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The latest cryptocurrency M&A deal makes even more sense when considering the development of the sector in 2024.
Major digital asset broker FalconX has bought trading firm Arbelos Markets in a bid to become one of the largest cryptocurrency derivatives traders on the market.
In a press release on Thursday, FalconX noted the significant growth the institutional market has achieved over the past year, “driven by positive regulatory momentum coupled with the growth of ETFs and derivatives markets.”
“Similar to traditional asset classes, crypto derivatives will continue to scale to multiples of spot markets,” the company added.
After launching bitcoin ETFs in January, the Securities and Exchange Commission Approved options – contracts that represent the right to buy or sell at a certain price for a specified period of time – on the largest of these products, BlackRock’s iShares Bitcoin Trust (IBIT).
Industry observers tell me that options will stimulate more Strong ecosystem Spot ETFs, which enhance liquidity and price discovery. Basically the tool Attracts institutional investors They are looking to better manage their exposure to Bitcoin as market conditions fluctuate.
Michael Klena, a partner at consulting firm Architect Partners, described this FalconX purchase as a “logical progression in the market” as more demand and supply fuels more deals.
Institutional trading driven by regulatory changes (ETF approvals) and expected crypto-friendly frameworks “means that larger companies are now able to move more aggressively to acquire and be confident of not falling into the crosshairs of regulators,” he said. On the supply side, there are a number of newer cryptocurrency derivatives companies (such as Arbelos, D2X, and One Trading), but there is no single dominant player.
Another point: “Derivatives are a higher-margin product than spot trading, so firms will look to expand their offerings as trading fees fall,” he said, noting that the same thing happened in stock trading.
We've seen Cboe's global markets Closing of its acquisition From ErisX in 2022. Coinbase, in the same year, Bought Derivatives exchange FairX.
“But the timing was a little early for these deals because of the regulatory clarity that we haven't seen yet,” Kalina told me. “We are now hearing companies say the timing seems better.”
Besides the rise of crypto ETFs and pending regulatory clarity, Arbelos Markets CEO Joshua Lim, in a statement, described the growing acceptance of cryptocurrencies as a diversifier in investment portfolios as another reason this is a “defining moment” for the combination to happen.
You may remember the latest news from BlackRock guidance I Allocate 1-2% to Bitcoin It is "reasonable".
We have seen Thrive of crypto M&A deals immediately after the election. Kalina expects more deals to take place around derivatives trading and infrastructure.
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