So Much for that Refuge
Are the exchanges still a tape bomb refuge? What needs to change? The Blind Squirrel's 'Monday' Morning Notes. Year 4; Week 23 of 2026.
The🐿️ is finally back home in Melbourne and normal publishing cadence has resumed. The cost of annual subscriptions will be rising from $360 to $450 at the end of this month. Monthly subscriptions will remain at $45. As ever, all existing subscribers are grandfathered at their original rates.
This is not another note on SpaceX. I promise. We are, however, going to start with a SPCX 0.00%↑ - related chart. Below is the 30-minute chart of the SpaceX perpetual futures contract on Hyperliquid, with the Nasdaq cash open, high and close on Friday marked with horizontal blue dashed lines.
It’s pretty remarkable to think that the wisdom of crowds (or, less politely, degenerate gamblers on a blockchain) have been pricing an ‘impossible to value’ stock to within its ’Day 1’ cash trading range for the whole of the past week (when markets could hardly have been described as quiet…). Perhaps IPO ‘grey markets’ have finally found their moment of maturity?
In early June 2016, I was sitting in a Goldman Sachs Asian Equity Underwriting Committee discussing risk markets. I highlighted an interesting internal note that had been written by a London-based colleague observing that the upcoming Brexit referendum might be closer than what was then inferred by FX and financial asset markets.
“Nonsense, Rupert!” came the call from the head of the table “look at the odds on Betfair!” (the UK-based peer-to-peer betting exchange now owned by Flutter FLUT 0.00%↑ - in which ‘the Chair’ had a personal investment). An easy victory for the “Remain” campaign was deemed ‘a lock’ by polling (and betting) markets. We all know how that ended…
10 years on, perpetual futures contracts on blockchains and binary prediction markets have offered investors punters an alternative to traditional exchanges. With backing from the Trump Administration (plus offspring!) and its closest financial backers, the likes of Hyperliquid, Kalshi and Polymarket have entered the mainstream.
So Much for that Refuge
Since the beginning of last year, we have owned a basket of traditional financial exchanges. The original thesis was that, in a world of tweet-induced volatility, these intermediaries had a decent chance of outperforming the financial assets that they listed.
Until recently, the thesis played out pretty well. The group had comfortably outperformed the MSCI World Index ACWI 0.00%↑. I have held on to the basket with the exception of LSEG (London) which I removed last September (terrible chart, increasing concerns about its clearinghouse exposure).
Until early April, my exchanges were outperforming global equities by over 10% year-to-date. This lead has now been erased - violently in recent weeks!
The first blow came in mid-May, when news broke that the SEC was preparing to roll out an “innovation exemption” framework for tokenized stocks. This proposed regulatory sandbox would allow crypto-native platforms to offer on-chain versions of traditional US equities.
The hammer blow came in early June with the CFTC’s approval of perpetual futures on platforms like Coinbase and Kalshi. By allowing lightly regulated, retail-friendly platforms to list non-expiring derivative contracts, the CFTC had effectively greenlit direct competition to the monopoly-like derivatives complexes of the CME, ICE and CBOE.
How should we play this?
