November 26, 2017
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.”
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.
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.”
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.”
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 31, 2017
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 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
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.