Wall Street exchanges face perp concerns as investor fears hit valuations

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Wall Street perp concerns

Highlights

CFTC approval for Kalshi to offer bitcoin-based perps in the U.S. raises investor concerns, triggering a roughly one-third drop in Cboe shares within four weeks.
Cboe Global Markets, CME Group, and Intercontinental Exchange stocks decline after regulatory shift, as investors fear broader perp adoption and aggressive leverage such as Binance's 100x oil-based products.
Traditional exchanges maintain some competitive edge with institutional clients and risk controls, while responding with crypto-linked offerings and strategic partnerships like ICE's May deal with OKX.

Regulatory shift fuels market concern

As reported by Financial Times, concern over perpetual futures intensifies after the Commodity Futures Trading Commission allows prediction market Kalshi to offer bitcoin-based perps in the U.S., marking the regulator's first approval of such a product in the country.

Perpetual futures, or perps, do not expire and do not require physical delivery of the underlying asset. Popularity for the instruments first builds in crypto markets, where they are easier to trade than the underlying tokens, and they are now also tied to assets including oil.

Investors worry the CFTC's change in stance could open the way for broader use of perps outside traditional exchanges. Shares in Cboe Global Markets fall by as much as one-third in the four weeks after Kalshi's approval and remain down by close to a fifth, while CME Group drops about a fifth and Intercontinental Exchange declines slightly less.

Interest in perps also rises after the U.S.-Iran war begins over a weekend, leaving investors with limited venues to react. Providers are also offering aggressive leverage, with Binance launching oil-based products in April that can be leveraged up to 100 times.

Traditional bourses retain structural advantages

The large exchanges are still less exposed than their share-price moves suggest because their main clients are institutions that need more than highly leveraged directional bets. Traditional futures markets provide forward curves across different maturities and use margin-call systems that give traders time to meet additional funding demands when markets move against them.

Perps work differently, with balances credited or debited as often as three times a day. That structure can leave traders exposed to losing their full position after even temporary adverse market swings.

The established exchanges are also responding rather than standing still. Cboe launches a crypto-linked continuous future last year, ICE signs a deal in May with OKX, in which it owns a stake, to offer perps based on Brent oil products, and CME pursues a legal challenge against the CFTC.

Perps are likely to remain a niche product, even if they attract attention during periods of volatility and around-the-clock trading demand. That leaves room for incumbent exchanges to adapt, although the tension between product innovation and market stability continues to unsettle investors.

Our earlier analysis of Bit Digital Inc (BTBT) highlighted a sustained selloff, with the stock trading below key moving averages and momentum indicators remaining firmly bearish. The piece noted oversold conditions that could spark short-lived rebounds, but stressed that without a supportive fundamental catalyst, downside risks continued to dominate near-term expectations.

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