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Fidelity Considers Digital Trading of Top 7 Cryptocurrencies

Fidelity Considers Digital Trading of Top 7 Cryptocurrencies

Fidelity Investments is reportedly looking into the feasibility of offering the top five to seven cryptocurrencies on its Digital Asset Services platform.

Extending beyond Bitcoin and Ether

Last month, the investment firm revealed its new Digital Asset Services arm alongside plans to offer Bitcoin and Ether trading services for institutional investors, also giving them a much-anticipated custody solution for these cryptocurrencies.

Tom Jessop, head of Fidelity Digital Assets, shared at the Block FS conference in New York on Thursday the company’s willingness to extend these services to other major cryptocurrencies.

“I think there is demand for the next four or five in rank of market cap order. So we will be looking at that,” he said in response to a question posed by Coindesk.

One of the potential issues he perceives is the question of which tokens will fall into the US Security and Exchange Commission’s definition of securities, as this will significantly impact the regulation surrounding their use. ”We are waiting for that space to develop,” he noted.

Jessop added there is not a huge call from institutional investors yet to venture into the lesser known cryptocurrencies on offer, so Fidelity will focus on the top seven or so, although other aditions will be considered when the demand is there.

Right now, he says Fidelity services over 13,000 institutional clients and their main interests are in the two leading cryptocurrencies, Bitcoin and Ether.

In August, the Bitcoin Tracker One Exchange Traded Note (ETN) became the first fully regulated financial instrument tied directly to Bitcoins, a service Fidelity offers its clients.

Given the relatively poor performance of the cryptocurrency market this year compared with 2017, many are counting on an influx of institutional investors using digital currency investment services such as that offered by Fidelity to boost prices.

 

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Bitpay: Bitcoin the “Under Pound Gorilla” Will Eclipse Many Other Currencies

Global Bitcoin payment service provider Bitpay is making some upbeat predictions for 2019 which certainly paint a different picture to the digital currency’s rocky ride as 2018 comes to a close.

The Atlanta-based company’s Chief Commercial Officer (CCO) Sonny Singh predicts that 2019 promises to be an “exciting” year which will push Bitcoin’s value up to between USD 15,000 and USD 20,000 by next December.

He believes that with the entry of Fidelity and Intercontinental Exchange into the market and ETFs getting the green light, 2019 will take on a whole new look when it comes down to investment opportunities. He commented it would be Bitcoin that would eclipse many other digital currencies whose fortunes were less easy to foresee, suggesting, “I don’t know what’s going to happen to them.”

He said, “There’s a night and day difference between Bitcoin and everything else. Bitcoin is the under pound gorilla, it’s the one that has the mass network effect… [the one] the traditional financial incumbents are building products around.”

In terms the durability of his gorilla, Sing argues that “Bitcoin survives first”, even in a poor market, despite its fluctuating fortunes. Blockstream CEO Bobby Lee, brother of Litecoin founder Charlie, agrees, suggesting that despite flashes of green in the last 24 hrs, Bitcoin could still threaten USD 3,000 but long-term, he feels it will overtake gold.

In this bear market for #Bitcoin, it’s worth reminding everyone that $BTC is still only one-hundredth of the value of #Gold: $80 billion vs $8 trillion.
Gold is worth 100 times more than Bitcoin today!
What will the ratio be in 10-20 years?
Will it flip, with Bitcoin worth more? pic.twitter.com/VIpzIDKfo0

— Bobby Lee (@bobbyclee) November 20, 2018

Currently, there is a consensus among certain cryptocurrency experts that with Bitcoin’s growing convenience as a payment method, illustrated by the march of ATMs worldwide, along with the digital currency becoming an internationally recognized household name, past hype could surrender to real value. A deflation of Bitcoin could “clean out weak hands”, according to the views of many investors. Serious players in the market would then be left to establish Bitcoin’s real value. EToro analyst Mati Greenspan says the ship isn’t sinking, but simply readjusting to its load:

“What we’re seeing now are the after-effects of the unprecedented rise of Bitcoin and other crypto assets in 2017. This year is simply a retracement of that… These cycles can sometimes be accentuated in the crypto market due to the riskier nature of this nascent industry. In the same way, previous cycles have not signaled the end for broader markets, these price movements don’t signal the end for crypto assets.”

For now, Singh’s gorilla is still in the mist, waiting for its moment to escape.

 

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“Institutional Investment Class” Morgan Stanley’s New Catchall for Crypto

A new report published by American multinational investment bank Morgan Stanley has redefined cryptocurrency as an “institutional investment class”.

The report was initiated after research revealed that current trading trends are flowing towards institutional investors who are increasingly wanting to invest in cryptocurrencies, so much so that Morgan Stanley have had its eyes firmly set on institutional investor potential for some months.

This led to rumors recently that the bank was intending following in the footsteps of some other Wall Street financial institutions offering crypto-related services by dealing in contracts that gave investors “synthetic exposure to the performance of Bitcoin”.

Still unconfirmed but if the rumors turn out to have substance, then 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, according to a source close to the investment bank.

It is of little surprise then, that the New York financial giant has chosen this time to re-examine the way it looks at cryptocurrency. The new report, titled ‘Bitcoin Decrypted: A Brief Teach-In and Implications’, updated the classification of digital assets based on statistics from the last six months.

The report also examines problems reported by customers in relation to crypto as an investment class, such as regulatory uncertainty and a lack of regulations. These are areas that Morgan Stanley would like to address if it is seriously deciding on targeting institutional cryptocurrency investors, with a view to offering clients the chance to trade in Bitcoin derivative, as it has hinted in the past.

On a positive note for the bank, if this is to be their direction moving forward, is the reports mention of Fidelity’s new crypto services division, Coinbase’s fundraising round and positive regulatory developments. The report also notes that institutional investor confidence is rising at the expense of retail investment which has all but come to a standstill. The report states that institutional investors have gained “full confidence” in the market over the past six months.

 

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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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Fidelity Offering Bitcoin ETN to Clients

The Bitcoin Tracker One Exchange Traded Note (ETN) has become the first fully regulated financial instrument tied to actual bitcoins that are available for purchase by traders and investors in the United States. It is listed under the ticker symbol CXBTF on NASDAQ Sweden, but is available via OTC Markets to United States investors. Now Fidelity, one of the biggest stock trading firms with USD 2.4 billion of assets, is offering easy CXBTF access to their customers.

This is major news, since Bitcoin has a market cap of USD 110 billion and the overall cryptocurrency market cap is USD 215 billion. Now Bitcoin has direct exposure to investors who own and trade orders of much higher magnitude i.e. 1000% more, than the current amount of money invested in the Bitcoin market. Buying Bitcoin via CXBTF is just as easy, safe, and regulated as buying any other stock on the Fidelity platform. Eventually, due to customer demand CXBTF will likely be available on every major stock trading platform in the United States.

This is the news the entire crypto market had been waiting for since this is a way institutional investors can buy Bitcoin via the stock trading platforms they are used to. The crypto space had been hoping for a Bitcoin Exchange Traded Fund (ETF), and when the Winklevoss Bitcoin Trust ETF and the VanEck SolidX Bitcoin ETF were rejected and stalled respectively it caused the global price of Bitcoin to decline. This Bitcoin ETN is essentially just as good as an ETF, since it provides a way for institutional investors to diversify into Bitcoin on the same channels they use to trade stocks.

Bitcoin is an excellent way to diversify a portfolio, since it is an extremely unique asset class that has been showing strong long-term growth, and it is inevitable that institutional investors will invest a small fraction of their portfolio into Bitcoin in the future.

Currently, XBT Provider, a CoinShares company, is holding USD 334 million of Bitcoin for Bitcoin Tracker One and Bitcoin Tracker Euro, and USD 109 million of Ethereum for Ether Tracker One and Ether Tracker Euro. This is not an insignificant amount relative to the total Bitcoin and crypto market caps, and now that it’s available in the United States these numbers should surge.

One very important thing to note is that XBT Provider backs the Bitcoin Tracker One ETN with actual bitcoins, so as investors buy CXBTF, XBT Provider buys actual bitcoins. Therefore, CXBTF has a direct impact on spot markets and therefore the global Bitcoin price. This is much better than the Bitcoin futures in Chicago on CME and CBOE, which are backed by cash and don’t directly influence global Bitcoin price.

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