Showing posts with label futures. Show all posts
Showing posts with label futures. Show all posts

December 09, 2017

Want to Short Bitcoin? The time to take action is now

By Kinsey Grant - December 07, 2017 (www.thestreet.com)

If you're not buying into the bitcoin hype, now could be the time to go short, as fees related to placing a short bet on the cryptocurrency could more than double
when bitcoin futures go live next week.


Bitcoin is going wild Thursday, Dec. 7. But if you're not buying the rally, now could be the time to place your short bets.

The digital currency has surpassed five major threshold prices in the past two days. After trading above $16,100 midday Thursday, bitcoin pared gains slightly, still higher 16.18% for the day to $15,971.05 Thursday afternoon.

The surge in price comes ahead of the Sunday, Dec. 10, start date for bitcoin futures on Cboe. A week later, on Dec. 17, bitcoin futures will become available on CME. Investors looking to short bitcoin need to take action before futures start trading, according to S3 Analytics.

Shorts on Grayscale Investment's Bitcoin Investment Trust (GBTC) , which is the only ETF whose performance is directly tethered to bitcoin's market price, has averaged $21 million for the year. Short interest hit a high of $71 million on Tuesday, Dec. 5.

Shorts are down $45.9 million in year-to-date mark-to-market loss, S3 wrote, or down 217%. About $39 million of that loss has been registered since October, when the bitcoin rally amped up considerably.

But the cost to short bitcoin hasn't been cheap, S3 found. Stock borrow costs have averaged a 10.2% fee for the year, and "borrow rates are getting more expensive as borrow supply diminishes," S3 said. Since GBTC is more of a retail-owned stock than an institutionally owned stock, new shorts are being charged an 18.5% fee.

"If short interest continues to climb, we should see new borrow rates hit the 50% fee level quickly," S3 said.

The cost to short the GBTC fund could rise higher than 50% and possibly near 100% by the time the first futures contract trades, S3 noted. Many analysts have asserted bitcoin is headed for a pullback when futures open for trading.

"While the futures contract will allow easier and safer bitcoin short selling, it will also allow for easier and safer bitcoin long buying," S3 said. "Long GBTC holders may feel the pain of its 53% asset premium shrinking, while short-sellers will probably be incurring a 50%+ stock borrow fee -- both sides will be paying a premium in order to ride the bitcoin roller coaster once the Cboe futures start trading."

November 29, 2017

Bitcoin Futures Trading is coming to Nasdaq, the World’s Second Largest Stock Market

By Joseph Young - November 29, 2017 (www.cryptocoinsnews.com)


The $6.831 trillion stock market Nasdaq, the world’s second-largest stock exchange behind New York Stock Exchange, will enable bitcoin futures trading by mid-2018.

Nasdaq and Cantor to Integrate Bitcoin by First Half of 2018


A Wall Street Journal report revealed that Nasdaq and Cantor Fitzgerald & Co. will list bitcoin futures within the first half of 2018. The two financial institutions are “rushing” the integration of bitcoin given the cryptocurrency’s recent surge in price, to $11,441.

According to sources familiar with the Nasdaq’s plans for a bitcoin futures exchange launch, Nasdaq’s bitcoin futures and contracts will be listed on Nasdaq Futures. Through that, investors in the traditional finance sector and stock brokerages will be able to engage in bitcoin trading.

In an interview with WSJ, Cantor, a major US-based financial firm, also revealed that it intends to launch bitcoin futures and derivatives on its flagship exchange.

Shawn Matthews, chief executive of Cantor Fitzgerald & Co., stated that cryptocurrencies are a new asset class that “is not going away,” and that bitcoin is here to stay.

He stated:

"The asset class is not going away. If you look at the next level, it will be the institutions coming in and being larger participants in the marketplace, especially as liquidity gets better".

Cantor’s futures exchange has already been approved by the US Commodities and Futures Trading Commission (CFTC), and considering that CFTC has approved several bitcoin futures listings including the bitcoin options, derivatives, and futures exchange of LedgerX, regulatory hurdles of Cantor in listing bitcoin are expected to be minimal.

Nasdaq’s Bitcoin Integration Will Trigger Other Exchanges to Adopt Bitcoin


Other major exchanges including Nodal Exchange are actively investigating the potential of listing bitcoin futures on their regulated exchanges and trading platforms.

John D’Agostino, a former Nymex executive, told WSJ that every department of every regulated exchange is considering listing bitcoin futures, and that the number of bitcoin futures exchanges will drastically increase throughout 2018, as leading exchanges and markets such as CBOE, CME, Nasdaq, and Cantor move to implement bitcoin.

“Every research department of every regulated exchange is saying, ‘Can we do this?. The majority of costs associated with that are marketing. If people want to trade this thing, why wouldn’t you?. This is a gift from the heavens,” said D’Agostino.

In early 2017, the integration of bitcoin futures could have required marketing to a certain extent to attract investors within the traditional finance sector. Currently, the mere act of integrating bitcoin is an impeccable marketing strategy. Some reports revealed that if multi-billion dollar companies like Overstock switch their businesses to cryptocurrency-focused ventures, they are likely to see 70 to 100 percent increase in sales and market valuation.

Given the rapid increase in the mainstream adoption of bitcoin and the rise in demand for cryptocurrencies, every exchange in the US and in the global finance market is planning to integrate bitcoin in the short-term. Nasdaq’s listing of bitcoin futures will trigger more exchanges to pursue the path of bitcoin futures in the upcoming months.

Featured image from Shutterstock.

November 26, 2017

Bitcoin will be safe haven during next stock market crash, Says expert

By Gareth Jenkinson - November 26, 2017 (cointelegraph.com)


As Bitcoin powered ahead to a new high for a second week in a row, some have speculated that institutional investors could seek safe haven in the virtual currency in the future. The prevailing rhetoric over the past month has been more affirming than damning of cryptocurrencies, with the likes of Ronnie Moas and Max Keiser predicting new highs in 2018. Speaking to RT, eToro analyst Mikhail Mashchenko says financial institutions could look to Bitcoin if a major financial crash hits global markets.

“The demand for Bitcoin is growing as the crypto market has become less volatile, and an increasing number of professional investors see it as insurance.”

Second-oldest bull market


The current bull market in stocks is the second-longest in history, according to Fortune, having lasted 104 months so far. The longest bull market in history ended in 2000 after an impressive 113 month run. With the current rally getting a bit long in the tooth, many on Wall Street are making contingency plans for the stock market’s inevitable turn. If Mashchenko is right, Bitcoin will have a role in some of these plans.

Shifting opinions


Mashchenko’s statements come on the back of changing sentiment in the mainstream financial sector. Last week, JP Morgan Chase announced plans to offer Bitcoin futures on the Chicago Mercantile Exchange - an important move by one of the biggest banking and financial services providers in America. Even more satisfying, this moves comes only months after Chase CEO Jamie Dimon condemned Bitcoin as a scam.

Online banking service providers and exchange operators LedgerX and Revolut are also adopting Bitcoin support. The former was recently cleared to offer Bitcoin derivatives as people look to do more than just trade the cryptocurrency.

“LedgerX launched its first long-term options for Bitcoin, with an expiration date of December 28, 2018. In the coming months, we will continue to see the ‘domestication’ of Bitcoin: the Chicago Board Options Exchange and the Chicago Mercantile Exchange are planning to launch tools based on the cryptocurrency in the near future.”

Big money


If and when a stream of institutional investors start investing large amounts of capital into cryptocurrencies, some of the stunning predictions made by Bitcoin bulls could well be realised. However, Mashchenko’s prediction was quite conservative, suggesting that Bitcoin reaching a $10,000 high by the end of 2017 would be driven by emotion rather than fundamentals:

“We could see a Bitcoin at $10,000 in a month or so. However, such a surge will be based on emotions, not on fundamental factors. So, further growth of the cryptocurrency will require something more than euphoria.”

Having hit the $8,000 mark last week, Bitcoin surged another $1,000 dollars in just a few days, breaching the $9,000 level during the Thanksgiving weekend. At press time, the price of Bitcoin sits at $9,500, just $500 below Mashcenko’s predicted level.

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 23, 2017

Max Keiser - Bitcoin to reach $100,000, Calls Bitcoin Cash a fraud

By Rebecca Campbell - November 23, 2017 (www.cryptocoinsnews.com)


Max Keiser has said that bitcoin will increase to $100,000 from its current $8,000 value and believes that bitcoin cash is plagiarising it.

Host of Russia Today’s ‘Keiser Report,’ Keiser recently spoke to RT with the advice of sticking with the cryptocurrency as it will continue to dominate the market, pushing it forward.

He said:

"Hundreds of obituaries have been written about bitcoin and none of them have come true and none will. Fact is, bitcoin is a gift from God to help humanity sort out the mess it has made with its money".

The number one cryptocurrency has risen in recent months spurred on by the announcement that the CME Group are planning to launch a bitcoin futures contracts in mid-December, pending regulatory approval. Just yesterday, it was reported that bitcoin had risen to a new all-time high of $8,380, after recovering from the post-Tether hack market volatility.

Remaining confident as to where the digital currency is heading, Keiser believes that it will hit $100,000. However, even though the combined market value is increasing he believes most of the trading will remain within the top 20 alt-coins.

He added:

"Ninety percent of trading is in the top 20 coins, and that will continue. Coins will come and go. The composition of the top 20 will change less frequently".

While he states that trading within the top 20 coins is unlikely to change much in the future, he doesn’t have good things to say about bitcoin cash, the third ranked cryptocurrency. According to Keiser, the alt-coin is simply copying bitcoin, stating that:

"Bitcoin cash is an alt-coin that has its fans just like many alt-coins. I don’t think anyone who uses bitcoin’s name and applies it to an alt-coin like bitcoin cash does is adhering to acceptable business practices. In other words, bitcoin’s brand is being stolen by a competitor that calls itself bitcoin cash and this is outright fraud in my opinion, just like it’s fraudulent to use Coca-Cola and Nike’s name to sell soft drinks or shoes".

Created at the beginning of August, bitcoin cash has been marketed as the digital currency alternative to bitcoin and the answer to bitcoin’s current scaling issues. Despite a lack of support during its early days, with its price remaining below that of $1,000, recent weeks has seen it reach new all-time highs. Since last week, bitcoin cash has risen from $800 to $2,900 and is currently trading at $1,491, according to CoinMarketCap.

Yet, despite its fluctuating price, bitcoin cash proponents Roger Ver and Calvin Ayre have proclaimed that ‘bitcoin cash is bitcoin.’

Featured image from Shutterstock.

November 22, 2017

‘Bitcoin will end the year at $10,000,’ Says billionaire investor Mike Novogratz

BY Bhushan Akolkar - November 22, 2017 (www.coinspeaker.com)


Renowned Bitcoin investor and crypto-hedge-fund manager, Mike Novogratz believes that Bitcoin can touch $10000 by the end of this year.

Legendary hedge fund manager and a billionaire trader – Michael Novogratz – is yet again seen pumping confidence in Bitcoin investors with his recent prediction.

It was just last month in October when Novogratz predicted Bitcoin to touch $10,000 in a time-frame of six months from then i.e. possibly my April 2018. However, these predictions were made before the announcement of Bitcoin-futures contract by CME group which catapulted Bitcoin prices to an unprecedented rally from over $5,500 to $8,000.

Now, in his recent interview with Bloomberg, Novogratz seemed to have turned more bullish than he was a month earlier and has reduced the time-frame of his previous to the end of this year. This means that as per Novogratz Bitcoin prices could touch $10,000 by this year-end.

Novogratz compared Bitcoin to an asset like gold calling it as the new ‘digital gold’ stating that “gold has value solely because people say it has value; bitcoin is built on an amazing technology, there’s a limited supply of it.

This whole revolution came out of a breakdown in trust in the 2008 crisis.” In addition to this, Novogratz also believes that the second-most popular cryptocurrency Ethereum will also surge considerably and trade above $500 by the year-end.

Mike Novogratz is very bullish on the future of Bitcoins and has established a $500 million Galaxy Digital Assets Fund which is the biggest-of-its-kind crypto-hedge-fund. The fund will focus on investing in the blockchain and cryptocurrency space looking to its revolutionary applications and a great future potential.

Novogratz’s hedge-fund has already started active investments in the blockchain space with its first investment in Worldwide Asset eXchange (WAX) which is a decentralized blockchain platform for the development of secure and transparent online in-game virtual item exchanges.

Following Novogratz’s comments, Bitcoin prices were seen shooting up again above $8300 after the prices fell by over 5.4% on yesterday’s news of $31 million worth Tether tokens getting stolen. Novogratz comments however instilled back the lost optimism in the market. It has to be noted though that Bitcoin has witnessed quite a bumpy ride in the past month with a huge volatility and price fluctuation.

According to CoinMarketCap, currently, it is trading at $8253.41 and is seen to be consolidating there. Commenting on the latest price fluctuations in Bitcoin prices, Novogratz said: “We’re in the second or third inning. Because prices have moved so far people are nervous. You made a whole lot of money, there’s news, so you want to book your profit and get out.”

The ambitious launch of $500 million worth crypto-hedge-fund marks Novogratz comeback as a prominent investor after suffering major losses at Fortress Investment Group LLC. Novogratz, who was away from Wall Street for over two years is back in action and is quite optimistic about the new blockchain revolution and the world of virtual digital currencies.

However, many of his peers from the Wall Street are quite skeptical about cryptocurrencies with some few prominent personalities like Jamie Dimon even calling Bitcoin as a big “fraud”. Neil Dwane of Allianz Global Investors said it’s a “scam for criminals around the world,” while Larry Fink of BlackRock Inc. said Bitcoin to be the best tool for money laundering activities.

Quickly pointing out to all his critics, Novogratz who is currently 52 said: “all of those guys are over 60 and I’m not. There’s some truth to that in that it’s difficult for someone who didn’t grow up in a digital world to understand that we’re moving into a digital world.”

In addition to Novogratz, there are several other prominent figures who have increased their targets for Bitcoin prices after the recent bull run. Standpoint Research’s Ronnie Moas has corrected his target second time this month from $11,000 to $14,000. There are several factors which can contribute to next upward journey for Bitcoin from here.

Not December: CME Group calls its previous BTC futures release date announcement an error

November 22, 2017 (bitnewstoday.com)


Looks like the Chicago Mercantile Exchange wants to delay the date of release of its one of the most-discussed innovative projects — a platform that will allow to use futures for Bitcoin. The possible reason of their decision to remove the announcement with the release date is that they do not want to launch a raw and insecure product. While it’s absolutely incomparable in terms of actors’ wealth and level of influence, the Bitcoin Gold team has made such a mistake and since then, people often mention the rawness of this currency quite often. CME seems to be more careful.

However, their decision to simply remove the old announcement with the December release date seems somewhat immature. Couldn’t they just update it with the new date and provide some delay reasons? Instead, according to Reuters citing the company’s spokeswoman, the original posting “was due to an error with the website”. Let us all just believe it was the website itself who wrote the date and that whole announcement, then, as no alternative explanations have been provided from any other company members. But if this is actually the case, CME really has to patent an artificial intelligence technology they apparently created by accident.

While CME postpones the date of the launch of Bitcoin futures, some rivals might potentially connect the fiat and the cryptocurrency market faster: Swiss companies already demonstrated their interest in developing BTC futures trading environments and Cboe Global Markets, too, wants to build bridges between the traditional market and the cryptocurrency market.

November 20, 2017

FUD from all sides - In defense of CME's Bitcoin Futures plan

By William Mallers - November 20, 2017 (www.coindesk.com)


William Mallers, Jr. started First American Discount Corporation with his father in 1984, eventually building it into the third-largest discount futures brokerage. He sold it in 2001 to Man Financial and then retired. 

In this opinion piece, Mallers argues CME Group's plan to offer bitcoin futures will benefit the futures trading industry and the bitcoin community alike – notwithstanding hand-wringing in both worlds about the idea.

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I'm a member of the Chicago Mercantile Exchange. I've also been a bitcoiner since 2013. So, when CME Group announced its intention to launch bitcoin futures in the coming weeks, I thought, "Great! Way to go, CME."

The first exchange to offer a futures contract on bitcoin is good news for my CME friends: more trading volume and and speculative opportunities. And it's also good for my bitcoin friends: the legitimacy and access is sure to help with adoption and higher bitcoin prices. Win-win! Right?

Well, that wasn't quite the response I got.

Instead I heard just about every negative stereotype about both futures trading and bitcoin, from both communities. Let's try to put these misperceptions to rest.


'Tulips' in 5,4,3...


First, there’s this from the futures industry’s most widely read blog, John Lothian News:

"The risk of bitcoin is in its history and the cloud surrounding its creation and early fraudulent days. Who is Satoshi? Where is he today? What happened at Mt. Gox? Is it still used to launder money? Why won't China let people trade bitcoin and what does this have to do with money laundering or capital controls?"

Good Lord. If you've been in enough arguments with bitcoin skeptics you know what's coming after the drug-dealing, money-laundering slam, right? Next up: the tulip-bulb analogy.

Sure enough, Lothian says, "I don’t want to be on the wrong side of history. But the history I am looking at is … 1636-37. That was the peak of tulipmania."

And that, my friends, is why I spent my first two years in bitcoin not sharing my passion with any non-bitcoiners. "Bitcoin? Never heard of it."

But because I have benefited from all the hard work that others have done to advance this project – hosting meetups, dispelling misinformation – and all I've done is log into my account and click "Buy," I thought I'd try to do my part.

A margin clerk's dream


Here's what I wrote to Lothian (a former employee at the futures brokerage I ran), and maybe it will help you with your bitcoin futures doubters:

"Hey John, it's Junior from your old FADC [First American Discount Corporation] days and I’ll be glad to help you understand bitcoin.

"But first – recall how you used to try to collect margin money by first asking the customer to provide a contact at his bank who could confirm that he had sufficient funds in his account and that he had initiated the wire. Why did we have you do that? Because we knew we wouldn’t get the money until the next day; his bank, while debiting his account immediately, would wait until the end of the day to wire us the money (unless he stopped the wire) and our bank wouldn’t credit us until mid-morning the next day, at the earliest.

"Now, imagine, instead of that 24-hour headache, your under-margined customer simply waved his cell phone at our FADC QR code and we got the money within 10 minutes, or at most a few hours. Bitcoin is a margin clerk's dream come true: near-instant peer-to-peer value transfer! It's easy to see why Jamie Dimon doesn’t like it, but a former margin clerk? You should be loving this technology and cheering for its adoption!                                                                                     

"I know having an asset protected by the computing power of a globally distributed network doesn't feel as secure as having armed guards protecting a bank vault, but if you get some time, there are websites that estimate the cost of amassing enough computing power to defraud the bitcoin network. This site estimates about $1 billion in electricity per day, plus over $1 billion in equipment, to counterfeit one transaction. In other words, it would be way cheaper for the Hunt brothers to corner today’s silver market than it would be for me to con an online retailer like Overstock into sending me free patio furniture. It's called a '51% attack' because I’d need to control a majority of the network hashing power to get a consensus mechanism to accept my phony accounting.

"Bernie Madoff-style cons are hard to pull off; I need years to earn my victims' trust, I have to get a reputable accounting firm to bless my forged statements, etc ... but Madoff's con was far easier than going undetected while amassing billions' worth of computing power. Plus, since new bitcoins are awarded to the miners proportionate to their computational contribution, if I did have that much computing power, I may as well amass bitcoins the honest way, right?

"That's one of the fun insights into this project: it manages to align all participants through economic incentive."

Overwhelming demand


When Terry Duffy, CME's CEO, says it's offering bitcoin futures in response to customer demand, I'm sure he’s right.

I know from writing brochures for commodity trading advisors that money managers want non-correlated assets. That's the only reason they own gold.

When the stock market tanks or a terrorist attack happens, that's when gold rallies. After 9/11, the stock market dropped over 7 percent, but gold spiked.

Bitcoin, like gold, is a perfect non-correlated asset to add to an investment portfolio. I am not surprised that there is such overwhelming demand for bitcoin futures from traders. Now, every trader is going to have the option to invest right there on their screen without having to do the onerous work of buying and securing bitcoin itself.

Risk controls


As for claims that CME futures trading will put the exchange at risk, they are overblown.

CME clearing privilege requires a large amount of capital. If a member's capital level drops below the threshold required to clear, the CME removes customer accounts and places them with a firm that has the capital to support them. Again, customers come first.

Stock index futures functioned as designed during the 1987 crash, grain futures likewise during the 1988 drought, currencies during the high volatility after the Plaza Accord. Consider this: prior to 1982, if you’d predicted where the most successful stock index contract would launch, you’d guess probably the New York Stock Exchange, right? But S&P 500 Index Futures launched at the Chicago exchanges next to the pork-belly pit, U.S. Treasury futures next to the soybean pit.

CME has done its homework on bitcoin; it's well aware of bitcoin's volatile price history and has the experience and controls in place to clear bitcoin futures.

Amazing, isn't it? The exchange that offers risk-management products should avoid bitcoin because it’s "risky?" Huh? I’ve never seen anything like bitcoin that inspires such lame arguments from its opponents.

This ain't Wall Street


Then, there's all the bitcoiners' FUD: "Here comes Wall Street to drive the price of bitcoin down, manipulate the market and ruin it for us!"

Suffice it to say, for many of the same reasons I gave above, I don’t believe that to be true.

Keep in mind that CME is not Wall Street. The Chicago exchanges have an ethos like bitcoin's: transparency, security, independence and accountability.

To all the people hand-wringing on both sides, let's just see how this plays out. I have decades of experience with the Chicago exchanges and feel reasonably certain that you all are wasting your breath and paying too much for full-page ads in print newspapers.

Let's get this thing to the moon!

Disclosure: CME Group is an investor in CoinDesk's parent company, Digital Currency Group.

Downtown Chicago 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.

November 18, 2017

First Long-Term LedgerX Bitcoin Option Pegs Price at $10,000

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.

Chou said:

"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.

Soft launch


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.

November 16, 2017

Bitcoin price pierces $7000

November 16, 2017 (www.forex-ratings.com)

The cryptocurrency market cap reached a new all-time high on Wednesday amid a generally-bullish day of trading. The bitcoin price set the tone for the rally, surging nearly $500 to recover past the $7,000 threshold for the first time since its weekend correction.

The total cryptocurrency market cap entered the day at $208 billion, and it climbed gradually throughout Tuesday evening. On Wednesday morning, the rally began to acquire steam, enabling the crypto market cap to leap to a new all-time high of $217.1 billion.

Bitcoin Price Pierces $7,000


The bitcoin price posted a 7% recovery on Wednesday, enabling it to climb nearly $500 in the past 24 hours alone. Since November 12, when the bitcoin price briefly crashed as low as $5,519, the flagship cryptocurrency has recovered by approximately $1,500, bringing it ever closer to the high-water mark it set last week shortly after the SegWit2x hard fork was called off. The bitcoin price is now trading at a global average of $7,004, which translates into a $116.8 billion market cap.

Several factors have contributed to this rally, most notably the fact that Man Group, one of the world’s largest hedge funds, stated yesterday that the launch of bitcoin futures contracts will convince it to make bitcoin part of its “investment universe”. However, traders are likely also bullish on the fact that mobile financial services application Square Cash is testing bitcoin integration and has already rolled the feature out to some users.

Ethereum Price Tests $340


The ethereum price continued its slow — but steady — advance on Wednesday, climbing another 3% to a present value of $338. Ethereum now has a market cap of $32.3 billion, bringing the second-largest cryptocurrency to its highest point since mid-October.

Bitcoin Cash Price Retreats


Bitcoin and bitcoin cash have taken inverse trajectories in recent days, and that phenomenon repeated itself — in direction if not degree — on Wednesday. While bitcoin and nearly every other major cryptocurrency experienced gains against the dollar, the bitcoin cash price declined 4%, reducing it to a current value of $1,289. Bitcoin cash has a market cap of $21.7 billion, making it approximately two-thirds the size of ethereum.

Market Swells at the Seams


Wednesday marked one of the most comprehensive crypto market advances in recent weeks, with 88 of the top 100 cryptocurrencies ending the day in positive territory.

The ripple price increased by 2%, while the litecoin price added 6% to rise to $65. The dash price recovered by 5% following Tuesday’s pullback and is now trading at $437. NEO’s 6% increase enabled it to broach the $30 barrier once again, and the monero price rose 1% to $124.

The competition for the last two spots in the market cap top 10 has been fascinating to watch this month, as no cryptocurrency has been able to cement its place in this echelon of the rankings. Today, IOTA burst into the ninth spot with a 19% increase, while NEM maintains the 10th position with a 3% gain. That makes ethereum classic, now ranked 11th, the odd token out.

November 15, 2017

Massive Hedge Fund likely to begin trading Bitcoin

By David Dinkins - November 15, 2017 (cointelegraph.com)


Reuters reports that Man Group, a UK-based hedge fund, will be getting involved in Bitcoin trading if CME Group’s plans to open a regulated futures exchange are approved. According to Business Insider, Man Group is “one of the largest hedge funds in the world” and the fund’s website points out that they manage $103.5 bln in funds.




































Effects


Even a fraction of $103.5 bln could make a big impact on the markets, but more important, Man Group’s announcement continues to solidify digital currency as being worth of Wall Street’s attention. Bitcoin in particular is finding more and more acceptance in traditional markets. Likewise, futures markets and hedge fund involvement create more on-ramps into the mainstream financial system and more ways for large but cautious investors to get involved.

Hedge funds are only open to accredited investors, that is, those whose net worth exceeds $1 mln. However, such funds have a much wider latitude to trade whatever types of assets or instruments it thinks would be profitable for its clients. Mutual funds, on the other hand, are open to regular retail investors but have greater restrictions as to how they can invest their funds.

The holy grail for retail investors would be an exchange traded fund, or ETF. A Bitcoin ETF would allow ordinary investors to easily gain exposure to Bitcoin by adding it to their brokerage or retirement accounts. Greater acceptance by Wall Street and greater liquidity on regulated futures markets, such as CME’s, will almost certainly usher in an ETF.

November 08, 2017

Bitcoin Futures mirrors Tulip Bubble Crash - UBS Analyst

By Josiah Wilmoth - November 08, 2017 (www.cryptocoinsnews.com)


A UBS economist says that CME Group’s plan to launch bitcoin futures contracts mirrors Tulipmania in 17th-century Holland.

As CCN has reported, Chicago derivatives exchange operator CME Group has announced plans to provide its clients with bitcoin futures contracts before the end of the fourth quarter. In addition to luring Wall Street capital into bitcoin-related products, the creation of bitcoin futures will likely lead to the first commercially-available Bitcoin ETF.

However, not everyone is excited about bitcoin derivatives. UBS economist Paul Donovan told CNBC that he sees dangerous parallels between the structure of CME Group’s bitcoin futures and the crash of the Dutch tulip bubble in 1637.

The tulip bubble comparison has been hashed and rehashed on multiple occasions, and as CCN has explained in the past, it is inaccurate. However, Donovan introduces a new dimension to the argument by focusing his criticism on the similarity between the proposed bitcoin futures contracts and the tulip futures that contributed to the collapse of the tulip market in Holland.

Specifically, he points to the fact that the futures will be cash-settled rather than commodity-settled. Ordinarily, the way a futures contract works is that a buyer and a seller agree on a price for a commodity that will be delivered on a certain date. Professional traders buy and sell these contracts to place bets on the future value of the underlying commodities, and whoever owns a contract at its expiration receives physical delivery of the commodity.

However, CME’s bitcoin futures will be cash-settled, which means that cash will be delivered upon contract expiration rather than bitcoins. Donovan says this mirrors the creation of cash-settled tulip futures in Holland in 1636 – just one year before the tulip bubble popped.

“The idea of not physically delivering the product was rather shocking to contemporaries (as it turns out, the market crashed before bulbs could have been delivered anyway – bulbs were lifted in June 1637 for physical delivery). Traders met in groups (in taverns), called ‘Colleges.’ Think of the taverns as the cryptocurrency exchanges of their day,” Donovan said.

Donovan is not the only person at UBS to express skepticism about the future of bitcoin. Just last month, the investment bank published a research paper referring to bitcoin as a “speculative bubble”. Nor is he the only critic of CME’s launch of bitcoin futures. Themis Trading principal Joe Saluzzi said that the exchange was “playing with fire” and said that the products reminded him of the collateralized debt obligation (CDO) products that contributed to the 2008 financial crisis.

Posted by Josiah Wilmoth
Josiah is a former ancient and medieval literature teacher. He has been writing about cryptocurrency since 2014, and his work has been cited in Business Insider, NPR, and Yahoo! Finance. He lives in rural North Carolina with his wife and son. Email him directly at josiah.wilmoth@cryptocoinsnews.com.

November 04, 2017

Equities brokerage warns against CME’s Bitcoin Futures plan

By Lester Coleman - November 04, 2017 (www.cryptocoinsnews.com)


Themis Trading LLC, an equities brokerage agency for institutions, has joined the attack on CME Group’s decision to launch bitcoin futures. A recent blog on the company’s website argues that the U.S. Commodity Futures Trading Commission (CFTC) should not approve CME’s bitcoin futures.

Other Wall Street investors have also spoken out against CME’s bitcoin futures and compared it to collateralized debt obligations that caused the 2008 financial crash.

Calling themselves “market structure critics,” Themis Trading states right off the bat that they are “by no means cryptocurrency experts” and have joked that they would never write a note on blockchain.

CME Reverses Its Position


The blog takes CME Group President Bryan Durkin to task for reversing his position from a couple of months ago that he had no intention to launch bitcoin futures. The blog cited a Bloomberg TV interview in which Durkin said he doesn’t see going forward with a futures contract in the near future since bitcoin is “very nascent right now.”

The reason for his reversal can be found in CME CEO Terry Duff’s acknowledgment that clients are demanding such a product, the blog noted. Another reason is that CBOE announced plans to list bitcoin futures and LedgerX is already trading options and swaps.

Exchanges Cave To Demands


Themis Trading views bitcoin futures as part of a problem that has been going on in the equities market for years. Big, high-frequency clients demand a product from exchanges that are willing to comply because they don’t want to lose an opportunity, even if they themselves have reservations about the product.

Major equities exchanges such as BATS and NYSE get fined millions of dollars as a result of caving in to big clients for sending market data to certain customers before other customers and for not disclosing special types of orders.

Themis Trading believes CME knows the underlying bitcoin market is “very suspect.” CME knows, according to the blog, that bitcoin exchanges have been subject to many fraud cases over the past few years, and that there is no regulation of bitcoin exchanges.

CME rationalizes creating a futures product based on “an underlying market of bucket-shop type exchanges” by creating a reference price called the CME CF Bitcoin Reference Rate, a volume-weighted average of 5-minute time intervals that a select group of bitcoin exchanges provides. The averages were necessary since bitcoin spot prices have varied a lot across trading venues, especially during periods of high volatility, CME has noted.

The creation of an index serves to legitimize bitcoin trading, the blog observes.

Also read: World’s largest derivatives exchange CME Group to launch bitcoin futures

Bitcoin Still Risky


The SEC stated in denying the Winklevoss bitcoin ETF there is a lack of regulation of bitcoin exchanges. One observer noted at the time that illegal practices would be easy to implement and impossible to detect.

Themis Trading claims it would be dangerous for the CFTC to approve the bitcoin futures proposals, given the SEC’s concerns about lack of regulation. Themis Trading compared the proposal to collateralized debt obligations sold during the financial crisis – instruments that gave a sense of approval for high-risk mortgages. A bitcoin future would give a similar approval to an unregulated and risky instrument with a history of fraud.

Themis Trading further fears that such approval would sway the SEC to approve bitcoin ETFs, which would get buried in portfolios that lack risk tolerance for trading unregulated assets.

The company claims it is not anti-futures, anti-bitcoin or anti-ETF, only anti-fraud. Until bitcoin exchanges “clean up their act” and address the surveillance issue, derivative cryptocurrency products should not be approved.

Featured image from Shutterstock.

Bitcoin exchange Coinbase adds 100,000 users in 24 hrs, Shows surging interest in Crypto

By Jacob J - November 04, 2017 (cointelegraph.com)


The announcement by CME that it plans to launch Bitcoin futures has resulted in a spike in interest across the world. Coinbase, the world's largest Bitcoin exchange, has added 100,000 new users in the 24 hours past the announcement.

Why Coinbase matters


Coinbase is a popular exchange to buy Bitcoins with 11.9 mln users supported across 32 countries.

It was one of the earliest exchanges to support Bitcoin trading in the Western world, doing so when Bitcoin was valued in single digits. It supports merchants as well, allowing them to accept Bitcoins for their products and services, but removing the price risk by crediting fiat currency to their accounts.

Coinbase became the first unicorn of the crypto industry after it raised $100 mln in August 2017, implying enterprise valuation of $1.6 bln. The CEO of Coinbase, Brian Armstrong, is also on Fortune’s 40 under 40 list.

The Stampede


The launch of Bitcoin futures by CME is expected to bring a deluge of institutional money into Bitcoin. Individual investors seem to be stampeding towards Bitcoin exchanges, trying to get their hands on Bitcoins before institutional investors make it out of reach.

According to data compiled by Alistair Milne, of the Altana Digital Currency Fund, over 100,000 new users have joined Coinbase in the 24 hours since the CME announcement.

The exploding Bitcoin price has resulted in a sharp increase in the number of users of Coinbase, which has already doubled in 2017 to reach 11.9 mln users.

Handling the surge


With hundreds of thousands of new users, the demand (and price) of Bitcoin is expected to eventually explode. It is estimated that currently less than 0.5 percent of the global population is invested in crypto space.

While Coinbase has insurance protection for cryptocurrencies saved on its servers, questions will be asked about the robustness of its trading platform.

A flash crash caused by a large order on Coinbase’s GDAX exchange resulted in Ethereum's price dropping to 10 cents for a short period of time, triggering stop loss orders. With increasing number of users, it is not just Bitcoin which is running full blocks and has a scalability problem; Bitcoin exchanges have to scale up too.

October 31, 2017

World’s largest Options Exchange to launch Bitcoin Futures, optimistic long-term indicator

By Joseph Young - October 31, 2017 (www.newsbtc.com)


CME Group, the US-based financial market company operating the world’s largest options and futures exchange, has officially announced its plans to launch bitcoin futures by the end of 2017.

In a corporate statement, CME revealed that its bitcoin futures trading platform is currently being reviewed by US financial authorities and regulators. Upon the approval of the US government in the fourth quarter of 2017, CME will launch a bitcoin futures exchange for institutional and retail investors.

Terry Duffy, CME Group Chairman and Chief Executive Officer, stated:

“Given increasing client interest in the evolving cryptocurrency markets, we have decided to introduce a bitcoin futures contract. As the world’s largest regulated FX marketplace, CME Group is the natural home for this new vehicle that will provide investors with transparency, price discovery and risk transfer capabilities.”

It Has Become Difficult For Large Markets to Dismiss Bitcoin


Even for some of the largest financial conglomerates like CME Group, Goldman Sachs, and Fidelity, it has become increasingly difficult to dismiss bitcoin and the rapidly rising demand from their clients. Consequently, CME revealed its plans to address the growing demand for bitcoin by introducing an infrastructure for retail traders, Goldman Sachs disclosed the possibility of launching a cryptocurrency trading platform, and Fidelity have started to allow clients to invest in cryptocurrencies.

Earlier this week, during a presentation, highly regarded bitcoin and security expert Andreas Antonopoulos described the competition of bitcoin against the traditional financial industry in its early stages as a lemonade stand up against Walmart. But, the dismissive attitude of banks and financial industries have led to the emergence of a $180 billion market with nearly $4 billion in trading volume.

Within 9 years, the bitcoin market has matured to a point wherein financial service providers like CME and Fidelity can either isolate themselves from the market and allow the market to grow exponentially without their involvement, or participate in the market and help the industry grow at a faster rate. CME and Fidelity have chosen the path of assisting the cryptocurrency market and addressing the demand for bitcoin from clients, investors, and traders.

Can Bitcoin Evolve into a Trillion Dollar Market


Upon the launch of the CME bitcoin futures exchange, Crypto Facilities’ BRR system, which aggregates the trade flow of major bitcoin exchanges including Bitstamp, GDAX, itBit, and Kraken, will be used to evaluate the market valuation and price of bitcoin in real-time. Timo Schlaefer, the CEO of Crypto Facilities, said:

“We are excited to work with CME Group on this product and see the BRR used as the settlement mechanism of this important product. The BRR has proven to reliably and transparently reflect global bitcoin-dollar trading and has become the price reference of choice for financial institutions, trading firms and data providers worldwide.”

With LedgerX in place, the integration of bitcoin by CME will further trigger the interests and demand from institutional investors and retail traders, which will allow bitcoin to evolve into a trillion dollar market in the long-term.

Joseph Young
Joseph is a web developer and designer, writer and a passionate musician who loves to travel often. He's worked as a researcher for a number of venture capital firms and as a freelancer designer for resorts and corporations in Korea and the Philippines. Joseph will be covering new technologies, startups, technical analysis and breaking news in the bitcoin industry.

October 27, 2017

Bitcoin ETF is coming - US Futures Market executives

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).

Wilson stated:

“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.