Posted on

WSJ: Bitcoin Trading at Strong Correlation with Gold as Traditional Investors Step In

A Wall Street Journal has suggested that Bitcoin’s correlation with “traditional” assets markets has been high in recent days.

A Wall Street Journal (WSJ) article published today, Dec. 28, suggests that Bitcoin (BTC)’s correlation with traditional assets markets has been high in recent days.

Citing data from research firm Excalibur Pro Inc., the WSJ states that the top cryptocurrency has traded at a 0.84 correlation to gold over the past five days, where -1 indicates complete inversion and +1 perfect correlation. Moreover, Bitcoin has traded at a 0.77 correlation to the Chicago Board of Options Exchange’s Volatility index (VIX), a benchmark index for the United States equity market volatility.

While the WSJ frames the strong correlation between traditional markets and what the article dubs as the rebellious first cryptocurrency, Bitcoin, as something of an unexpected twist of fate, the article also offers several explanations as to why the pattern may have formed.

The first is the reported influx of institutional money into the crypto space, with the WSJ citing the growth of Grayscale Investments’ over-the-counter exchange-traded fund (ETF), the Bitcoin Investment Trust, as a prime example.

As per the article, the trust saw $51 million in assets under management (AUM) during its first year (2013). By the end of 2017, in the midst of the crypto market bull run, AUM had surged to around  $3.5 billion. As of recently — due to the so-called “crypto winter” — the trust reportedly retains about $900 million AUM.

Another factor proffered is venture capital (VC) investment. The WSJ reports that whereas in 2013, VC investment in Bitcoin and the blockchain sector was at around $96 million, this grew to $500 million in 2016 and to over $2 billion in all-time VC crypto investment through the end of 2017. The WSJ gives no fresh data for 2018.

As the article notes, a pull factor for traditional capital into crypto is the building of trading services and infrastructure with high regulatory compliance; the advent of crypto futures trading, and attempts to gain broad acceptance for crypto-based ETFs.

As reported, the crypto space continues to undergo far-ranging transformation; major developments on the horizon include the launch of the Bakkt Bitcoin futures exchange from Intercontinental Exchange, the launch of investment giant Fidelity’s digital assets business, and the continued influx of stalwart investors such as Yale, Harvard and Stanford Universities.

Posted on

Bakkt CEO: Crypto Trading Platform Won't Support Margin Trading

Two weeks after the Intercontinental Exchange (ICE) introduced Bakkt, a new digital assets platform, the latter’s CEO has set out to explain what the service will offer consumers.

Bakkt chief executive Kelly Loeffler outlined the fundamentals for a platform to trade, store or spend cryptocurrencies in a post published on August 20. The platform is currently working with what she described as “a proven framework that underpins exchanges” which will include three characteristics: it will be consistent with existing regulations, provide a transparent system for price discovery and offer “institutional quality pre-and post-trade infrastructure.”

Notably, Loeffler emphasized the critical role that the physical delivery of cryptocurrencies plays in trusted price formation, which is the foundation of advancing the promise of cryptocurrencies, according to the post.

She explained further:

“Specifically, with our solution, the buying and selling of bitcoin is fully collateralized or pre-funded. As such, our new daily bitcoin contract will not be traded on margin, use leverage or serve to create a paper claim on a real asset.”

As CoinDesk reported on August 3, Bakkt is a digital assets platform that will leverage Microsoft’s cloud technology to build “an open and regulated, global ecosystem for digital assets.”

Along with the announcement of the platform, ICE mentioned that it plans to offer a one-day “physical bitcoin futures contract,” meaning bitcoin will be delivered on a specified date, which distinguishes it from other offerings that are settled with cash.

Bitcoin trading image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Posted on

Prime Trust Enters Crypto Custody Race, Will Hold 'Any' Ethereum Token

Prime Trust, a small U.S. financial institution that’s played a behind-the-scenes role in several dollar-backed cryptocurrencies, is entering the hotly competitive crypto custody business.

Revealed exclusively to CoinDesk, the Nevada trust company quietly began offering cold storage for bitcoin in mid-July, and will announce next week that it can also handle custody for ether and any token issued on the ethereum blockchain under the ERC-20 standard. 

Such services are in demand among institutional investors, who despite the bear market find crypto’s returns alluring, but don’t want the bother of protecting the private keys to a digital wallet and/or are required by law to use a qualified custodian. In cold storage, these cryptographic keys, which are like a long password and can be used to drain the money from a wallet, are kept offline, on a hardware device or a piece of paper that’s typically locked away in a safe. 

However, several big names in financial services are entering this niche as well, with Northern Trust, Goldman Sachs and Intercontinental Exchange (ICE), the parent of the New York Stock Exchange, all looking to offer institutional-friendly solutions. Crypto startups like Coinbase, BitGo and Ledger have also been courting this market.

But Prime Trust says that as a startup launched two years ago with all-new technology, it can outmaneuver the big boys. Referring to Northern Trust’s testing period and the uncertainty over when Goldman will come out of the bushes with a custody product, Scott Purcell, Prime Trust’s CEO, told CoinDesk,

“They are trillion-dollar Fortune 100 entities, and they are just not going to move that fast.”

Back-office breakthrough

Previously, Prime Trust was known in the crypto space for its back-office role in the so-called stablecoin announced last month by IBM and startup Stronghold. The token, issued on the Stellar blockchain, is backed one-for-one with U.S. dollars that Prime Trust deposits at federally insured banks where it has relationships. Purcell said it’s also providing this service to 10 similar projects.

He claimed his company will be the first to offer custody for any ERC-20 tokens, which he described as no small feat.

Purcell said his team solved a “massive technical problem” after partner company Polymath hosted a conference in Barbados. There, his engineers were able to spend quality time with some of the authors of the ERC-20 standard, which allows the creation of different tokens representing various kinds of assets on the same blockchain.

“We had had an engineering breakthrough which now enables us to easily cold-storage any ERC-20 token (along with BTC and ETH, of course),” said Purcell.

Doing so is “great in theory, impossible in practice due to various tweaks/nuances in each different token. That’s why nobody does this – nobody until now.”

Racetrack image via Shutterstock.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Posted on

‘No Coffee for Bitcoin,’ Starbucks Clarifies as Media Misrepresent Its New Crypto Venture

Starbucks has clarified that it will not be accepting Bitcoin (BTC) or other cryptocurrencies as payment, despite misleading reports from mainstream media, a spokesperson told Motherboard Friday, July 3.

Earlier on Friday, New York Stock Exchange (NYSE) operator the Intercontinental Exchange (ICE) announced plans to create a new “global platform and ecosystem for digital assets,” dubbed “Bakkt,” alongside a group of big name enterprises including Starbucks, BCG and Microsoft.

Following the major announcement, a number of mainstream media outlets, including Bloomberg and CNBC, ran misleading headlines –– such as CNBC’s “New Starbucks partnership with Microsoft allows customers to pay for Frappuccinos with bitcoin” –– directly implying that the partnership would mean customers could purchase items at Starbucks for crypto.

A spokesperson for the multinational coffee chain clarified in comments to Motherboard that in fact “customers will not be able to pay for Frappuccinos with bitcoin,” but rather the company is part of a new venture creating a platform, Bakkt, to “convert digital assets like Bitcoin into U.S. dollars, which can be used at Starbucks,” adding:

“At the current time, we are announcing the launch of trading and conversion of Bitcoin. However, we will continue to talk with customers and regulators as the space evolves.”

Starbucks’ official press release Friday elaborated on the project, stating that it would, pending regulation, include physically delivered Bitcoin futures:

“As an initial component of the Bakkt offering, Intercontinental Exchange’s U.S.-based futures exchange and clearing house plan to launch a 1-day physically delivered Bitcoin contract along with physical warehousing in November 2018, subject to CFTC review and approval.”

In May, the New York Times reported on sources suggesting the ICE was considering launching physically-delivered BTC futures contracts, a move Friday’s news confirms.

In late July, former Wall Street exec turned crypto entrepreneur stated crypto markets “need a trusted, name custodian — a Japanese bank or HSBC or ICE or Goldman Sachs — to allow institutional investors to feel comfortable.”

Posted on

Here Is How Starbucks Will Lead the Way Towards Bitcoin’s (BTC) Global Adoption

The news that the owners of the New York Stock Exchange – the Intercontinental Exchange – has teamed up with Microsoft, BCG, Starbucks and other firms to launch the Bakkt company that will push Bitcoin and other digital assets towards becoming mainstream financial asset, has come at an opportune time in the crypto-verse. The news came during a time period when the crypto-markets lacked the momentum to get out of the current bear trend. Although the news came late on Friday, there is indeed hope in the crypto-marekts.

With Bakkt, there is hope that the CBOE sponsored Bitcoin ETF pending at the SEC might be approved by the end of the year. This is due to the fact that Bakkt will be fully operational by November giving validity to Bitcoin ETF as explained by CNBC’s Brian Kelly below:

This is huge news. I think the market is completely underappreciated. So let us talk about why this is the biggest news of the year for Bitcoin.

It paves the way for a Bitcoin ETF. Last week I stood here and said you know what, I don’t think the Bitcoin ETF will get approved. And guess what? The Winkelvoss ETF got rejected. Why?

Because there was not a US regulated exchange and there wasn’t US regulated custody.

The Bakkt company provides a regulated exchange and a US regulated licensed warehouse where commodities will be stored. During the CNBC commentary, Brian Kelly would go on to explain how Starbucks will be thrust into the limelight of Bitcoin adoption on a global scale since it is part and parcel of the new Bakkt venture.

Starbucks are going to allow you to take your crypto and effectively load up a US Dollar card with it. We do not have a problem with that payment system here in the US.

This is more about a move forward and if you look at Starbuck’s history, they are really at the forefront of digital payments particularly in the retail space. To have them involved is more of a signal that this is becoming more of a mainstream.

If you go globally, they are talking about Bitcoin as a global currency…which I believe it could be…People are going to start using Bitcoin to buy their coffee if their currency does not work well.

In conclusion, and as commented by CNBC’s Brian Kelly, it is only a matter of time before we start paying for our coffee at Starbucks using Bitcoin. This will in turn mean that BTC is soon going to be a mainstream medium of exchange for goods and services on a global level.

Disclaimer: This article is not meant to give financial advice. Any opinion herein should be taken as is. Please carry out your own research before investing in any of the numerous cryptocurrencies available.


Posted on

NYSE Parent ICE's New Futures Contract Will Deliver Real Bitcoin

Intercontinental Exchange (ICE), the Atlanta-based firm that owns the New York Stock Exchange, announced Friday that it plans to launch a digital assets platform and a bitcoin futures product.

Called Bakkt, the platform will leverage Microsoft’s cloud to build “an open and regulated, global ecosystem for digital assets,” according to a press release. Effectively, it will allow consumers and institutions to trade, store and spend digital assets over a worldwide network.

The company said that it believes that the regulated venues will create new protocols for managing “the specific security and settlement requirements” of cryptocurrencies.

Notably, ICE also plans to offer a one-day “physical” bitcoin futures contract – meaning bitcoin is actually delivered on a specified date, unlike other offerings that are settled with cash. The product is expected to launch in November, pending U.S. Commodity Futures Trading Commission (CFTC) approval, ICE states.

The firm adds that major companies including BCG, Microsoft and Starbucks are providing expertise on risk management and consumer experience for the project.

Jeffrey Sprecher, founder and chairman of ICE, said in the release:

“In bringing regulated, connected infrastructure together with institutional and consumer applications for digital assets, we aim to build confidence in the asset class on a global scale, consistent with our track record of bringing transparency and trust to previously unregulated markets.”

“Bakkt is designed to serve as a scalable on-ramp for institutional, merchant and consumer participation in digital assets by promoting greater efficiency, security and utility,” said Kelly Loeffler, CEO of Bakkt.

The release also indicates that M12, Microsoft’s VC arm, Galaxy Digital, Horizons Ventures, Alan Howard and Pantera Capital are among the firms who have either invested in, or are expected invest in, the project.

NYSE image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Posted on

Report: NYSE Owner ICE Weighs Bitcoin Trading Platform Launch

Intercontinental Exchange, the firm that owns the New York Stock Exchange, is the latest Wall Street giant to be mulling a move into the cryptocurrency space, according to a report.

An article from The New York Times published Tuesday suggests that Intercontinental Exchange (or ICE) has been developing an online bitcoin trading platform for major investors who want access to bitcoin.

The newspaper cited emails and documents it obtained as well as conversations with four people with knowledge of the still-confidential project.

While details of the trading platform have not been set in stone and it may not still go see launch due to concerns over bitcoin’s negative reputation in traditional finance, the report indicates that the move by the established financial firm would be notable if it does go ahead.

The Times said an ICE spokesman would not comment when asked about the trading platform.

The report also suggests that the company has had discussions with other financial institutions about a different effort that could make ICE-backed bitcoin swap contracts available to banks, though the exchange has made no announcements on either project.

Notably, the news comes shortly after recent reports that other Wall Street giants are becoming more open to offering services around the cryptocurrency.

For example, investment bank Goldman Sachs, according to reports in early May, has a plan to use its own money to trade bitcoin futures on behalf of its clients. And Nasdaq’s CEO of Nasdaq suggested last month that the company could open a cryptocurrency exchange in the future.

NYSE image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Posted on

ICE Exploiting Blockchain to Expose Crypto Use in Drug Trafficking

The U.S. Immigration and Customs Enforcement (ICE) has detailed how it is working to expose transactions made by illegal drug traffickers using cryptocurrencies to cover their trail.

In a written testimony to a Senate committee on Jan. 25, ICE’s deputy assistant director Greg Nevano said the agency has seen increasing usage of cryptocurrencies to pay for the trafficking of illicit drug such as opioids like fentanyl.

Combatting this growing concern, the agency said it has adopted various strategies to expose drug traders who are turning to cryptocurrencies for their difficulty to trace.

Nevano wrote in his testimony:

“In support of its diverse financial investigative efforts ICE uses undercover techniques to infiltrate and exploit peer-to-peer cryptocurrency exchangers who typically launder proceeds for criminal networks engaged in or supporting dark net marketplaces.”

In addition, Nevano also indicated that ICE is employing “complex blockchain technology exploitation tools” in a bid to analyze cryptocurrency transactions and to discover the identities behind those transactions. Further, training is being provided by the agency to national and international cryptocurrency investigators to continue tackling the issue.

While he did not disclose the precise details of the agency’s cryptocurrency investigations, the comments mark ICE’s latest effort in delving into cryptocurrency’s underlying blockchain technology in order to strip its core feature of anonymity.

As reported by CoinDesk previously, in another testimony to a Senate committee, ICE reported its concern that criminal organizations have been increasingly using cryptocurrencies to launder money or pay for illicit activities.

ICE image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at