Huobi loses in China crackdown, suggests Bitcoin futures market

[ad_1]

Call it the Huobi shed.

Bitcoin’s move to $ 50,000 rekindled the bullish sentiment, raising forward premiums on most major cryptocurrency exchanges. These premiums represent the difference between the price of bitcoin futures contracts traded on a given exchange and the larger spot market price often seen as an indicator of speculative interest.

But on the Huobi stock exchange, historically biased towards Chinese clients, the premium has not budged. Analysts say the relatively low premium on Huobi could be the result of the stock exchanges’ decision to suspend services to clients based in China.

While the annualized three-month, or base, term premium recently averaged 5% on Huobi, the premium on Binance, OKEx, Deribit and other major exchanges has climbed to nearly 10%.

Traders have actively looked to other exchanges to trade benefits and futures, said Matthew Dibb, COO at Stack Funds. Perps refers to perpetual swaps, a type of derivative in the cryptocurrency markets that serves as an alternative to conventional futures contracts.

Huobi announced late last week that October 29 would be the last day for derivatives trading for users on the Chinese mainland. The exchange cited a commitment to local compliance policies and said it would remove user accounts in the coming months.

Huobis’ trading volume among leveraged products has shown signs of weakening given China’s over-regulation, Dibb said. This has a big impact on the volume and basis of futures contracts.

Patrick Heusser, head of trading at Crypto Finance AG, said some traders on Huobi need to close their positions.

This could be due to the landing pressure exerted by Huobi, he said.

Arcane Research, a Norwegian cryptocurrency analysis company, wrote in a weekly report Tuesday that the Huobi futures contract had previously been one of the most important for bitcoin price discovery. Thus, these developments will present interesting structural changes in the market, according to the report.

The story continues

Huobi has lost significant market share to rivals Binance and OKEx since the start of the year. Huobis’ share of spot market trading volumes increased from 24% to 16%, according to data from Kaiko.

The phasing out of Chinese account exchanges over the next few months could have an even bigger impact on its volume share, Kaiko wrote in an Oct. 4 research bulletin.

Omkar Godbole contributed to this report.

[ad_2]