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Reminder: Bakkt is Launching Bitcoin Futures in the Coming Day

Bakkt is Finally Here

That’s right, Bakkt is finally here. After months upon months of deliberation, hype, and odd regulatory setbacks, the cryptocurrency venture that has been backed by the New York Stock Exchange, Microsoft, and Starbucks is launching.

Starting Monday, July 22nd, the exchange will be testing physically delivered Bitcoin futures, which will be one of the first product of its kind to be regulated in U.S. markets. It is currently unclear who will be testing the product, or in which way the contract and custody solution will be tested. But, this development marks a huge step in the right direction for the cryptocurrency market.

Bakkt confirmed the launch date for its testing period at a recent summit that was held in the New York Stock Exchange, whose chief executive is wed to the head of Bakkt. Per first-hand recounts of those in attendance, the cryptocurrency startup has also confirmed that it will be fully launching its Bitcoin futures product by the end of Q3, should nothing go wrong during testing of course.

A Catalyst for Bitcoin & Crypto Growth

In a recent Fundstrat Global Advisors research note posted to Twitter, Sam Doctor of the market research firm explained his thoughts on the conference. Citing the buzz being emanated by the over 150 investors and institutions in attendance, Doctor argues that there is “institutional anticipation” for the exchange’s Bitcoin futures. He expounded:

“As we have written before, Bakkt tackles many of the barriers to adoption for traditional investors seeking to expand their mandate to include crypto.”

Doctor adds that “appears to be a critical mass of adopters ready to come on board on Day 1 of the Bakkt launch”, noting that the firm’s sales team is starting to ramp up discussions with everyone from brokers and market makers. He thus confirms that should the hype translate into actual investment, the long-expected launch of the Bitcoin product, which will give many institutions their first taste of so-called “physical” BTC, could be a “huge” catalyst for the growth of this already budding market.

Institutions Are Buzzing

Per Placeholder’s Chris Burniske, the venture capitalist author of industry primer “Crypto Asset”, the overall feel of the room was rather bullish. He wrote the following, making the case that Wall Street has its eye on the cryptocurrency space once again.

Title Image Courtesy of Samson Creative Via Unsplash 

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Bitcoin: CNBC Counter Indicator Strikes Again, BTC Outpaces Cannabis

Forget Bitcoin, Buy Weed Stocks?

For a while now, CNBC has been controversial in the Bitcoin and crypto community. Since it began heavily covering the space in 2017, which came as BTC was skyrocketing, pushing past price milestones of $5,000, $10,000, and so on, the outlet has been known to make bad calls on the cryptocurrency.

In fact, one analysis completed by cryptocurrency personality and trader Jacob Canfield revealed that CNBC’s coverage of the Bitcoin market was a counter indicator 95% of the time in much of 2018. In other words, when the prominent outlet published an article or segment claiming BTC would head higher, it fell. The inverse was also true.

The counter indicator has purportedly struck again. As noted by analyst Ceteris Paribus, who cited data from Messari’s OnChainFX, Bitcoin has rallied strongly against cannabis stocks in the past four months.

In fact, since February 22nd, which is when CNBC published a quote from a “wealth advisor” that said investors should dump their BTC for weed stocks, Bitcoin has rallied by a jaw-dropping 167%. In that same time frame, some of the “hottest weed stocks”, which were then being buoyed by Canada’s legalization of the substance, lost much of their value. In fact, since the CNBC report, Tilray has lost 45%, as CannTrust lost 71%.

For those who missed the memo, the article in question was this one, during which Carol Pepper of Pepper International opined that stocks relating to the substance would not mirror the “Bitcoin frenzy”, implying that she doesn’t expect for cannabis to go boom and bust as BTC did.

(Bitcoin has since recovered, of course. But at the time, many in the mainstream had deemed the cryptocurrency fad “dead”.)

What’s weird is that CNBC’s social media team has continued to push the article on their feeds, despite the fact that the advisor’s warnings have been proven to be inaccurate and baseless.

Not All Bad News

It is important to note, however, that CNBC has hosted a series of “good takes” on cryptocurrency. Case in point, Joe Kernen, one of the hosts and anchors of the “Squawk Box” show, has become somewhat of an outspoken bull of Bitcoin. Ever since Facebook unveiled Libra, Kernen has been somewhat optimistic about Bitcoin’s prospects.

Most recently, the personality questioned U.S. Treasury Secretary Steven Mnuchin’s take on cryptocurrency. During an interview, Kernen argued to Mnuchin that cash is used for illicit activity just as much, if not more than Bitcoin, questioning the Treasury representative’s warning that cryptocurrencies may soon face “very, very strong” regulation.

Another prominent Bitcoin bull that has recently graced CNBC is Chamath Palihapitiya, a former Facebook executive and a minority owner of the Golden State Warriors. Speaking to millions, Palihapitiya argued that Bitcoin is the perfect insurance against questionable fiscal policy and macroeconomic risk, urging viewers to purchase BTC.

Title Image Courtesy of Andre Francois Mckenzie Via Unsplash 

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Fidelity’s Crypto Division Looks for New York License Amid Bitcoin Rally

Fidelity in Search of New York Trust License

Fidelity’s crypto-asset division, the fittingly-named Fidelity Digital Asset Services — FDAS for short — is purportedly in the midst of an application process for a Trust license in New York State.

Sources tell The Block, an industry publication, that the financial institution’s crypto team has made its application to the New York Department of Financial Services, which presides over some facets of the Gemini Trust — the Winklevoss Twins’ firm — and other startups that have operations in the state.

Should FDAS secure the license, it will be able to custody cryptocurrencies, in New York State.

For those unaware, the institution, which has thousands of institutional clients and assets under management literally worth trillions, launched FDAS late last year. It has since reportedly been testing and deploying a Bitcoin custodial solution to a handful of selected clients. As a side note, the company is also purportedly looking into a trade execution desk for Bitcoin. Combined, these two products, when launched at scale, could be two massive mediums of institutional Bitcoin adoption.

This comes as Fidelity has only ramped up its other efforts in the blockchain technology and crypto-asset space. Per previous reports from Ethereum World News, Financial News reports that someone familiar with the matter claims that Fidelity staff “across various parts of the international business” are actively looking into blockchain technologies. Also, Forbes has reported that the Wall Street giant has an internal crypto game, during which all of Fidelity’s 8,000 staff can build a portfolio of digital assets.

Chief executive Anne Richards, who has purportedly been mining Bitcoin for years in her own office, stated:

We have a bitcoin trading game that we use internally, as a way of teaching people about distributed ledger technology and digital tokenization, which ultimately will be an important part of the whole financial system going forward.

Institutions Are Flooding Into Crypto

Fidelity’s further foray into the Bitcoin market comes as institutions have also begun to continue to make an impact on the budding cryptocurrency industry.

Case in point, Grayscale’s latest Digital Asset Investment Report revealed that the firm. secured over $84.8 million in investment during the last quarter, marking the strongest inflows since the true start of the bear market in Q2 of 2018.

Per the report, much of the capital that Grayscale received in Q2 was allocated to its Bitcoin Trust, the firm’s flagship vehicle that trades on American over-the-counter markets. This may be one of the reasons why Bitcoin dominance has rallied in this uptrend, not declined as it did in early-2018. What’s also interesting is that a purported 84% of the $84.8 million inflow was sourced from institutional players, mainly “hedge funds”.

Per Changpeng “CZ” Zhao of Binance, however, the herd isn’t entirely here. As reported previously, he told Bloomberg that proportionally, institutions have just as much as of impact on Binance’s cryptocurrency market as they did last year.

Photo by Colton Duke on Unsplash

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Bitcoin to Hit $100,000 in 2020? You Can Bet on It

LedgerX Unveils New Product

Bitcoin-centric derivatives platform LedgerX has just unveiled a helluva product.

Reported first by Bloomberg, the American exchange that recently secured a derivatives license from the Commodity Futures Trading Commission (CFTC) will be allowing traders to bet on if Bitcoin will pass $100,000 by December 2020. The call option will pay only if BTC manages to surmount that crazy milestone by December of 2020, which is still around 18 months away.

According to Paul Chou, the chief executive of the startup, institutional customers that have assets valued at anywhere from $10 million to $1 billion have expressed interest in this new vehicle. Chou adds:

I understand $100,000 is a large number, but a lot of us who’ve been in this space remember Bitcoin at $1, and then it hit $10 and $100 and $10,000. A $100,000 contract doesn’t even make us blink.

As reported by Ethereum World News previously, LedgerX has received clearance from the CFTC. This regulatory green light will allow the company to list physically-settled BTC futures, which are far different than the paper contracts offered by the CME.

According to CoinDesk, chief operating officer Juthica Chou has claimed that her company has no exact timeline, but she noted that LedgerX is looking to be the incumbent in this market. Chou adds that LedgerX intends to “serve customers of all sizes”, hinting that there may be a much-needed retail component to this upcoming product, something that Bakkt is seemingly not focusing on yet.

Is a $100,000 Bitcoin Possible?

Alright, so now that you know that such a zany product is available, do analysts think that Bitcoin achieving $100,000 by 2020 is possible?

According to one model, just maybe. The model is from analyst PlanB and centers around the idea of the stock-to-flow ratio (SF).

The stock is the value of an asset, usually a commodity, above the ground/produced; the flow is the growth in the supply of said asset in any given year. These two sums can be combined to form a ratio, which defines scarcity by how much inflation an asset sees (the higher, the more scarce).

According to an analysis compiled by PlanB, the value of commodities like gold and silver can be plotted, and thus predicted, by a stock-to-flow valuation model.

In a recent tweet, the analyst noted that if you take BTC’s prices in all historical Octobers, then plotted it against his stock-to-flow model, Bitcoin fits it to a 99.5% R2.

The model predicts that should Bitcoin continue to follow the model to an eerie degree of accuracy, BTC could reach over $100,000 a pop after May 2020’s halving event. You see, when the cryptocurrency’s block reward reduction arrives, the SF ratio naturally increases, doubling actually.

The model doesn’t predict exact price action on a day-to-day and month-to-month basis, but it does show that a six-figure Bitcoin is entirely possible.

Title Image Courtesy of Through Catalog Via Unsplash

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Binance CEO: Bitcoin (BTC) Run is (Was) Driven by Retail Investors

Bitcoin Still Somewhat Retail-Driven

Over the past few months, there has been a whole lot of talk about Bitcoin becoming the next trend for institutions. Like mom & pop investors fueled 2017’s monumental run, investors today expect institutional money, the “smart money”, to drive cryptocurrencies upward. Thus, a narrative has formed. “The herd is here“, some that abide by this narrative may say.

According to Changpeng “CZ” Zhao, the beloved founder of Binance, this is not the case though. Speaking to Bloomberg for a recent interview, the Chinese-Canadian businessman suggested that Bitcoin’s move to $10,000 and beyond wasn’t mainly catalyzed by your average institutional player.

Instead, Zhao notes that it’s been a combination of retail and institutional investment. Backing this quip, the exchange chief executive cited data from Binance, claiming that 60% of all trading volume on the platform is from retail players — about the same percentage as it was last year.

CZ’s comment comes in stark contrast to comments from other reports. As reported by Bloomberg, a JP Morgan analyst stated that the paper futures contracts from the CME and CBOE (now defunct), and thus institutions, have played a larger role in recent Bitcoin price action that what many consumers are fed and believe:

“The importance of the listed futures market has been significantly understated. The report by Bitwise credits the traded futures as an important development in allowing short exposures that enabled arbitrageurs in properly engaging in arbitrage, and that the futures share of spot Bitcoin volumes increased sharply in April/May. [The data 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.”

Also Diar recently wrote that “firm size” addresses (1,000 to 10,000 BTC under management) now own 26% of the circulating supply of the cryptocurrency, up from under 20% in August 2018.

This signifies accumulation of almost — if not more than — 1,000,000 coins, implying inflows of hundreds of millions and billions of dollars. It is unclear who is behind these transactions, but as explained by Diar, the size of the wallets suggest big investors.

Well On Their Way

Whether or not institutions are occupying the cryptocurrency market now, one thing is for certain: soon, there will undoubtedly be institutions in this space. Bakkt, the New York Stock Exchange’s sortie into the cryptocurrency space, is soon expected to beta test a Bitcoin futures product that is slated for institutional players. Also, Fidelity Investments, a firm with over 10,000 institutional clients, is still reported to be testing its cryptocurrency custody and trade execution services.

Photo by Samson Creative. on Unsplash

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Another Crypto Startup Enters the Bitcoin Derivatives Rat Race

Bitcoin Derivatives Rat Race

With the resurgence in the Bitcoin price, cryptocurrency startups have rushed to push products to market, presumably in a bid to capture renewed demand. According to CoinDesk, an up-and-coming digital asset exchange is looking to offer BTC derivatives to a U.S. audience.

In a press release published on Friday, trueDigital Holdings revealed that it had begun to acquire the proper licenses from the U.S. Commodity Futures Trading Commission (CFTC) via a firm called trueEX. If the American financial regulator approves, this deal will see trueDigital Holdings take trueEX’s registrations as a designated contract market and swaps execution facility.

Should the deal go through, the cryptocurrency platform will look to offer Bitcoin physically-deliverable swaps, which could be a medium of adoption for retail and institutional traders.

trueDigital joins a series of firms that have recently revealed that they too will be launching Bitcoin products. In fact, in the coming ten days, Bakkt, the de-facto crypto initiative of the New York Stock Exchange, will begin beta testing its BTC futures market. And both LedgerX and ErisX, two of Bakkt’s competitors in U.S. proper, have secured the proper licenses from the CFTC to offer similar futures markets.

Currently, many eyes are focused on Bakkt and ErisX. The former has been hyped for nearly a year now, and has been cited as some as the catalyst to return the cryptocurrency market to its previous all-time high of $20,000.

And the latter may reportedly be adopted by TD Ameritrade, the retail brokerage which insiders say is on the verge of offering Bitcoin and Ethereum trading to its millions of clients. Steven Quirk, an executive at the institution, said the following last year:

“I think the appeal for us is that [ErisX has] the biggest players in the Bitcoin space from a market making standpoint, both DRW and Virtu here, and you also have CBOE in a partnership with NEX. So you have people that are very well versed in this space and what we’re bringing to the table as a strategic investor is a pretty deep understanding of our 11+ million retail clients and what they look for when it comes to a product.”

Binance Sorties into Non-Spot Crypto Products

Outside of the U.S., there has also been a push to offer crypto derivatives and alternative investment vehicles. Just recently, Binance launched three times margin for certain Bitcoin, Ethereum, Binance Coin, Tron, and XRP trading pairs. But more importantly, the exchange, which just turned two, intends to launch futures with up to 20 times leverage in the coming weeks.

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‘Shark Tank’ Billionaire: Facebook’s Libra Could Threaten Finance & Gov

facebook phone libra

The Threat of Libra

Around one month ago, Facebook unveiled Libra — its first consumer-facing sortie into the crypto and blockchain world, which has been backed by VIsa, Spotify, Mastercard, PayPal, Uber, Booking Holdings, and many other corporations and investors worth billions apiece.

Since then, every businessman, politician, and investor has tried to make their voices heard, trying to either warn of the asset’s implications or laud Libra for its ability to act as a medium of financial inclusion and liberation.

Most recently, Mark Cuban, the billionaire investor and star on the entrepreneurial television show “Shark Tank”, spoke on the Facebook-backed crypto project with CNBC. Flat out, the American businessman said that he isn’t a fan of Libra, adding that he thinks the whole project is a “big mistake”. Cuban, who owns the Dallas Mavericks, went on to back his point, explaining that in nations where there isn’t a lot of “rule of law, government stability, or currency stability”, Libra could become “dangerous” should it see adequate amounts of adoption.

Indeed, should Libra be adopted in a country with governmental problems, for instance, there may be unintended consequences. Whether those consequences are good or bad are debatable though. Cuban expounded:

“There’s going to be some despot in some African country that gets really upset that they can’t control their currency anymore and that’s where the real problems start occurring.”

Skeptical of the Corporate Crypto

Cuban isn’t alone in his skepticism. In fact, as reported by Ethereum World News yesterday, even Donald Trump is against the corporate coin. In a series of tweets, the American leader tried to dismantle the value proposition of not only decentralized cryptocurrencies, like Bitcoin, but Facebook’s Libra too.

Trump quipped that he doesn’t believe that digital assets are money, adding that they are also known to be very volatile and “based on thin air”. Indeed, BTC is volatile due to its status as an early-stage asset, and technically isn’t backed by anything but code and electricity. After touching on crypto asset’s ability to be used in illicit transactions, he lambasted Libra:

“Facebook Libra’s ‘virtual currency’ will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations.”

Trump’s reasoning for bashing Libra is that it throws a wrench into the United States’ de-facto rule to have no other currencies than the U.S. dollar, which is “by far the most dominant currency anywhere in the World.”

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Japanese Crypto Scene Slammed by Hack: $32M in XRP, Bitcoin, Others Sniped

Japanese Crypto Scene Sees Another Hack…

Youch. A Japanese crypto asset exchange, Bitpoint, has just been subject to a large hack, during which attackers managed to steal over $30 million worth of Bitcoin, XRP, Ethereum, Litecoin, and other digital assets. The funds were siphoned out of the exchange via its hot wallet, not the cold wallets as first suggested by some users. This harrowing tidbit of news comes via Bloomberg.

Interestingly, the broader crypto market hasn’t reacted to this debacle, despite the fact that BTC has habitually fallen in the minutes and hours after the hacks of Binance, Bithumb, and so on and so forth. Though, shares of Bitpoint’s parent company, Remixpoint, fell by upwards of 19% on some markets and were actually temporarily frozen due to “a glut of sell orders” by panicked investors.

Revealed in an announcement published via Remixpoint, the upstart exchange claimed that around 70% of the funds lost originate belong to its customers, with the rest coming from company coffers.

Due to this hack, Bitpoint has been mandated to cease its operations for the time being, including deposits, withdrawals, and trading at large.

It is unclear how or if the exchange will reimburse its customers.

Unfortunate Timing

This comes at an unfortunate turning point in the Japanese crypto exchange. You see, ever since the monumental CoinCheck hack, which incurred the loss of $500 million worth of a crypto asset named XEM (NEM), the local financial regulator has been very stringent in handling the cryptocurrency space. The Financial Services Agency (FSA), as the entity is known, has developed a serious licensing system for want-to-be trading platforms.

The thing is, Bitpoint had purportedly been somewhat verified by the FSA, but had received a “business improvement order”.

With the agency currently managing a list of over 100 upstart crypto firms wanting to sortie into the exchange space, the FSA may become even more heavy-handed than it already is, potentially resulting in the death of some crypto platforms, and thus investor interest, in the nation.

A Digital Asset-Friendly Nation?

It is important to note that Japan has been quite friendly to the cryptocurrency space overall. As reported by this outlet previously, Kazuhiro Tokita, the president of the FSA-regulated local crypto exchange DeCurret, in April unveiled a system that would allow for consumers that hold a Suica card, which is used on East Japan Railway Company’s (JR East) metro and shinkansen systems, to top up their balance with digital assets.

Also, Rakuten, an e-commerce heavyweight in the nation, has acquired a Bitcoin exchange, and intends to integrate direct cryptocurrency payments into its stores. Bit Camera, a large electronics retailers, too, has embraced cryptocurrencies, accepting BTC in its stores across the nation.

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Who’s the Bitcoin Bag-Carrying Man Leaving Deutsche Bank?

The Famous Bitcoin Bagholder

Yesterday, the Financial Times published a surprising image: a Bitcoin bag-carrying, nice suit-clad man purportedly leaving the London Deutsche Bank building.

While the story that accompanied was focused on the collapse of the massive institution, once one of the larger banks in global finance, many focused on the Bitcoin tote. Questions like “who’s the guy?” and “why is he carrying a bag sporting the enemy of central banks out of a bank?” were brought up.

Here are some answers.

Firstly, the guy is not a fired Deutsche Bank employee, despite the fact that he is sporting an extremely well-fitting suit. But, the tailor was leaving the building, leaving the building after finishing fitting an individual within the building.

His name is Alex Riley, and he works for Fielding & Nicholson, a London-based suit shop that has since put a Bitcoin address in its Twitter biography to appeal to the cryptocurrency community.

According to one of Riley’s friends, he is a tailor that has been a proponent of BTC for over two years, hence the bag. Riley states that he makes a point of bringing the Bitcoin bag, which is unfortunately sold out as of the time of writing this, to every meeting he has at large banks. Just look at the rather hilarious collage of photos, which shows him clearly trying to rub Bitcoin in the face of mainstream finance.

While this clarification reduces the power of this image, it is still quite the statement. For those who missed the memo, Deutsche Bank, a German multinational investment bank and financial services company, has been bleeding out for years now.

Its publicly-tradable stock has lost over 77% of its value in the past five years. This comes in spite of the fact that within the same time frame, the S&P 500 index gained around 50%, marking one of the greatest stock market bull runs in history.

The institution’s situation recently got worse, with it announcing plans to cut 18,000 global jobs as it shutters its equity business, hence the Financial Times report.

So in a sense, the “Bitcoin Bag Guy” making it to the front pages of some of the world’s financial media is quite the statement, this being that BTC is an alternative to fiat. In the eyes of most of cryptocurrency’s proponents, that statement is 100% correct.

European Union Recession?

Deutsche Bank’s unfortunate tumble into the abyss comes as many investors have begun to fear a recession in the European Union and potentially abroad too.

As explained in an extensive Twitter thread by Raoul Pal, the founder of crypto-friendly media outlet and investment research startup Real Vision, the European Union’s economic data is extremely harrowing.

European-centric banks are shedding profits at a crazy rate, which has materialized in mass layoffs; some sovereign bond yields have flipped negative; and inflation expectations have collapsed entirely. Pal points out that it now makes sense to purchase Bitcoin to hedge against risk.

Also, central banks have begun to impose inflationary fiscal policy to mitigate the risks of a downturn.

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Boost For Bitcoin Incoming As Fidelity Explores Blockchain And Trading Desk Nears

Fidelity International Hong kong

Fidelity International, a subsidiary of Fidelity Investments, is edging closer to entering the crypto space in what could be a major boost for bitcoin.

Fidelity Investments has already set up a custody operation called
Fidelity Digital Assets.

A report in the Financial News says someone familiar with
the matter has confirmed that “staff across various parts of the international
business” are investigating blockchain tech.

Also, according to the newspaper the parent company is close
to getting its trading desk up and running.

Further evidence of rising crypto-friendliness at one of the
world’s biggest fund managers comes from the fantasy crypto trading game it’s been
running internally for staff at the international arm.

In-house crypto trading game

Starting off with £10,000 in virtual money, players are
tasked with building a portfolio of crypto. Those who end up with the largest
returns are eligible to win cash prizes.

Of Fidelity International’s 8,000 staff, 1,200 are already playing.

The existence of the trading game was revealed at an
industry conference last month by chief executive Anne Richards.

“We have a bitcoin trading game that we use internally, as a
way of teaching people about distributed ledger technology and digital
tokenisation, which ultimately will be an important part of the whole financial
system going forward,” said Richards.

If it is true that Facebook can be credited with fuelling
the recent blast-off in the bitcoin price then the expected impact of moves in
the space by Fidelity will be immense.

Fidelity Investments has $7 trillion in assets under
management.

Institutions are already showing heightened interest in the crypto market, especially bitcoin, and are thought to be among the key buyers when the price was under siege during the “crypto winter. Fidelity Digital Assets will have helped institutions to on board into the sector.

Fidelity is an industry leader

A trading desk and news that the international arm is looking to either launch products or use distributed ledger technology for its back-office operations, will confirm its leadership role in the fund management industry.

There continue to substantial legacy costs at play in the
fund industry, with paper trails still evident in settlement.

Holding back adoption of blockchain for many of the
processes is the question of interoperability and the inertia borne out of the
fear of disrupting systems that work in favour of the untried.

If Fidelity takes the plunge it could prove to be a pivotal moment for its industry.

In the same way that Facebook has likely sparked other Big
Tech firms to speed up plans for applying the technology, Fidelity could do the
same for its industry.

That will likely have an impact on both retail and
institutions, bringing closer the possible launch of mutual funds, although the
inability to get an exchange traded fund past US financial regulators may
continue to blunt such efforts.

Speaking to the Financial news, Teana Baker-Taylor, executive
director at crypto industry body Global Digital Finance, said of Fidelity
International’s plans: “This signals to the market that traditional financial
investment in digital assets is likely to increase and they intend to maintain
their institutional first-mover advantage, providing access to digital assets
to their mutual fund and pension clients, as well as private and institutional
investors.”

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