Stanley Druckenmiller on CNBC’s Delivering Alpha, September 28, 2022.
Scott Mullin | CNBC
The post seemed to come out of nowhere. Stanley Druckenmiller, the legendary hedge fund manager who brought down the Bank of England in the 1990s and whose annual returns were the envy of Wall Street, posted a simple message on his sparse X feed announcing his involvement in a new type of decentralized exchange. The post caused an uproar on social media and moved the stock of a major crypto asset company and its tokens.
TradeXYZ, the lead developer of Hyperliquid Exchange’s Perpetual Futures, or “PERPS” market, announced the partnership on Thursday. Intercontinental Exchange (ICE) Bringing popular perpetual futures onshore to the US
Shortly after the pair announced that they were seeking regulatory approval, Druckenmiller told X that he was “excited to be an investor in trade(xyz)” and “looked forward to using their innovative products to enhance my investment process.” A representative for Druckenmiller confirmed the statement to the Financial Times.
Options traders jumped on the closest public trade to the news. Hyper Liquid Strategy (PURR)a company that invests in the HYPE crypto token that powers the Hyperliquid exchange.
More than 111,000 options were traded on HyperLiquid Strategies on Thursday, sending the underlying stock up 19% to a three-week high. Flows were bullish with approximately 86,000 calls and less than 27,000 puts. According to Cboe LiveVol data, calls were almost four times more likely to be initiated by buyers than puts, and only one of the top 10 trades involved a put buy.
“ICE is excited to partner with Trade.XYZ to offer HyperLiquid markets and liquidity to U.S. investors,” HyperLiquid Strategies CEO David Shamis said in a text. “ICE is a cornerstone of traditional finance and an ideal partner.”
Shamis added that this transaction demonstrates the demand for PERP futures trading and is a step forward towards regulated trading in the asset class.
In August, President Donald Trump told reporters in surprising comments that regulators were working to bring exchanges on land.
The most popular trade based on PURR volume was selling a 13-strike put expiring on December 18th and buying a 13-strike call expiring on November 6th. Taken together, the two resemble a “risk reversal” strategy, a bullish trade aimed at sustained short-term upside combined with long-term confidence that the stock price won’t fall below $13 by the end of the year.
