💰 Show me the money

We’re just barely halfway through the month and CME’s crypto unit is already logging its best month since it launched bitcoin futures contracts way back in 2017. 

As many loyal Empire readers know, I like to look at CME data to understand where traders and institutions are putting their money.

So, yesterday I caught up with Gio Vicioso, CME’s head of crypto. Turns out, the firm is averaging “a little bit over $10 billion a day across our futures suite.”

“Just comparing November this year to last, our volume and contract terms are up more than 5x … and then we're also seeing increases or records in terms of open interest, where November is also the record month, averaging more than 166,000 contracts. And that's up 60% compared to October, and up over 3x compared to November 2023,” Vicioso said.

The large bitcoin contracts offered by CME are becoming so big that investors — primarily retail — are turning to CME’s micro bitcoin contracts. 

“Now we're seeing an increase in volume in terms of our micro contracts, where those contracts, over the last couple weeks, have been averaging more than a billion dollars a day. When we look at the year, our micro bitcoin contract was averaging between $200 to $300 million per day, and we're also seeing an uptick in terms of the representation of that smaller contract to the larger contract, whereas for the year, micro bitcoin futures volume represented roughly 6% of bitcoin volumes,” he said.

“Over the past few trading sessions, we've seen a micro contract represent now north of 15% or so of the large bitcoin contracts. We’ve really seen increases across the board.”

The makeup of participants is mixed, Vicioso noted. Micro contracts are seeing a fairly even spread of retail and institutional buyers given that the margin is a more “manageable” number. The readthrough for institutions, in that case, is that they could be testing out fresh strategies and finetuning their exposure. 

With all of this interest, there is a pickup in volatility across both ether and bitcoin. Vicioso said it’s “par for the course” and isn’t terribly worried. But he noted that the momentum we’ve seen from bitcoin has carried through a lot of this year and it looks to be a continuing trend.

Open interest — which means any entity holding over 25 contracts — is soaring. As of last Friday, CME recorded a record of around 600 large open interest holders in their futures contracts.

“So both our standard BTC and ETH contracts, as well as our micro BTC and ETH contracts, all achieved records in terms of the number of large open interest holders holding those contracts,” Vicioso said.

— Katherine Ross

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• Another new record for BTC open interest on CEXs: $57.93 billion, up from $54.63 billion on Monday.

• BTC is ahead 3% on the day and nears a retest of its all-time high. (Current price: $92,150; ATH: $93,477.11)

• ETH is down 3.3% in the past week compared to gains for BTC and SOL between 7% and 14%. The ETH/BTC ratio is on track to hit 3.5-year lows set last week.

• Global NFT volumes are down 22% month-on-month to $470.6 million. Weekly volumes are otherwise up almost 40%, per CryptoSlam.

• Base’s total value secured has leveled out to a record $9.64 billion, according to Blockworks Research data.

 🍔 Stay hungry

Trump’s win could have you cooking up all sorts of profitable trading strategies. 

It’s only natural, considering it feels like we’re on the cusp of a new paradigm: for arguably the first time ever, US regulators might take it easy on crypto and let innovation flourish.

And so the topic of risk appetite came up on today’s Empire podcast episode. 

Yano asked Eric Peters, CEO and CIO of both Coinbase Asset Management and One River, what he’d prescribe for a 30-40-year-old first-time crypto investor who has a million dollars to allocate and a strong appetite for risk.

“I would advocate for them to be overweighted to bitcoin and ether but have some exposure to solana. Maybe 50/35/15 [percent], something like that,” Peters said. “[But] I think if you’re right on that trade, you’re gonna, at least for a period of time, wish you’d had a million bucks in solana.”

The question was really posed within the immediate context. Still, we can backtest Peters’ suggestion. 

And even better, plot it alongside Coinbase’s new benchmark crypto index COIN50, which is currently weighted 51.5% BTC, 23.4% ETH, 7% SOL with the remaining 18% or so spread across 47 other altcoins including DOGE, XRP, BCH and BONK.

The above, in log view, plots the value of that $1 million allocation from the end of 2020, which is when COIN50’s performance data starts.

There’s indeed an element of time bias. The period starts in the leadup to the epic 2021 bull run when SOL’s market cap was under $100 million (now $117 billion).

So, back then, it would be questionable just how likely it would be to split a million-dollar allocation between BTC, ETH, and a token so small in relative terms.

In any case, the purple shows the split highlighted by Peters, which turned $1 million into $27 million and would now be at all-time highs for dollar value.

ETH maxis were second best with $4.2 million. And while there are currently no ETPs tracking COIN50, if there were, that vehicle would’ve converted to a $3.8 million portfolio. 

Someone who aped a million dollars in BTC meanwhile would be holding $3.15 million right now.

For scale: Anyone who bought an index fund tracking any major benchmark from legacy finance would, at best, be sitting on $1.64 million, via the Nasdaq 100. 

That’s a minimum $1.5 million difference between stocks and crypto. It’s hard to put an exact value on risk appetite, but that’s as solid a number as any.

— David Canellis

• The parent company behind Truth Social is interested in acquiring Bakkt, the Financial Times reported.

• Kraken can’t move forward with an interlocutory appeal after a California judge ruled against it. 

• Nope, Binance’s BFUSD isn’t a stablecoin and it hasn’t launched just yet.

• Coinbase CEO Brian Armstrong reportedly met with President-elect Donald Trump, per the Wall Street Journal.

• Heather Morgan, aka Razzlekhan, will serve 18 months in prison, in line with what prosecutors sought, a judge ruled Monday.

Q: Are AI agent memecoins here to stay?

So much of the value proposition for memecoins is stooped in their individual lores.

But there’s a very human limitation on how far their respective gimmicks can take them: attention spans. 

Some memecoins are obviously stickier than others, but on the whole, the market tends to move on once the shtick wears thin, taking positive price action and liquidity along with it.

Autonomous AI agents (chatbots with a crypto wallet) present a solution, in that they can endlessly weave narratives around themselves. 

As LLMs evolve, they’ll only get vastly more efficient at converting bagholders into lasting crypto cults, and I’m all the way here for it.

— David Canellis

I’m not sure it’s realistic to say any memecoin is here to stay, with very few exceptions like DOGE. 

AI agents are one of many memecoin subsections popping off right now, and I can’t pretend to totally understand it. 

I bared my soul to y’all just a few weeks ago after I left a memecoin talk at Midwest Blockchain Week feeling like I’d aged 20 years.

Will they carve out a permanent corner in memecoin land? Perhaps. 

I think it depends on the entertainment. I’m also curious to see how memecoins fare if we really do see a friendlier regulatory regime. 

— Katherine Ross