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Millennials Could Drive Crypto Industry by Ditching Banks

Millennials Could Drive Crypto Industry by Ditching Banks

The current levels of cryptocurrency adoption by millennials is seen by many analysts as a negative sign for traditional banking as more and more of this age group become disillusioned by the current financial system.

The general view borne out by much research on the subject is that millennials simply don’t trust banks. Research conducted last year by Edelman Intelligence, a global, research and analytics consultancy owned by Edelman, the world’s largest public relations company, showed that 77% of prosperous millennials feel the traditional financial system is “designed to favor the rich and powerful”.

The statistics are revealing, and that lack of trust led to the same nearly 4 out of 5 respondents to predict that another global finance crisis was imminent due to the banking system’s “bad behavior”. Another 75% were worried that the global financial system was at risk of being hacked, causing the respondents concern about the potential loss of their own private financial information.

Thus millennials are putting their faith elsewhere, as the figures illustrate: some 17.2% of millennials own cryptocurrency. According to Edelman’s study, a quarter of wealthy millennials own cryptocurrencies, a further 31% are interested in crypto, and a huge 74% put their faith in blockchain as a far safer system than the global financial space is currently able to offer.

Another survey by Sustany Capital showed that 88% want to invest in cryptocurrency and 42% like to “use cryptocurrency as savings”. The switch from conventional banking becomes more feasible for many given more education, with another survey revealing that 97% of surveyed millennials and generation X’ers said they would like to learn more about the workings of cryptocurrency. Many felt that they would be more likely to invest with financial advice demonstrating a potential professional gap in the market.

As millennials search for a whole new way of conducting their finances in a way where they can help themselves, rather than simply feed banking institution profits, cryptocurrency is becoming considered far more seriously than the early days where it was seen by this age group as just a hit or miss gamble.

As for Bitcoin’s stability, much disputed in 2018, Bloomberg shows that even with the price of the cryptocurrency dropping by 80%, the total number of users starting in the same period has doubled to 35 million.

 

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Crypto Fund Strategies Edge Out Hedge Fund Models

Crypto Venture Fund Strategies are Beating Hedge Fund Models

A report from Bloomberg shows the changing nature of cryptocurrency investment, with crypto venture fund strategies surpassing their hedge fund counterparts for the first time.

The reason for this shift is suspected to be the changing conditions brought by the ongoing bear market and the collapse of initial coin offerings (ICOs) in the wake of the increased regulation from the US. The prices of tokens fell up to 90% last year, meaning investors wanted out and venture funds replaced them, entering with purchases at cents on the dollar.

Jeff Dorman, partner and portfolio manager at Los Angeles-based Arca, explained to Bloomberg the benefit for the venture capitalists, saying that it was an opportunity to ”buy below even the cash value of the company”.

Last year, 125 new cryptocurrency venture funds launched, compared to 115 investment-oriented cryptocurrency hedge funds — a stark difference to 2017 that saw 136 hedge funds and just 85 venture funds emerge.

This change is perhaps not surprising; Eurekahedge Crypto-Currency Hedge Fund Index reported average losses of around 70% for crypto hedge funds in 2018.

Despite poor performances, several hedge funds told Bloomberg they are seeing an influx of institutional investors. “We are talking to a lot”, one contributor added.

 

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Fidelity Bitcoin Custody Service Coming in March

Fidelity Bitcoin Custody Service Coming in March

Multinational financial services corporation Fidelity Investments is reportedly giving itself a March deadline to launch its Bitcoin custody service. Bloomberg reports three people familiar with the matter confirmed the March target, although the sources were not named.

The cryptocurrency custody solution is being developed to service the much anticipated institutional investors entering the market; retail investors will be unable to access the service when it does launch.

The cryptocurrency storage service was first announced in October last year, with Fidelity betting it is only a matter of time before Wall Street investors move to the cryptocurrency market. CEO Abigail Johnson said at the time: “Our goal is to make digitally native assets, such as Bitcoin, more accessible to investors.”

Johnson has advocated in favor of cryptocurrency for years, introducing Bitcoin and Ethereum mining at Fidelity in 2017. Clients have also been able to access balances from their Coinbase accounts on the website for several years.

The sources also disclosed to Bloomberg that an Ether custody solution would be the next focus for the firm.

Fidelity Investments administers over USD 7.2 trillion in customer assets and is based in Boston, USA.

 

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Sleeping Bitcoin Whales Could Make the Market Splash in 2019

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The early movement in the reactivated dormant Bitcoin (BTC) wallets in 2019 indicate that prices may soon see some bearish movement, according to analysts.

According to Bloomberg’s data analysis compiled from research by a crypto analytics startup — Flipside Crypto, BTC is being transferred from accounts, many of which have not been active between the period of six and thirty months. Research shows that wallets active in the last month represent about 60 percent of total bitcoin in circulation.

Flipside maintains that the active supply of Bitcoin is on the move, leaping 40 percent since the summer of 2018, representing “a big shift” according to Eric Stone, head of data science at the company. Flipside CEO David Balter said this activity is due to long-term holders coming back on board after sitting out the volatile market since 2017. Balter sees that this could continue, with little doubt in his mind that many long term “hodlers” won’t wish to sit on the sidelines for another two years, commenting that there is now, “more potential than usual for price swings.”

Other analysis, compiled in October 2018 when this market trend began, put together by blockchain research firm Chainalysis, reported that only a third of so-called Bitcoin whales were active traders, buying only on price declines, concluding that whales were not responsible for price volatility.

With around 1000 wallet addresses reportedly owning a staggering 85 percent of all bitcoins, the awakening of some of these dormant accounts in the near future could have a significant impact on the Bitcoin price in 2019 and ultimately the entire cryptocurrency market.

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Nasdaq Bitcoin Futures Confirmed

Nasdaq Bitcoin Futures Confirmed

Just last week, Bitcoin News reported Bloomberg’s findings on the world’s second largest stock exchange’s plan on moving forward with Bitcoin futures listing. This week, Nasdaq has cleared the air of all speculation by confirming this.

UK news outlet Express heard it from the horse’s mouth yesterday that Nasdaq would definitely be launching its Bitcoin futures within the first half of next year. This was obtained from two credible inside sources from within the organization.

Vice president of Nasdaq’s media team Joseph Christinat told an Express point man: “Bitcoin Futures will be listed and it should launch in the first half of next year – we’re just waiting for the go-ahead from the CFTC but there’s been enough work put into this to make that academic.”

Christinat added, “We’ve seen plenty of speculation and rumors about what we might be doing, but no one has thought to come to us and ask if we can confirm it, so, here you go – we’re doing this, and it’s happening.”

The current market trends might just be in need of a good news as this, in particular, is of more interest to institutional investors. However, this has a way of rippling into other mainstream financial affairs. The most likely of all institutions to feel the most impact would be traditional banking institutions, as the move will enlighten them on the serious roles cryptocurrency has in the future of finance. More so, it may be a step closer to legitimizing the market.

From Joseph’s statement, it would seem that they are no strangers to the development of both the blockchain technology and the cryptocurrency market, as he does emphasize on the efforts of the exchange toward engaging with the new venture.

“We got into the blockchain game five years ago, and when the technology first popped up we just leaned out of the window and shouted “hey come over here” right at it.”

However, the most assuring is that the exchange has spent so much on achieving this milestone:

“We’ve put a hell of a lot of money and energy into delivering the ability to do this and we’ve been all over it for a long time – way before the market went into turmoil, and that will not affect the timing of this in any way. No. Period. We’re doing this no matter what.”

Right now, all that’s left for the exchange is the final confirmation from the CFTC. This would also be the case with other players who are currently looking to launch their Bitcoin futures too. In the case of VanEck partnering with SolidX for a physically-backed Bitcoin exchange-traded fund (ETF), they are simply waiting on the US Securities and Exchange Commission (SEC) for approval.

 

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Coinbase Shoots Down IPO Plans, Plans 300 Crypto Listings

The President and Chief Operating Officer (COO) of prominent US-based cryptocurrency exchange platform Coinbase shared in an interview on Wednesday that there were no plans for an initial public offering (IPO) any time in the near future.

Instead, Coinbase will reportedly be focusing on a number of new diversifications, including listing up to 300 different coins.

Speaking to Bloomberg, Asiff Hirji responded to questioning regarding whether a Coinbase IPO was on the cards for 2019, saying, ”There’s not going to be an IPO any time soon. We have so much to do.” This shot down rumors stirred by CNBC host Ran Neuner in a Twitter post last week.

Hirji, who himself first brought up the potential for an IPO in 2017, does not rule out taking the company public when the time is right, although says diversifying revenue streams and adding more features to the platform is the top priority right now.

Bringing up the topic of expanding Coinbase’s cryptocurrency listings, the COO revealed plans to multiply the current standing of seven listings up to somewhere between 200 and 300 in the next year. Some of these will be offered in the US but the majority will be offered outside of the country, he shared, because of the Security and Exchange Commission’s (SEC) strict regulatory guidelines.

Another key area in future diversification Hirji pointed to was areas of the business that caters to institutional investors.

Over time, Hirji expects ”Coinbase institutional”, as Bloomberg’reporter referred to it, to become a large chunk of the company’s revenue source, ”more than its fair share”. Coinbase’s revenue model is right now 100% transactional, while diversification efforts could provide new avenues, such as fee-based custody services adding more stability and predictability to the revenue stream.

Upon completion of a new funding round that raised USD 300 million, Coinbase Inc is now valued at approximately USD 8 billion.

 

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Mike Novogratz: Institutional Investments in Bitcoin During Q1 2019 to Bring New Highs

Notorious Bitcoin bull and seasoned investor Mike Novogratz no longer stands by his USD 10K Bitcoin price prediction for 2018, instead suggesting that institutional investors may push it to that total early next year.

Novogratz’s comments came in a Bloomberg Television interview where he defended his previous prediction, saying the cryptocurrency process has been a learning curve with everything taking ”longer than expected.”

He compared the whole crypto ecosystem to a fourth grader being expected to materialize into a graduate. One of the issues Novogratz pointed to is the need for internal committees and testing to solve custody problems that leave investors ”screwed” if anything illicit happens to their assets.

The conversation turned to Fidelity Investment’s announcement of a ”world-class custody solution,” to quote Novogratz, aimed at institutional investors. Considering cryptocurrencies as bare financial instruments, this class of investors has been held back from entering the market due to uncertainty surrounding the storage of cryptographic keys that allow access to the assets

Fidelity is offering them insurance that they can place their bets with cryptocurrency knowing that they won’t lose their money in an illicit way.

Combined with Goldman Sachs’ crypto custody solutions in the works, Novogratz believes that ”slowly but surely institutional investors are becoming more comfortable with the whole asset class.” As he reasons it, the institutional flow of capital can be expected in Q1 of 2019, or early Q2.

Being a Bitcoin trader himself, Novogratz has shared that right now, he is going long. In defense of Bitcoin’s mid-week stumble last week, he argued that it is still a young asset that certainly is not without volatility. Meanwhile, he stands firm on his belief that it is a valuable store of value, particularly in countries facing economic crises such as Iran and Venezuela.

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Morgan Stanley to Offer Clients Bitcoin Derivatives Trading

American multinational investment bank Morgan Stanley is reportedly planning to offer clients the chance to trade in Bitcoin derivatives, reports Bloomberg from an anonymous source.

The source, who claims to be close to the matter, shared with Bloomberg that the New York-based bank will be following in the footsteps of other Wall Street firms offering crypto-related services by dealing in contracts that give investors ”synthetic exposure to the performance of Bitcoin“. Investors will be given the option to go long or short using what is described as a ”price return swap”, with Morgan Stanley adding its own charge to each transaction that it facilitates.

Apparently, it is just waiting for enough institutional client demand and final approval for the internal processes to start offering these services, as the bank is already technically prepared for the Bitcoin trading.

While Morgan Stanley does not plan to trade in Bitcoin directly, the proposed services are tied to Bitcoin futures contracts. Any direct Bitcoin trading is unlikely to happen in the near future either, as CEO James Gorman has said customers will not be able to buy and sell directly through the bank.

Gorman has said, however, that the bank intends to build a cryptocurrency trading desk that will support derivatives of various digital currency assets. Andrew Peele, formerly of Credit Suisse Group AG, has been taken on by Morgan Stanley as head of digital asset markets to help institute this.

Goldman Sachs reaffirmed last week that it would not be abandoning its cryptocurrency trading desk, despite fake news report circling in the media. According to the firm’s chief financial officer Martin Chavez, the bank was even looking into expanding its crypto operations by launching a Bitcoin derivative.

Physical Bitcoin is not yet on the cards for Goldman Sachs yet, however, as Chavez explained: ”Physical Bitcoin is something tremendously interesting and tremendously challenging. From the perspective of custody, we don’t yet see an institutional-grade custodial solution for bitcoin, we’re interested in having that exist and it’s a long road.”

 

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Nasdaq to Trial Prediction Tool for 500 Cryptocurrencies

Nasdaq, second-largest exchange in the world by market capitalization, is planning to add a tool to the exchange which will aid investors to predict crypto price movement, according to unconfirmed reports.

A person familiar with the company’s plans has indicated that it will shortly be adding crypto assets to its new Analysist Hub. The Hub, launched in 2017, computes traditional asset market fluctuations drawing on social media and other sources.

Wall Street has shown interest in the cryptosphere over past months, with major banks making statements of intent, although Brian Kelly’s prediction that the addition of the New York Stock Exchange (NYSE) and Goldman Sachs to the crypto status quo would cause the market to surge, has yet to happen.

Bill Dague, Nasdaq’s head of alternative data, is guarded in his response to the suggestion that the exchange giant is about to take the same steps as some of Wall’s Streets other major financial institutions, and commented, “…given the abundance of interest, we are exploring cryptocurrency related datasets… Whether or not we launch a crypto-related product remains to be seen.”

On the other hand, Nasdaq’s source had a less guarded response, suggesting that the service would provide information on the movement of 500 crypto datasets using resources such as Twitter, and possibly StockTwits and Reddit.

Nasdaq CEO Adena Friedman had hinted earlier this year that Nasdaq had been looking into crypto-related products when she remarked:

“Certainly, Nasdaq would consider becoming a crypto exchange over time… I believe that digital currencies will continue to persist it’s just a matter of how long it will take for that space to mature.”

An article published in May on the Nasdaq website even cited three coins that the exchange felt might be able to withstand future market turmoil if it transpired: Bitcoin (BTC), Litecoin (LTC) and Stellar (XLM).

Nasdaq will need to move fast with its any crypto additions to its Analyst Hub, as news services Reuters and Bloomberg are already lining up with similar plans to launch a crypto analytic tool.

 

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Cboe President Still Hopeful for First ETF Approval

The race to receive the coveted spot as the first Securities and Exchange Commission (SEC) approved Bitcoin exchange-traded fund (ETF) continues and Cboe Global Markets Inc believes it still has a chance to make it.

Speaking to Bloomberg, Cboe’s exchange operator’s president and chief operating officer Chris Concannon said that it was a matter of working through the issues that concern the SEC before an ETF can be approved. He believes Cboe can achieve this but recognizes the growth of a strong Bitcoin futures market may mean that a futures-based ETF may come first, rather than an exchange for the cryptocurrencies themselves.

What Concannon sees potentially problematic here, however, is that a futures-based ETF has never been done before, and it could be a struggle to find enough liquidity. Futures trading volumes have remained low compared with commodities contracts such as gold, although an ETF would certainly prompt a significant increase in trades. The SEC is hesitant to approve such an ETF until futures trading can provide sufficient liquidity, however.

Concannon said that he had learned there have been more articles than volume, describing the amount of media attention the market gets compared to its size as ”shocking”. He noted that the entire cryptocurrency market was only a fifth that of multinational technology company Apple.

Cboe was the first company to usher Bitcoin into mainstream finance during its bullish run in December last year, offering futures contracts for the cryptocurrency. Many interpreted this as a signal Wall Street was turning in favor of Bitcoin, with an ETF finally becoming foreseeable.

The SEC cited the potential for market manipulation in the nearly entirely unregulated market as the primary reason to deny approval, as was the case in the Winklevoss brothers rejection. The SEC said that they would require a surveillance sharing agreement with a large Bitcoin exchange to ensure no manipulation is taking place, of which the Winklevoss Bitcoin Trust could not provide at the time.

 

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