Category Archives: CME

Auto Added by WPeMatico

Binance: ETFs Not Core to Crypto Growth

ETFs Are Not Core to Crypto Industry’s Growth, Binance CEO Weighs In

A popular trend as the cryptocurrency industry develops is the introduction of the analogous derivative instruments of the traditional financial market, aimed at luring in institutional investors into the crypto world. One such instrument is the exchange-traded fund (ETF).

CEO of leading cryptocurrency exchange Binance, Changpeng Zhao, has, however, downplayed the role of ETFs in the growth of the crypto industry. He said: “If it [a Bitcoin ETF] is listed on a big traditional exchange… that does bring in a lot of attention from people outside our industry.”

In a live stream via Periscope on 6 February, Zhao attempted to draw the attention of crypto enthusiasts to a very important piece in blockchain development – entrepreneurs building real, and usable products.

Blame it on the bear

The bear market which started at the cusp of the last all-time high of Bitcoin hasn’t made it easy for crypto projects. Many startups last year faced developmental challenges and were either forced to abandon their projects or get absorbed by another. Now, lots of players in the industry have become highly dependent on these market derivatives being introduced.

First, it was Bitcoin futures introduced by CME Group and CBOE in late 2017, which helped drive the price of Bitcoin to a new high of USD 20,000. However, it didn’t last long. Suffice to say, it was an opportunistic glitch in the price dynamics of Bitcoin.

Secondly, speculations about another bull-run propelled by ETFs run deep in the crypto community. Perhaps similar trends are bound to occur with more derivatives being introduced into the sphere, however, without an established value-based blockchain ecosystem in place, the market could get dire once more.

ETFs or no ETFs

As of the time of writing, the US securities regulator, Securities Exchange Commission (SEC) has rejected nine ETF applications. Each was laden with similar bull run expectations from the members of the crypto community as many have speculated on the prices increase should the SEC give the green light.

Recently,CBOE, along with investment firm VanEck and financial services company SolidX, reapplied for a rule change to list Bitcoin ETFs after withdrawing it a week earlier.

With the ongoing fuss about Bitcoin ETFs, Zhao seems to think that with or without the ETFs, the industry will grow. A sentiment probably sparsely shared as focus on the real development of blockchain and its applications are fairly the driving motif for latter blockchain adopters.

Other derivatives are coming

Bitcoin News recently reported a new class of derivative instrument being introduced by US-regulated derivative platform LedgerX, which is essentially a binary wager on the next Bitcoin’s block-reward halving.

While derivatives may be an economic milestone for the crypto industry, the overall utility of blockchain applications and their gradual adoption by legacy systems adequately offset the economic benefits of derivate crypto markets.

 

Follow BitcoinNews.com on Twitter: @BitcoinNewsCom

Telegram Alerts from BitcoinNews.com: https://t.me/bconews

Want to advertise or get published on BitcoinNews.com? – View our Media Kit PDF here.

Image Courtesy: Pixabay

The post Binance: ETFs Not Core to Crypto Growth appeared first on BitcoinNews.com.

Permabull Tom Lee Puts Bitcoin Fair Value Near $15k

Permabull Tom Lee Puts Bitcoin Fair Value Near k

Fundstrat Managing Partner and Head of Research Thomas Lee is sticking to his guns despite Bitcoin’s flailing fortunes, saying that its fair market value is no lower than USD 13,000 and as high as USD 14,800.

Thomas Lee predicted that Bitcoin would hit USD 25,000 by the end of 2018, and while that forecast is all but guaranteed to go out the window by some distance, he insists that evidence of the growing number of active wallet addresses, usage per account, and factors influencing supply calculates fair market value at far higher prices.

Without disclosing the exact formula that combines these indicators, Lee attributes Bitcoin’s “meltdown” below fair market value to ICO companies selling off their treasuries, and the overall macroeconomic climate.

Bitcoin News also examined the possible causation driven by the launch of Bitcoin futures on CME. The Bitcoin market began its steep descent from USD 20,000 on 17 December 2017, the same day the futures launched. The Federal Reserve confirms that the launch of Bitcoin futures is a primary cause of the decline in Bitcoin’s price.

Combining Lee’s analysis and the Federal Reserve statements regarding Bitcoin futures, it can be postulated that Bitcoin really is below its fair market value due to the Bitcoin futures, and that price has become decoupled from reality. If this is true, it is similar to what happened to the spot gold markets after futures became a dominant force.

Essentially, once futures markets are introduced to an asset class, the fair market value no longer determines spot value. This theory is perhaps not well-known in the crypto space, leading to numerous price forecast busts in 2018.

Asked to update this forecast, Lee responded, “We are tired of people asking us about target prices.” Perhaps Lee now understands the tried and true weatherman adage that one should not make a forecast unless they have to.

 

Follow BitcoinNews.com on Twitter: @bitcoinnewscom

Telegram Alerts from BitcoinNews.com: https://t.me/bconews

Want to advertise or get published on BitcoinNews.com? – View our Media Kit PDF here.

Image Courtesy: Pixabay

The post Permabull Tom Lee Puts Bitcoin Fair Value Near $15k appeared first on BitcoinNews.com.

Federal Reserve: CME Bitcoin Futures Prompted Bear Market

Federal Reserve: CME Bitcoin Futures Prompted Bear Market

In a statement widely overlooked by the Bitcoin community, the Federal Reserve published a letter on its website in May 2018 blaming the launch of Bitcoin futures markets on the Chicago Mercantile Exchange (CME) for the decline of Bitcoin’s price.

Indeed, Bitcoin futures launched on CME on 17 December 2017, the same day the biggest Bitcoin rally in history reversed into a fall. On the very first day of Bitcoin futures trading, futures opened at USD 20,650 and closed at USD 19,055.

The Federal Reserve says this sort of market behavior has been observed in other asset classes when futures markets are introduced. Specifically, it mentions how the mortgage industry boom was reversed when futures markets for mortgage securities were launched.

Its reason for this is that when a new asset class is born, there are optimistic investors who buy it up, driving the market upwards. However, pessimistic investors have no voice and no way to bet against an asset’s value, until futures markets are launched. Once futures markets are launched, pessimistic investors can short sell, where they buy futures contracts via a loan, sell them for cash and then buy back the contracts later at a lower price before the contracts expire.

The Federal Reserve implicitly says that Bitcoin would have kept rising past USD 20,000 if CME had not launched Bitcoin futures and explicitly says the CME Bitcoin futures are the exact reason for the beginning of Bitcoin’s price collapse.

Further, the investment opportunity presented by Bitcoin futures diverts investment away from the spot markets. Bitcoin futures on CME are cash settled, meaning no Bitcoins are backing them. Therefore, investment into the futures does not increase spot demand for Bitcoin but in fact, causes Bitcoin’s price to be lower since the money invested into the futures is diverted from the spot market.

The Federal Reserve explains how the combination of short selling and diversion of investment away from the spot markets creates a feedback loop which forces Bitcoin’s price lower.

 

Follow BitcoinNews.com on Twitter: @bitcoinnewscom

Telegram Alerts from BitcoinNews.com: https://t.me/bconews

Want to advertise or get published on BitcoinNews.com? – View our Media Kit PDF here.

Image Courtesy: Pixabay

The post Federal Reserve: CME Bitcoin Futures Prompted Bear Market appeared first on BitcoinNews.com.

Nasdaq Full Steam Ahead on Bitcoin Futures, New Target Q1 2019

Bloomberg has reported that Nasdaq Inc has decided to move forward with its plans to list Bitcoin futures and this could happen as soon as the first quarter of 2019.

Nasdaq is following up on its initial plans in November 2017 to launch Bitcoin futures in 2018, doing so in the hopes of sustaining a long-term cryptocurrency patronage. However, it failed to execute its original plans, committing to satisfy the standards imposed by the US financial regulator Commodity Futures Trading Commission (CFTC).

Bitcoin futures were thought to be instrumental to the astronomical rise of the price of Bitcoin last year, with the market registering price verticals as high as USD 20,000. The first two derivative markets to launch the bitcoin futures were CBOE Global Markets Inc and CME Group Inc, after which the CFTC decided to review the processes for listing crypto derivatives.

Nasdaq’s decision comes as a bold move considering the current market conditions, as Bitcoin has dropped from its all-time high and now trades as low as USD 4,000.

The current market conditions seem to have fallen short of the initial expectations that institutional investments attracted by the Bitcoin futures contract would be the sustaining wave for the next cryptocurrency mass adoption. However, this year’s market has only been in the reverse. Still, institutional investments remain a topic of focus as speculation on them make headlines daily.

Moving forward, it does seem as though Nasdaq had been brewing on its plans to ensure that it meets the demand of a wide range of investors and ensure that its contracts services are foolproof, thereby outpacing its competitors. This was disclosed by an unnamed source reported by Bloomberg who said:

“The Nasdaq futures will be based off the Bitcoin’s price on numerous spot exchanges, as compiled by VanEck Associates Corp… CME uses prices from four markets, while it’s just one at Cboe.”

On a general note, Nasdaq has shown a keen interest into blockchain technology as a whole alongside the derivative systems, even considering the possibility of a Nasdaq cryptocurrency exchange in the future.

 

Follow BitcoinNews.com on Twitter: @BitcoinNewsCom

Telegram Alerts from BitcoinNews.com: https://t.me/bconews

Want to advertise or get published on BitcoinNews.com? – View our Media Kit PDF here.

Image Courtesy: Pixabay

 

The post Nasdaq Full Steam Ahead on Bitcoin Futures, New Target Q1 2019 appeared first on BitcoinNews.com.

CME to Stick With Bitcoin Before Spreading the Field

CME, the world’s largest exchange operator, says that it is in no rush to list more cryptocurrencies to Bitcoin futures trading at this time.

CME Group is the world’s leading and most diverse derivatives marketplace, handling 3 billion contracts worth approximately USD 1 quadrillion annually. The financial giant, which is also the owner of the Dow Jones stock and financial indexes, began offering Bitcoin futures back in December of last year, following CBoE Global Markets Inc similar move.

The group’s CEO, Terry Duffy, says that so far he hasn’t seen huge flows of business, but is happy to take a “wait and see approach”. Competitor CBoE has been trading 5,881 contracts a day in 2018 to CME’s average of 3,063 according to Bloomberg, although the daily average works out to double that of CBoE at 15,317.

Duffy said that in his 40 years in trading that adding Bitcoin futures was a massive step, describing it as possibly the most controversial launch of any product by the