Last week, the Swiss Six Exchange began trading on the Amun Crypto Basket ETP, an exchange-traded product that represents an investment in a portfolio of the five largest cryptocurrencies. It now has the highest trading volume of any product traded on this exchange.
Although it has already lost 15% of its value, falling from $13.80 to $12.40 per unit, due to bearish sentiment in the overall cryptocurrency market, its turnover of 425,000 Swiss francs ($425,000) per day significantly exceeds the turnover of others traded on Exchange Sixproducts in silver, crude oil and gold.
High volumes are usually a sign of significant investor demand for a given asset or financial product.
Of course, these volumes would be considered negligible for larger exchange-traded products in the United States. The SPDR Gold Shares ETF, for example, has an average daily volume of $987 million, according to ETF.com. As for Amun, according to market structure experts, such large volumes may indicate that there was pent-up demand for this type of digital asset.
Richard Johnson, an expert at Greenwich Associates, believes that trading firms seeking to arbitrage trade between ETPs and the underlying spot market may also be a reason for such high volumes.
Firms may be using price differences between derivatives and the underlying market to make a profit. With the cryptocurrency market continuing to fall, hedge funds and other investors are forced to squeeze profits out of the market in any way possible.
According to a Bloomberg report, Amun's product is backed by Jane Street Financial and Flow Traders, which provided its liquidity by purchasing a sufficient number of units. However, investors did not invest in the company behind this product. Both companies declined to disclose the amounts they invested in Amun Crypto ETP.
Amun Crypto ETP holds the cryptocurrencies that provide its value. This structure requires authorized participants, Jane Street Financial and Flow Traders, to supply the ETP with cryptocurrency if the price rises and withdraw it if the price falls.
Currently, US investors cannot buy or sell ETPs regulated by the Swiss SIX Exchange.
According to https://www.theblockcrypto.com
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