September 5, 2023

Markets Insights

Next FOMC meeting: Sept 20th 2023

  • Probability of a 0bps hike → 95%
  • Probability of a 25bps hike → 5%

The News Room

Bitcoin's Use as Margin Collateral in Crypto Futures Trading on the Rise

The use of Bitcoin (BTC) as a margin in futures trading has surged, increasing the potential for price volatility. As per Glassnode data, since July, Bitcoin futures open interest margined with BTC has grown from 20% to 33%. Although cash or stablecoin-margined contracts dominate with 65% of total open interest, BTC-margined contracts bring added risk due to their "double whammy" effect.

When traders use BTC as collateral, a decrease in BTC price reduces both the contract's value and the collateral's value, leading to quicker margin shortfalls and liquidations. Such volatility cascades were frequent pre-September 2021 when coin-margined contracts made up over 50% of global open interest. Blockware suggests this trend might be due to a cash shortage in the market, evidenced by diminishing stablecoin market values.

Chinese Court Recognizes Cryptocurrencies as Property

A court in Xiamen, China, declared cryptocurrencies as property under the nation’s legal framework, recognizing their "economic attributes" and legal circulation in overseas markets. This ruling emerges amidst Beijing's continued crackdown on digital assets and adds another layer to China's evolving stance on crypto, which has previously banned crypto-related activities without prohibiting ownership. Meanwhile, Hong Kong, adhering to its "one country, two systems" principle, has distinguished itself by setting clear digital asset regulations, recently licensing crypto firms, and having its High Court equate cryptocurrencies with other intangible assets like stocks.

Crypto Casino Stake Loses $40 Million in Multi-Network Exploit

Cryptocurrency casino Stake has reportedly fallen victim to an exploit, resulting in a loss of $16 million on the Ethereum network due to a "private key leak," as indicated by on-chain analyst Cyvers. This claim was further reinforced by blockchain investigator ZachXBT, who pointed out an additional combined loss of $25.6 million across the Polygon and Binance Smart Chain.

The siphoned funds have since been converted to ether (ETH) and distributed amongst multiple external wallets. Etherscan data reveals that the compromised Stake wallet still retains approximately $2.44 million in ETH and other altcoins. Stake, an Australian-based crypto casino and sportsbook boasted a revenue of $2.6 billion in 2022.

Trading Desk Insights

Equity futures displayed a downward trend on Tuesday morning, marking the commencement of a truncated trading week post the Labor Day break.

Historically, September has been a challenging month for equities. Investors are keenly analyzing economic updates, especially the upcoming inflation figures, in anticipation of the Federal Reserve's policy meeting. The Fed is set to reveal its interest rate decision on September 20.

The U.S. 10-year treasury yields climbed on Tuesday as investors considered what could be next for the economy following last week’s key data releases. Prices rebounded off the support level of 4.05% and are aiming to continue higher towards the yearly high of 4.36%.

Bitcoin has been under pressure for quite some time now as it keeps testing the recent lows between $25,500 and $26,000. It seems that market participants have been shorting the rallies with the intent of eventually breaking below the infamous support level near $25,000.

All moving averages are trending lower, a clear indication of a downtrend. Another bearish element would be the breakdown of the 50-day moving average on the 200-day moving average. This pattern is called the Death Cross and is usually followed by some pressure in price action. The last time the 50-day broke below the 200-day, was in January 2022 when Bitcoin was trading at $44,000.

ETHBTC remains muted as it continues to trade near its resistance of 0.064.

Economic calendar:


  • US Bank Holiday


  • N/A


  • US ISM Services PMI
  • US Fed Beige Book
  • Bank of Canada interest rate decision


  • US unemployment claims


  • CAD unemployment rate
  • China CPI

Technical Charts


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