November 24, 2017
JP Morgan is getting into Bitcoin Futures trading, Despite Jamie Dimon’s statement about Bitcoin’s fraud
BY Eugenia Kovaliova - November 22, 2017 (www.coinspeaker.com)
JP Morgan, one of the largest banking institutions in the United States, is looking at allowing its clients to trade bitcoin futures, while its Chief Executive James Dimon stays negative to Bitcoin believing it’s a fraud.
According to the latest Wall Street Journal report, JP Morgan Chase & Co., a leading global financial services firm operating worldwide and the US largest banking institution, is considering whether to provide its clients access to CME’s new bitcoin product through its futures-brokerage unit. The final decision depends on JPMorgan’s customers’ demand.
The news can seem a bit contradictory if we remember JP Morgan’s Chief Executive James Dimon, stating that Bitcoin is a fraud, which became the most outspoken critic of Bitcoin on Wall Street. Moreover, on multiple occasions Dimon hinted that he believes digital currency is a bubble that will crash. On a conference last month he said: “If you’re stupid enough to buy it, you’ll pay the price for it one day.”
Dimon also said he would fire anyone caught investing in Bitcoin and seemed to be ready to fulfill the promise. His finance chief, Marianne Lake, has struck a more measured tone. Last month she said that the firm was open minded to the potential uses for digital currencies so long as they are properly regulated.
Surprisingly, that despite Dimon’s negative attitude to cryptocurrency, JPMorgan would be moving forward with plans to allow clients to trade in it through the bank.
The introduction of Bitcoin Futures Contract by the CME group, which is planned to be launched by the end of the year, was followed by Bitcoin’s new all-time high of $8336. The upswing was recorded on Monday, November 20. And the rate doesn’t seem to stop rising. According to the predictions of legendary hedge fund manager and a billionaire trader Michael Novogratz, Bitcoin can touch $10,000 by the end of this year.
Apart from CME Group, a few more Wall Street financial institutions have turned optimistic about Bitcoin’s future. One of such examples is LedgerX, a federally regulated exchange and clearinghouse, which has initiated the first-ever long-term Bitcoin futures ‘option’ pegged at a price of $10,000.
Bank of America Merrill Lynch has recently stated that bitcoin futures could help dampen the coin’s volatility:
“We would not overstate this, as a material reduction in volatility would require there to be a large community of speculators prepared to provide liquidity to the natural owners of the various coins, but given the volatility of the coin markets, maybe there already exists a cadre of participants who would look to short coins on strong days and vice versa, which could overall reduce volatility.”
Still, some experts continue to doubt that bitcoin futures would be positive for the markets, holding on to the point that such a product could ultimately destabilize the real economy.
November 18, 2017
By Michael del Castillo - November 18, 2017 (www.coindesk.com)
LedgerX just initiated its first long-term bitcoin futures option.
Called a Long-Term Equity Anticipation Security (LEAPS), the trade was matched by the platform this morning and is set to expire on December 28, 2018.
Under the terms of the deal, the buyer has the right to buy bitcoin at a price of $10,000 at that date, or almost a 30 percent premium on today's price.
Yet, because the buyer only makes money if the price is more than $10,000 (called the strike price), the investment can be seen as a reflection of the level of confidence that the price will reach that level by the agreed upon date.
Such long term futures options have long been seen in the industry as a much needed sign of maturity, and could in part help pave the way for even more institutional money to enter the space.
In an exclusive interview with CoinDesk, LedgerX CEO Paul Chou sought to position the milestone as just the first of many more before the cryptocurrency market can truly be considered mature.
"There will be, I expect, a lot more trades down the line. This is the first one, but it at least gives you the first guess from different institutional traders as to what bitcoin's dynamics will look like from now until 2018."
The trade option was listed by LedgerX late Friday night, and to Chou's surprise, two institutional investors agreed to the terms of the deal just one day later.
Under the terms, the buyer agreed to a price of $2,250.25 for the trade, meaning the seller collects that money if the price is less that $10,000 by the end of next year, and the buyer gets to purchase bitcoin at the strike price if it is higher.
Unlike a futures swap however, the buyer is not obliged to purchase the asset.
"If the price goes to zero, you don't have to pay $10,000 for it," Chou said. "But if a year from now it's at $20,000, then you can exercise your options."
Based on LedgerX's own calculations (made using the Nobel-prize winning Black-Scholes financial markets model), the startup believes there is a 25 percent chance that bitcoin will reach that level in the allotted time.
While this is the first LEAPS financial instrument matched by New York-based LedgerX, they've been conducting increasingly high trade volumes since their soft launch a month ago.
As reported by CoinDesk, LedgerX traded $1 million in bitcoin derivatives its first week of trading, ending Oct. 20.
Since then, the first cryptocurrency firm to be granted a derivatives clearing organization (DCO) license by the CFTC has posted a $1 million day, a $1.6 million day and on November 15, a record $2.6 million day.
Since LedgerX listed the LEAPS option at 5:30 Friday evening, Chou says they saw an additional $500,000 traded before midnight. "That's for a holiday week too," he said. "So we were shocked." He estimates the company has conducted approximately $16 million in notional bitcoin transactions to date.
While the startup's numbers seem to indicated active early interest, legacy institutions such as the Chicago Mercantile Exchange (CME Group) and the Chicago Board Options Exchange (CBOE) have both recently revealed their own similar plans.
Though Chou hopes to maintain his first-mover advantage, he said there's no hard date to launch into full operation. Rather, his team wants to make sure the platform scales well beyond the 1 million messages it sends per day before this milestone. He says he'd be "surprised" if that takes "more than a month," concluding:
"But it might be sooner."
Crystal ball image via Shutterstock
Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.
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 Bitcoin Derivatives Platform Launched With Government Regulation
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.”
Derivatives Trading Around Bitcoin Likely to Lead to ETF
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 21, 2017
By Jon Buck - October 21, 2017 (cointelegraph.com)
The proof, as they say, is in the pudding. The demand for ways to trade Bitcoin beyond simply buying and selling has become crystal clear by the trading spike on the LedgerX platform this past week.
In July, LedgerX received full approval from the US Commodity Futures Trading Commission to become a derivatives clearing organization (DCO). While the initial announcement was met with little fanfare, the impact on investors will be massive.
The company announced via their blog this week that the platform has gone live with a ‘soft launch.’ The company on boarded several institutions and opened doors for trading. The response was huge, with over $1 mln being trading in the first week alone. According to the company:
“…we ended up completing swaps and options trades worth over $1,000,000 USD. 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.”
The explosion in trading simply shows the massive level of demand that is underpinning the market at this time. Coupled with the recent price spike and stability over $6,000, these signs indicate a strong bull market for the near term.