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Fundstrat Strategist: Bakkt Futures to Launch in the Current Quarter

Bakkt’s crypto futures contracts to launch in the current quarter per a Fundstrat strategist’s account of Bakkt’s recent event.

Managing director and quant strategist at Fundstrat Global Advisors Sam Doctor suggested in a Twitter post published on July 19 that Bakkt’s Bitcoin (BTC) futures contracts will launch this quarter.

According to the post, which includes a summary of Fundstrat’s takeaways from the Bakkt Digital Asset Summit held on July 18, the firm’s futures will launch in the current quarter. The launch is set to follow tests announced last month, which are scheduled to start next week. The firm believes that the launch will be a catalyst to accelerate entry of traditional institutional investors. The post notes:

“There appears to be a critical mass of adopters ready to come on board on Day 1 of the Bakkt launch, with the sales team gaining traction among brokers, market makers, prop trading desks and liquidity providers.”

During the aforementioned event, Commodities Futures Trading Commission (CFTC) commissioner Dawn Stump apparently expressed that no current cryptocurrency could threaten financial stability and that the regulator sees a growing demand for Bitcoin futures from the public. Also during the summit, chief information officer at crypto investment firm Blocktower Ari Paul was reportedly confident that once a killer app or user interface makes cryptocurrency on-ramps safe, reliable and as easy to use as Paypal, retail adoption will be enormous.

According to the Fundstrat notes, Paul also said that institutions should not dismiss crypto assets, considering their low correlation with traditional assets and with compound annual growth rates of 200%-300%. He also said that inflation and confiscation resistance of cryptocurrencies are a key value proposition.

Pantera Capital CEO Dan Morehead, on the other hand, said that most tokens will fail and a handful of base protocols will survive, but with thousands of decentralized applications built on top of them. 

As Cointelegraph reported in May, the Intercontinental Exchange is reportedly taking steps to ensure approval from the United States CFTC for Bakkt.

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No, It’s Not Facebook: Bitcoin Price Already Up 200% in 2019 Before Libra

When Facebook confirmed its crypto plans in mid June, BTC/USD was already riding gains of 130% since April.

Bitcoin (BTC) was already trading above $9000 when Facebook formally unveiled its Libra cryptocurrency protocol.

Despite many commentators arguing the current bitcoin price spike is due to the social media giant, a glance at data puts bitcoin’s momentum far ahead of Libra. 

As Cointelegraph reported, Facebook revealed a website for its cryptocurrency scheme on June 18, when BTC/USD was hovering around $9200. 

After the website went live, the largest cryptocurrency actually dropped in price for several days before regaining ground to surge to current highs above $11,300. 

The bitcoin bull market began on April 1, seeing several peak-and-trough cycles but definitively reversing its previous downward trend which took it to just $3130. 

Nonetheless, the idea Facebook is uniquely fuelling the bitcoin price rise continues to pervade the press, including mainstream media titles. 

“Bitcoin has slowly – by its own standards – been rising in recent months but the launch of Facebook’s Libra has clearly been a catalyst for the recent surge,” Craig Erlam, a senior market analyst at the financial trading firm Oanda, told The Guardian in an article published June 24.

The confusion appears to stem from a related concept that interest and publicity from Libra will have a knock-on effect for cryptocurrency in general. 

“The publicity that the launch has once again brought to the space, combined with the legitimacy it offers, has understandably excited the community,” Erlam added.

Other sources meanwhile agreed about Facebook’s limited role, but lacked faith in bitcoin itself, Bloomberg calling current enthusiasm “the return of a speculative dream.”

However, as details of Facebook’s plans trickle down, criticism is mounting over Libra’s technical characteristics, which arguably leave it with little in common with public blockchains.

Far from lay consumers, it is institutions which appear to be taking center stage in bitcoin interest. 40% price premiums on public fund the Grayscale Bitcoin Investment Trust (GBTC), along with record trading volume for bitcoin futures, are two recent examples of the phenomenon. 

Cointelegraph recently published a dedicated piece summarizing the most likely factors behind bitcoin rise to $11,000 and possibly beyond.

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CME Bitcoin Futures Briefly Broke $10,000 Amidst a New Open Interest All-Time High

Bitcoin futures briefly exceeded $10,000 on the Chicago Mercantile Exchange for the first time since early March 2018.

Bitcoin (BTC) futures on the Chicago Mercantile Exchange’s (CME) briefly broke $10,000 on Friday, June 21, according to data from trading analytics platform TradingView.

CME bitcoin futures 24-hour chart. Source: TradingView

CME bitcoin futures 24-hour chart. Source: TradingView

BTC futures reached a new high for 2019 of around $10,050, breaking $10,000 for the first time since early March 2018, when bitcoin was trading above $11,000 per coin.

The new 2019 record has grown in line with the new highs of CME bitcoin futures total open interest (OI) that has reportedly reached around $273 million after CME reported new all-time high of 5,311 contracts totalling $256 million earlier this week. At the time, CME stressed that the OI spike came amid increased popularity from institutional investors.

Open interest rate on CME bitcoin futures. Source: ZeroHedge

Open interest rate on CME bitcoin futures. Source: ZeroHedge

A Bitcoin futures contract is an agreement to purchase or sell bitcoin on a specific future date at a specific price. CME Group became the second global exchange to list bitcoin futures for trading back in December 2017, a week after the launch of BTC futures by the Chicago Board Options Exchange (CBOE). In March 2019, CBOE announced that they will not add a new BTC futures market, citing re-evaluation of its approach to trading digital assets.

Meanwhile, CME has seen notable growth in bitcoin futures trading on its platform recently, having recorded a new all-time high in the number of open contracts in early June. Earlier in May, CME reported that it was about to record the biggest trading month for BTC futures trading.

While BTC futures trading on CME surpassed the $10,000 mark, bitcoin’s price has been firmly approaching the same threshold recently. At press time, bitcoin is trading at $9,862, slightly down from the intraday high of $9,893.

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CME: Open Interest in Bitcoin Futures Contracts Hit All-Time High

Open interest in Bitcoin futures contracts on CME hit a new all-time high of over 5,300 contracts, purportedly due to increased institutional interest.

The Chicago Mercantile Exchange (CME) Group has released data showing that open interest in Bitcoin futures is rising, as per an official Twitter post on June 18.

Interest in BTC futures over time:

Interest in BTC futures over time:

According to CME, bitcoin (BTC) open interest spiked on June 17 with an all-time high of 5,311 contracts totalling 26,555 BTC, or approximately $246 million at press time.

Futures are standardized contracts that bind a party to buying or selling some asset at a predetermined date. Notably, the CME group also remarked in the Twitter post that BTC futures appears to be gaining popularity with institutional investors.

Major United States bank JPMorgan Chase (JPM) executive Nikolaos Panigirtzoglou has also recently commented in a report on the state of bitcoin, saying that BTC markets appear to be increasingly influenced by institutional investors.

While CME is noticing increased interest and positions, the Cboe Global Markets settled its last bitcoin futures contracts at 3 p.m. Chicago time today. 

Many have speculated that Facebook’s recent cryptocurrency announcement will propel markets forward. Yesterday the social media giant released the white paper for its own stablecoin, Libra, which financial analyst Tom Lee says is evidence of mainstream interest in crypto.

BTC is currently trading around $9,290, up 2.55% on the day.

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Bloomberg: UK Interdealer Broker TP ICAP to Sell CME’s Bitcoin Futures

United Kingdom-based interdealer broker TP ICAP will sell bitcoin financial derivatives.

United Kingdom-based interdealer broker TP ICAP will sell bitcoin (BTC) financial derivatives, Bloomberg reports on June 17.

Per the report, the ICAP unit of the firm now allows its customers to buy or sell the Chicago Mercantile Exchange’s (CME) bitcoin futures. In June, the Chicago Board Options Exchange’s bitcoin futures will expire with no current plans for renewal, leaving the CME as the sole offerer of BTC futures.

TP ICAP also reportedly expects to add non-deliverable forwards tied to the largest cryptocurrency, and then plans to open desks in Asia and the United States. Bloomberg claims that the company took the decision due to a decrease of its core business model:

“Interdealer brokers have traditionally relied on handling trades for banks, but their volumes shrunk in the aftermath of the financial crisis. A profit warning last year wiped 36% from TP ICAP’s market value in a day. It’s regained about 10% since then to 1.6 billion pounds ($2 billion).”

The author of the report also points out that customers have to comply with Know Your Client and Anti-Money Laundering regulations in order to access bitcoin through the firm’s services. Furthermore, TP ICAP also reportedly considers other digital assets, such as altcoins and tokenized, to be real-world assets. Bloomberg quotes the firm’s head of digital asset market, Duncan Trenholme, illustrating the company’s interest in the industry:

“We want to be close to what’s happening within this nascent asset class because we believe it’s important to invest in the early stages of a growing market. […] TP ICAP also understands that this technology could disrupt or impact other asset classes where we currently operate, so we feel it’s important to be informed.”

According to the company’s 2018 financial results disclosure, TP ICAP reported a revenue of £1,763 billion ($2.219 billion) last year.

As Cointelegraph reported earlier today, bitcoin surpassed one million daily active addresses on June 14, according to blockchain statistics website CoinMetrics.

Earlier this week, JPMorgan Chase wrote in a report that the Bitcoin industry has changed considerably since 2017, citing an increase in institutional interest.

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Bitcoin Markets Now Show Greater Influence From Institutional Investors: JPMorgan

A report highlights the fake exchange volume concerns from March compared with genuine bitcoin futures growth.

JPMorgan Chase (JPM) thinks the Bitcoin (BTC) industry has changed considerably since 2017, citing an increase in institutional interest, Bloomberg reported on June 15.

The publication quoted a report led by managing director of global market strategy of the United States’ largest bank, Nikolaos Panigirtzoglou, in which researchers examined recent phenomena surrounding cryptocurrency exchanges.

As Cointelegraph reported, an investigation by asset manager Bitwise in March — and again last month — revealed that a significant amount of trade volume reported by exchanges was likely fake.

Citing JPM, Bloomberg notes that if only 5% of May’s $725 billion number is accurate, than the true volume of BTC trading in May was equal to about $36 billion. On the other hand, May became the best performing month on record for Bitcoin futures provider CME Group, with implied USD value topping $500 million.

This volume difference between trading on exchanges when compared to volumes in bitcoin futures suggests institutional investors are now sincere about the cryptocurrency, JPM said.

“The overstatement of trading volumes by cryptocurrency exchanges, and by implication the understatement of the importance of listed futures, suggests that market structure has likely changed considerably since the previous spike in Bitcoin prices in end-2017 with a greater influence from institutional investors,” the report summarizes.

At the same time, the end of June will see CBOE, the first-ever futures provider, close down its last contracts in line with a decision taken in March.

Bakkt, the institutional ecosystem from New York Stock Exchange owner Intercontinental Exchange, meanwhile recently revealed it would begin testing its own futures offering in July.

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Bakkt Names Launch Date for Bitcoin Futures Testing

Executives compared the launch to the 1969 moon landing after Bakkt faced multiple delays due to compliance issues.

Institutional cryptocurrency platform Bakkt will begin testing its first product, physically-delivered bitcoin (BTC) futures on July 22, the company announced in a blog post on June 13.

Bakkt, which has seen multiple delays over regulatory compliance since its original announcement in August 2018, will offer futures as the first in a series of offerings, full details of which remain unclear.

“On July 22, two days after Apollo 11’s 50th anniversary, Bakkt will initiate user acceptance testing for its bitcoin futures listed and traded at ICE Futures U.S. and cleared at ICE Clear US,” chief operating officer Adam White wrote in the blog post, adding:

“This is no small step. This launch will usher in a new standard for accessing crypto markets. Compared to other markets, institutional participation in crypto remains constrained due to limitations like market infrastructure and regulatory certainty.”

White compared the move to the first moon landing in 1969, echoing the hurdles the company has had to cross in order to provide the fully-regulated cryptocurrency products it wants to for institutional investors.

The announcement comes the same week as data that showed bitcoin futures from CME Group turned record high volume in May.

At the same time, CBOE, the first-ever provider of bitcoin futures, will stop offering contracts when its final contracts settle later this month.

Unlike traditional platforms, Bakkt will settle its contracts in physical bitcoin, rather than fiat currency.

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Open Positions on Chicago Mercantile Exchange Bitcoin Futures Hit Record High

The number of open contracts for CME bitcoin futures is reportedly at an all-time high.

The number of open contracts for the Chicago Mercantile Exchange’s (CME) bitcoin (BTC) futures is reportedly at an all-time high, cryptocurrency news outlet Coindesk reported on June 3.

According to visible data released by the United States Commodity Futures Trading Commission (CFTC) data, the number of open positions for the aforementioned future contract in the week from May 27 to June 3 is 5,190.

Coindesk claims that this is the highest number of open positions that CME’s bitcoin futures have ever reported and a 7% increase over the previous week.

Per the report, the recent increase in futures trading activity could be a sign of increased institutional interest in bitcoin. This is a continuation of the trend lately reported by the bitcoin futures, that also saw record volume on May 13.

As Cointelegraph reported at the time, CME’s bitcoin futures were also expected to hit new heights in May. CME  purportedly revealed that the average daily bitcoin futures trading volume hit a new high of 14,000 contracts in May 2019.

An unnamed official allegedly said at the beginning of last month that the CFTC is open to the idea of ether (ETH) futures trading, should the product meet the CFTC’s various requirements.