Coinbase Futures Trading

Good morning, Coin Discoverers!

• BTC: $26,981 (-0.39%) YTD (+62.79%)

• ETH: $1,668 (+0.70%) YTD (+39.35%)

• BNB: $213 (-0.78%) YTD (-15.40%)

*Crypto numbers as of 8:00 pm EST on September 28th

Coinbase’s international exchange opens futures to retail

Coinbase initially launched perpetual futures trading in May, but it was limited to only institutional investors located outside the US.

Starting Sept. 28, non-US retail traders can verify their eligibility for perpetual futures trading on Coinbase Advanced, with actual trading set to commence in the following weeks, the announcement said.

The Coinbase International Exchange, which provides the service, maintains financial backing through its Insurance Fund and Liquidity Support Program, both funded in USDC, rather than relying on an exchange token, the company said.

Coinbase is looking to reduce its dependency on spot trading revenues, which, in the past, have negatively impacted its stock performance following disappointing quarterly earnings.

Notably, perpetual futures trading makes up a substantial portion, up to 75%, of the overall global cryptocurrency trading volume, according to the exchange.

The firm is also seeking to spread risks related to regulatory uncertainties.

Bitcoin lenders have a new regulation-friendly option for yield

Institutional credit infrastructure provider Credora and Polkadot DeFi hub Acala believe they’ve found a path, starting with a product to bring yield opportunities to bitcoin holders.

Working with Swiss-based market-making firm Portofino Technologies, the initial offering — announced Thursday — targets family offices, credit firms and hedge funds, and expects to return 7%-10% annually.

Past efforts to offer yield to bitcoin (BTC) lenders have not always fared well, with firms such as Celsius proving to be opaque, fragile and ultimately dangerous places for customers to store BTC.

Credora has devised a legal and technical structure that gives lenders much greater security and transparency, according to co-founder Darshan Vaidya.

Their first product is a Special Purpose Vehicle (SPV) which generates yield from staking Polkadot’s native currency, DOT.

It works like this: Starting with loaned bitcoin, Portofino exchanges a portion for DOT which is staked with Acala, while hedging price risk using derivatives markets on Bitmex, Bybit or Deribit. Polkadot staking yields fall in the 15%-21% range, Acala’s co-founder Bette Chen told.

Acala uses a variety of dedicated validators including Coinbase Cloud, which provides “slashing protection” — think insurance — for its service.

Portofino is required to provide its own capital into the SPV as a junior tranche, while bitcoin lenders are senior to it, so their assets are secured by the entire cache of funds.

The “first loss” capital provided by the market maker means “their incentives [are] aligned, such that the trading firm is always incentivized to ensure that the senior tranches paid back first,” Vaidya said.

Credora provides real-time monitoring for lenders, which Vaidya said will allow them to track the movement of capital — both on-chain and off — in real-time.

STOCKS

• DOW: 33,666 (+0.35%)

• S&P: 4,299 (+0.59%)

• NASDAQ: 13,201 (+0.83%)

*Stock numbers as of market close on September 28th

AMD’s stock pops after Microsoft tech chief touts chipmaker’s AI products

Shares of AMD rose almost 5% Thursday, a day after Microsoft’s technology chief said the chipmaker is bolstering its position in artificial intelligence, where Nvidia dominates.

So far this year, Nvidia shares have almost tripled while AMD is up about 60%. Since the launch in late 2022 of OpenAI’s ChatGPT chatbot, the tech industry has been swarming to new large language models, which require hefty processing power.

Microsoft and AMD are longtime partners, and it’s in Microsoft’s interest to have more high-powered chips on the market from a broader set of vendors. For years, Microsoft has offered some AMD GPUs to its Azure cloud customers, in addition to powering some of its computers and its Xbox consoles with AMD chips.

Bloomberg reported in May that AMD was working with Microsoft on a custom AI chip, but Scott declined to say if that’s actually happening. Microsoft’s cloud rivals Amazon and Google have developed homegrown silicon.

ECONOMY

• GOLD: $1,885 (+0.36%)

• AVG GAS: $3.832

• WTI CRUDE OIL: $92.86 (+1.25%)

  *Economy numbers as of September 28th

Holiday shoppers are getting an early jump on the season, but student loan payments weigh heavily

This year, half of shoppers plan to begin their holiday shopping by Halloween, according to a recent Bankrate report.

And yet, just as millions of borrowers face their first student loan bill in more than three years, October is expected to be a particularly big month for holiday shopping, as well, with consumers planning to start earlier and spend more than before.

A separate study, by RetailMeNot, found that more shoppers are starting even earlier than before — with as many as 64% kicking off the season in October, up from 53% in 2022.

With more shoppers getting an early start on the season, holiday retail sales are likely to increase between 3.5% and 4.6% in 2023, according to Deloitte’s annual forecast.

“Households have the capacity to spend, but momentum is slowing, in part because savings built up during the pandemic are running lower and credit costs are rising,” added Jack Kleinhenz, the NRF’s chief economist.

When it comes to consumer spending, “the biggest factor is always whether people have a job or not and we are near full employment,” Brett House said, professor of professional practice in economics at Columbia Business School.

REAL ESTATE

• 15-year: 6.89%

• 30-year: 7.60%

*Mortage rates via Mortgage News Daily

Office Conversions on Pace to Double in U.S.

CBRE analyzed the number of office conversions in major U.S. cities since 2016 and found nearly 100 projects are expected to be completed this year. This a sharp increase from the annual average of 41 completed from 2016 to 2022.

Across 40 CBRE-tracked markets in the U.S., 60 million sq. ft. of office conversions are planned or in progress, comprising 1.4% of the total U.S. office inventory, up from 1.2% in last year's fourth quarter.

Nearly half (48%) of office conversions this year are to multifamily residential complexes. Office-to-mixed-use conversions are becoming more common, accounting for 18% of the pipeline, up from 7% in Q4 2022. Meanwhile, conversions of offices to life sciences labs now account for 19% of activity, down from 28% in last year's fourth quarter.

Recently, major cities like New York and Chicago have passed zoning code changes and established public-private partnerships to make conversions more financially feasible. Such incentives are typically targeted at converting office buildings to much-need affordable and/or zero-emissions housing.

It's worth noting that markets experiencing higher-than-average conversion percentages typically have more older office buildings with higher vacancy rates. For example, Cleveland has the highest percentage of its office stock targeted for conversion (11% of total inventory). Boston has the largest footprint (sq. ft.) of conversions planned or underway at 6.1 million sq. ft., or 3% of its office inventory.

TECH

X CEO Yaccarino says Musk-owned platform could turn a profit next year

The appearance at Vox Media's Code conference comes as Yaccarino marked 100 days as CEO of the platform formerly known as Twitter. She has faced questions over her autonomy in the role and the company's ability to court advertisers who have been wary of the rapid changes on the platform and Musk's controversial persona.

When asked about third-party estimates that showed X's active app users have fallen to 25th place behind Samsung's clock app, Yaccarino said key metrics around time spent on X were "trending very, very positively," without providing specifics.

Yaccarino added that about 1,500 advertisers have returned to the platform in the last 12 weeks, and that 90% of the company's top 100 advertisers have returned.

While Yaccarino said the company could be profitable next year, X is also facing a number of lawsuits that allege it has failed to pay rent on its offices and millions of dollars in severance to thousands of employees who were laid off.

Asked on Wednesday about Musk's ADL fight, Yaccarino said it was "disappointing" that the organization did not acknowledge the progress that X has made on safety.

Earlier in the interview, she said X introduced new content moderation tools and features to prevent ads from appearing next to certain content, which hadn't existed before the acquisition.

Yaccarino also defended Musk's right to speak out on the platform.

QUICK RECAP 

#1. Nike (NKE +8.20%) after it posted an earnings beat in the first quarter while revenue fell below estimates.

#2. Blackberry (BB +1.50%) after it reported a second-quarter loss narrower than analysts’ expectations, but missed revenue forecasts.

#3. Tesla (TSLA +1.60%) after it was sued by the Equal Employment Opportunity Commission, which alleged the company subjected Black employees to racial harassment and a hostile work environment.

#4. Vail Resorts (MTN -1.80%) following a disappointing quarterly report.