October 27, 2017
By Joseph Young - Octover 27, 2017 (btcmanager.com)
At the Futures Industry Association annual conference held in Chicago over October 17-19, US-based trading powerhouse DRW Holdings founder Don Wilson told reporters that the emergence of bitcoin derivatives and options trading platforms would inevitably lead to the approval of a bitcoin exchange-traded fund (ETF) by the US Securities and Exchange Commission (SEC).
“Once a derivative is launched, a bitcoin ETF will follow. That’s the common wisdom.”
LedgerX, an institutional trading and clearing platform approved by the U.S. Commodity Futures Trading Commission (CFTC) to trade and clear swaps and options on digital currencies including bitcoin, successfully launched its bitcoin derivatives trading platform, clearing $1 million in orders within its first week.
In an official announcement, the LedgerX team admitted that the institution was expecting a “soft launch,” clearing minimal bitcoin derivatives and options trades for large-scale institutional investors and retail traders. The team further emphasized that it was planning on processing minimal volumes to test its platform and its infrastructure.
But, LedgerX ended up clearing over $1 million worth of swaps and options trades in its first week, which was unforeseen by the company and the cryptocurrency community. The LedgerX team said:
“As a new exchange and clearing house with technology built entirely from scratch, we were hoping for a quiet first week with minimal volumes to test the pipes. No press, no fanfare, just a laser-sharp focus on our customers, regulators and maybe we’d see a handful of small trades. Wow, were we mistaken — we ended up completing swaps and options trades worth over $1 million. Crucially, these trades were cleared through LedgerX, which is the only institutional grade, US federally regulated exchange and clearinghouse for digital currencies. And we are literally just getting started.”
As Wilson suggested, the probability of the emergence of bitcoin futures, options, and derivatives trading platforms leading to the approval of a bitcoin ETF is significantly high, because exchanges and clearing houses such as LedgerX are strictly regulated and overseen by financial regulators. All of its trades are protected, insured, and guaranteed, with regulatory oversight and trade surveillance.
“As a clearinghouse, we guarantee all the trades with the highest standard of oversight possible in partnership with the same US regulator that maintains the integrity of the foreign exchange, gold, and oil derivatives markets. There is no other platform in the world that can match the trade surveillance, regulatory oversight, and sophistication of financial instruments that we offer,” the LedgerX team explained.
Investor protection and trade surveillance of regulated platforms like LedgerX will play a vital factor in the approval process of bitcoin ETFs in the future. The SEC previously rejected the bitcoin ETF proposal of the Winklevoss twins in March due to lack of regulation in overseas markets and surveillance on trades.
Within the past seven months, major markets such as Japan and South Korea have significantly improved in terms of regulations. Specifically, the Japanese Financial Services Agency (FSA) imposed a national licensing program for cryptocurrency exchanges, recognizing digital currency trading platforms as regulated financial services providers.
Hence, the two major concerns of the SEC in regards to the approval of bitcoin ETFs that include lack of overseas markets and trade surveillance have already been resolved, increasing the probability of an approval for the cryptocurrency instrument in the upcoming months.
October 17, 2017
By Samuel Haig - October 17, 2017 (news.bitcoin.com)
CNY to bitcoin trading now accounts for approximately only 1% of all bitcoin trade occurring on exchanges, according to cryptocompare data. The Chinese cryptocurrency crackdown has drastically altered the global composition of bitcoin markets. 60% of bitcoin trading currently occurs through Japanese markets, with the U.S. and South Korean markets also comprising a significant share of the global bitcoin trade.
Japan Now Exerts Dominance Within the Bitcoin Markets
Last week, news.Bitcoin.com published a story that explained Japanese bitcoin trading comprises approximately 60% of all volume. Japanese trading volume spiked last year, following Japan’s passing of legislation recognizing bitcoin as a legitimate means of payment.
Approximately 80% of JPY/BTC trade during the last 24 hours took place on Bitflyer and Bitflyerfx. Coincheck is currently the second largest Japanese exchange, accounting for approximately 15% of trading. The third largest exchange, Zaif, comprises 4% of trading volume. As such, Japan’s bitcoin market is among the most centralized, with approximately 99% of BTC/JPY trading volume occurring on just three exchanges.
USD Comprises the Second Largest Bitcoin Market, Accounting for 25% of All Trading
The share of global bitcoin trading done in USD has fluctuated greatly over the years. During bitcoin’s infancy, the overwhelming majority of bitcoin trading was conducted in USD. Following China’s dramatic entrance into bitcoin markets at the end of 2013, the share of total trade conducted in US dollars fell to less than 10%. Since China’s crackdown on margin and cryptocurrency trading, dollar trade has risen to approximately one-quarter of all trade.
Bitfinex is the dominant exchange for USD trading, accounting for approximately 40% of the last 24h trading volume. Bitstamp is second, with 13%, followed by Gdax – 12%, Gemini – 7.5%, and Poloniex – 7%. The USD bitcoin markets are among the most decentralized, with approximately 90% of volume being shared across the top seven exchanges.
South Korea Has Emerged as a Significant Player in the Bitcoin Markets
Currently, South Korean volume accounts for roughly 9% of all bitcoin trading. The majority of South Korean trading occurs on Bithumb, which currently comprises 65% of 24-hour trade volume. Coinone and Korbit each account for approximately 17% of trade respectively. Bitcoin to Euro trading is the fourth most dominant sector of the bitcoin markets, comprising 3.3% of 24-hour trade volume.
Over the last twelve months, Chinese exchanges have gone from hosting over 90% of all bitcoin trade, to just 1% of the global volume. China is now the fifth largest market for exchange-based trading, with approximately 4600 bitcoins being traded for CNY on exchanges.
The Diminishing Presence of Chinese Bitcoin Exchanges
In January, it was announced that the People’s Bank of China would be monitoring the operations of the country’s major bitcoin exchanges. Soon thereafter, the PBOC placed restrictions on the amount of leverage offered for margin trading by Chinese exchanges, amidst accusations that high leverage trading may have been used to manipulate prices.
The ban on margin trading inspired speculation that bitcoin would not be able to sustain the bull trend leading into 2017 that had seen bitcoin break above $1000 USD for the first time since 2014. Ultimately, the clamp-down on Chinese margin trading appeared to have been interpreted as a positive indication of the cryptocurrency’s maturation, as prices continued establishing all-time highs despite the major Chinese bitcoin exchanges accounting for approximately 10% of total overall market share respectively.
Speculations of bitcoin’s inability to support record prices without a dominant Chinese presence again circulated in the run-up to most of China’s cryptocurrency exchanges ceasing operations by the start of October. With bitcoin setting new all-time price highs, it would appear that the bitcoin markets have emerged unscathed by the closure of most Chinese cryptocurrency exchanges.
Images courtesy of Shutterstock, Cryptocompare
Samuel Haig is a cryptocurrency and economics journalist who has been passionately involved in the bitcoin space since 2012. Samuel has written about the disruptive potential of cryptocurrency with regards to the dialectical relations within contemporary neoliberal capitalism.