JPMorgan Report on Bitcoin Contango

In a report titled “Why is Bitcoin’s Future Curve So Steep?” JPMorgan Chase analysts examined the futures market and growing derivatives around bitcoin, providing insights on why the contango is so steep and exploring what the future holds for the financial asset as it becomes increasingly financially sound.

Here are some of the highlights of the report.

“As has often been the case in the past, the gradual growth and maturity of cryptocurrency markets has naturally sparked interest in derivatives and other leverage sources. While futures are trading against a range of pairs, it is not surprising that Bitcoin dominates this nascent market. Like the spot market, these products trade within a highly fragmented ecosystem, with nearly 30 active locations. The vast majority is also traded offshore, with less than 15% of total open interest listed in large, regulated domestic locations such as the CME (Exhibit 1). Normal future futures have also kept pace with the deepening of the cash market, suggesting that it is also benefiting from institutional inflows and improved on-the-spot liquidity provision (Exhibit 2). ”