to an escalation in the Ukraine conflict showed that the risk-off reflexes are still working. Bunds were the main recipient of safe-haven flows, outperforming other European government bonds with the 10y initially outperforming versus swaps by almost 4bp. The 10Y yield still sits slightly above swaps and time will tell how lasting the move will be or whether it is seen as an opportunity to jump back on the Bund underperformance trade. So far, the spread performance has been more resilient than the immediate reaction to headlines. However, recent history has shown that Bunds have had a weaker and shorter-lived response to risk-off events, such as the French election turmoil.

We still think that the levels broadly around 5bp above swaps could mark an equilibrium around which 10y Bund spreads evolve with risk-off episodes and supply as well as political turmoil continuing to add volatility. Recall that the equivalent spread of around 20bp above OIS was last observed in 2014 ahead of the European Central Bank's QE.

Today’s events and market view

UK October CPI data this morning came in hotter than expected with services inflation at 5% year-on-year and core CPI at 3.3% versus an estimated 3.1%. However, leaving out categories the Bank has told us it cares less about, our economist calculates that this "core-services" measure fell from 4.8% to 4.5%.

The data calendar remains lighter after the release of the UK CPI in the morning, although the ECB will release its indicator for negotiated wages in the third quarter today. A rise here, mainly given developments in Germany, is likely to garner some headlines amid markets that have become a tad more cautious about pricing aggressive easing from the ECB. We still think Friday’s PMIs will be key. Also look out for more commentary from ECB members, including de Guindos and Stournaras, while the ECB will also release its Financial Stability Review.

In primary markets, Germany will tap two bonds in the 30Y part of the curve for €1bn each. Later the US Treasury will sell a new 20Y bond for US$16bn.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Warren Takunda

Cryptocurrency

Bitcoin’s potential climb to the $100,000 price level has captivated investors for years. While retail participants often celebrate such psychological milestones, the key impact should come from institutional adoption and advancements in the Bitcoin derivatives markets. Bitcoin to $100K: What Will Milestone Mean for Derivatives Markets?_1

Bitcoin to $100K: What Will Milestone Mean for Derivatives Markets?_1

Bitcoin futures aggregate open interest, BTC. Source: CoinGlass

Futures open interest on Bitcoin presently totals 626,520 BTC ($58 billion), a 15% increase in two months, signaling growing interest in derivatives. If Bitcoin reaches $100,000, this open interest would hit $62.5 billion, representing 3.1% of its $2 trillion market cap. This contrasts with the S&P 500, where $817 billion in futures open interest equals only 1.9% of its $43 trillion market cap.

A direct comparison between Bitcoin and S&P 500 futures is unfair, as over 65% of the cryptocurrency trading occurs on crypto-only exchanges such as Binance, OKX and Deribit. This number is expected to reduce as spot Bitcoin exchange-traded funds (ETFs) eventually launch their own futures markets, especially those offering in-kind creation that appeal to institutional investors.

However, regulation alone doesn’t guarantee adoption. For example, the CBOE offered Bitcoin futures from December 2017 to March 2019, only to discontinue the product due to low demand. Recent approvals for spot Bitcoin ETF options signal progress but underscore the need for deeper integration with traditional finance markets.

Institutional adoption: The key to $100,000 and higher

Institutional adoption is critical to translating Bitcoin's $100,000 milestone into meaningful derivatives market growth. Spot ETF options, for instance, could enable complex strategies like income generation through covered calls or hedging liquidity risks. As institutions grow more comfortable with Bitcoin as a reserve asset, the derivatives market will likely evolve to accommodate their sophisticated needs. Bitcoin to $100K: What Will Milestone Mean for Derivatives Markets?_2

Bitcoin to $100K: What Will Milestone Mean for Derivatives Markets?_2

Example of covered call expected return. Source: CME

Futures markets often confuse newcomers, particularly regarding the short positions. Many assume these positions signal bearish sentiment, but that’s not always the case. Strategies like cash and carry, where investors lock in a risk-free profit by selling futures while holding spot Bitcoin, create a large volume of short contracts. These strategies stabilize the market rather than betting on price declines.

A potential game-changing catalyst for Bitcoin's price surge could come from a shift in corporate governance. Microsoft shareholders recently voted to allocate funds toward Bitcoin, signaling a significant display of intention by influential investors. Even if the plans are not approved in 2025 or are disregarded by the board, the mere act of voting on Bitcoin allocation creates momentum that could pressure other companies to follow suit.

Additionally, Senator Cynthia Lummis’ proposal to convert US Treasury gold certificates into Bitcoin and create a “Strategic Bitcoin Reserve” offers another price catalyst. Her bill includes plans to acquire 5% of the total Bitcoin supply—1 million BTC—to be held for 20 years, further cementing Bitcoin’s potential as a reserve asset.

Bitcoin derivatives markets are a consequence, not a cause

Despite the excitement surrounding Bitcoin’s march toward $100,000, derivatives markets are more likely to react to broader adoption than drive it. Retail and corporate fears of fiat debasement remain the primary motivators pushing Bitcoin higher. This psychological shift—more than any futures product or spot ETF—will ultimately solidify Bitcoin’s role in institutional portfolios.

Lyn Alden’s research reinforces this narrative, showing a correlation between the global M2 money supply and Bitcoin's price. When governments accelerate monetary stimulus or reduce interest rates, investors increasingly seek scarce assets like Bitcoin as a hedge against debasement.

As a result, a liquid and mature derivatives market will emerge as a consequence, not a cause, of Bitcoin’s price breakthroughs.

Source: Cointelegraph

Risk Warnings and Disclaimers

Add to Favorites

Daily News

Remarks of Officials

Central Bank

Forex

FastBull Events

FastBull Featured

Devin

Mohammad Omar

Recent Searches

Top Searches

Markets

News

Analysis

User

24/7

Economic Calendar

Education

Data

The Commodities Feed: Geopolitical Risks Build

Energy – Natural gas proves to be more sensitive to geopolitical risks

Crypto Market Loses Some Spark

Market Picture

News Background

GBP/USD, GBP/JPY Price Action Ideas Post UK Inflation Release

UK Inflation Challenge

Source: ING Think

Technical Analysis

Source: TradingView.com (click to enlarge)

GBP/JPY

Source: TradingView.com (click to enlarge)

Source: ACTIONFOREX

Trump Tariffs Are Coming, But Some Chinese Companies May Already Know How to Avoid Them

Next stop: the Middle East

Source: TheGuardian

Nasdaq Futures Tread Water as Investors Brace for Nvidia Earnings

Pre-Market U.S. Stock Movers

Source: Barchart

Rates Spark: Risk-off Reflexes At Work

Bunds in demand as Ukraine faces uncertain times

Today’s events and market view

Bitcoin to $100K: What Will Milestone Mean for Derivatives Markets?

Bitcoin futures aggregate open interest, BTC. Source: CoinGlass

Institutional adoption: The key to $100,000 and higher

Example of covered call expected return. Source: CME

Bitcoin derivatives markets are a consequence, not a cause

Source: Cointelegraph

Risk Disclosure