Úno 09

CBOE and CME Bitcoin Futures See Lowest Volumes Since Launch

Chicago Mercantile Exchange (CME) and Chicago Board Options Exchange (CBOE) have seen the lowest Bitcoin futures volumes since they launched to much fanfare in December 2017. 


Battle Of The Markets

New research by TradeBlock shows that at their summer 2018 peak, combined trading volumes reached near-parity with spot trading volumes across five top US exchanges.

Bitcoin futures trading volume has fallen significantly since peaking in the summer. The latest numbers from December 2018 show the lowest volumes since the products were launched in December 2017.

What’s more, the vast majority of that volume has been through CME. Whilst the two markets were initially neck-and-neck, the gap between them has steadily widened since February 2018.

Volume grew rapidly following the products’ launch, reaching a high-point in July 2018 when it topped $5 billion. At the same time, spot trading volume was falling at digital currency exchanges in the US. Across five of the largest US exchanges (Coinbase, itBit, Kraken, Bitstamp, and Gemini) it fell dramatically, from over $20 billion, down to just over $5 billion.

Between January 2018 and October 2018, spot-trading volume fell 85%, following the general trend of the bitcoin price 00. Although volumes did start to pick up again in November and December 2018.

Back To The Futures

Meanwhile, following the peaking of the futures market in July and August 2018, volumes almost halved in September and have fallen steadily since. The exception to this was November, when volumes spiked, following volatility and a number of price crashes.

This decline in futures trading over H2 2018, coupled with the resurgence in spot trading, has seen spot trading volumes pull ahead again at the start of 2019.

But 2019 will see the launch of several new bitcoin futures products, from firms such as Bakkt, Nasdaq, ErisX, and CoinFLEX. It will be interesting to see the effect of these platforms on volumes as they come live over the next few months.

And of course, we may need to factor in the effects of volatility in price, should any also occur during this period.

Will futures volumes rebound with increasing price? Share your thoughts below!


Images courtesy of Shutterstock

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Pro 31

Bakkt Raises $182.5M From Microsoft And Other Big-Name Investors

Bakkt on Monday announced the completion of its first funding round, to the tune of $182.5 million. The platform which aims to offer the first-ever Bitcoin-settled futures contracts in the coming year says it is going ahead with its plans irrespective of the current market conditions.


$182.5 Million in Funding From High Profile Investors

In a Medium post published on Monday (Dec. 31, 2018) by the Bakkt CEO, Kelly Loeffler, the company announced that it had successfully carried out its first funding round. According to the announcement, 12 investors participated in the capital raising exercise.

The CEO notes the investors including some big names, namely:

The partners and investors in the first round include Boston Consulting Group, CMT Digital, Eagle Seven, Galaxy Digital, Goldfinch Partners, Alan Howard, Horizons Ventures, Intercontinental Exchange, Microsoft’s venture capital arm, M12, Pantera Capital, PayU, the fintech arm of Naspers, and Protocol Ventures.

Bakkt Moving Ahead Despite Bear Market

For Loeffler, the status quo remains unchanged despite the prolonged bear market that characterized the cryptocurrency space in 2018. The company intends to continue its drive for proper onboarding of clients, as well as, collaborating with relevant business partners.

New York Stock Exchange Owner to Launch Bitcoin Data Service

Reinstating Bakkt’s commitment and resolve to the process, Loeffler, said:

We have worked to build new markets and products many times before. Those of us building Bakkt have earned our stripes by helping advance markets in once-nascent asset classes, from energy to credit derivatives and, now, bitcoin. The path to developing new markets is rarely linear: progress tends to modulate between innovation, dismissal, reinvention, and, finally, acceptance.

According to Loeffler, focusing on the BTC price 00 action is a distraction from the groundbreaking developments happening with Bitcoin as a whole. The Bakkt CEO also noted that paradigm-shifting technological breakthroughs have a long incubation time and price isn’t always the best metric for gauging growth.

Notably, 2018 was the most active year for crypto in its brief ten-year history. This was evidenced by rising investment in distributed ledger technology and digital assets, as well as by blockchain network metrics such as daily bitcoin transaction value and active addresses. Yet, these milestones tend to be overshadowed by the more narrow focus on bitcoin’s price…

Bakkt Postponed From January to ‘Early 2019’

Bakkt and the Commodity Futures Trading Commission (CFTC) continue to work out modalities for the launch of the BTC-settled futures contracts. However, the current government shutdown in the United States looks like it has pushed back the January 2019 launch to “early 2019.”

The official statement published on December 31, reads:

Following consultation with the Commodity Futures Trading Commission, ICE Futures U.S., Inc. expects to provide an updated launch timeline in early 2019, for the trading, clearing and warehousing of the Bakkt Bitcoin (USD) Daily Futures Contract. The launch had previously been set for January 24, 2019, but will be amended pursuant to the CFTC’s process and timeline.

While awaiting CFTC approval, the platform says it will continue to onboard customers while firming up its institutional-grade infrastructure.

Do you think the signs are good for Bakkt following this successful fundraising round? Please share your thoughts with us in the comments below.


Image courtesy of Twitter (@Bakkt), Shutterstock

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Pro 21

Bakkt Bitcoin-Settled Futures Set To Be Approved in Early 2019

Bakkt, a platform for the first-ever Bitcoin-settled futures contract, is expected to be approved by the United States Commodity Futures Trading Commission (CFTC), according to the Wall Street Journal.


CFTC Approval Imminent

According to the Wall Street Journal, Bakkt will soon receive a regulatory green light from the CFTC for its Bitcoin futures contract. The WSJ notes:

The first futures contract that will pay out in cryptocurrency rather than cash is expected to soon get regulatory approval.

Bakkt, owned by Intercontinental Exchange Inc., will be the first to offer a BTC-settled futures product.

The Chairman Of The CFTC Might Just Have Brought The Bitcoin Crash To An End

Both Bakkt and the CFTC have been working together to iron out crucial issues relating to the futures contract. CFTC is also reportedly examining Bakkt’s business plan to determine whether they comply with its regulations.

Another major point of concern has to do with cybersecurity infrastructure. Cryptocurrencies are a target of hackers and other cybercriminals. The CFTC is looking at Bakkt’s security framework and the modalities in place to recover from a possible cyberattack.

Previously, Bakkt had to postpone the launch of BTC futures contracts to 2019 to give more room for proper customer onboarding and warehousing for the product.

In a press released issued by ICE back in November, the company announced that Bakkt would begin trading BTC futures on January 24, 2019. According to available reports, the CFTC will likely vote on the matter in early 2019.

Focus on Price Discovery

For Bakkt, the mechanism of price discovery is a critical issue given that its contract will be BTC-settled and not cash-settled like the ones offered by the CME and the CBOE.

Back in 2017, the appeal of the futures contract provided by the latter two gave traders the ability to place leveraged bets on BTC price 00 movement without having to buy the cryptocurrency itself.

However, the dynamics of price discovery could improve with Bakkt contracts being settled in actual bitcoin to gauge real demand as opposed to placing USD cash bets on BTC price movement. In August 2018, Bakkt CEO, Kelly Loeffler, said:

A critical element to price discovery is physical delivery. 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.

Apart from Bakkt, Nasdaq has also confirmed that it wants to launch its Bitcoin futures product in 2019 and possibly other altcoins like Ethereum thereafter.

Will Bakkt Bitcoin futures get approved and make Bitcoin price discovery more accurate? Share your thoughts below!


Image courtesy of Twitter (@Bakkt), Shutterstock

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Led 09

Bitcoin Futures Speculation Allowed in Thailand

· January 9, 2018 · 6:30 am

While the rest of Asia scrambles to regulate cryptocurrencies, some remain open and even welcoming of the blockchain boom. An unlikely nation in the region to be convivial to new technology and innovation beyond state control is Thailand, which is currently in the throes of an ever-lengthening military dictatorship and associated power struggles.


It was reported in the Bangkok Post this week that the Securities and Exchange Commission (SEC) has said Thailand’s first bitcoin futures trading service offered by a securities company is legitimate but urged investors to apply caution due to high risks.

Thai Futures

According to Phillip Securities Thailand, investors would be allowed to speculate on Bitcoin via an international global derivatives trading service. Market regulators within the country are in consensus that the move is legitimate and can proceed. Similar futures contracts were offered last month by two large Chicago exchanges: CBOE and CME, though products in other countries have yet to get off the ground.

In a press release, managing director Low See Kiong stated:

Using bitcoin as an underlying asset on the CBOE and CME will lead to greater acceptance of bitcoin futures as they have reliable payment systems and are regulated by the US Securities and Exchange Commission.

He added that the futures were targeted towards experienced investors that did not want to buy the currency directly on crypto exchanges or from unlicensed brokers.

Open to Trading

The head of global markets at Phillip Securities Thailand told the Bangkok Post that customers wanting to trade Bitcoin futures must apply for the company’s global derivatives service, which will allow them to trade futures on 15 global futures markets, including CBOE and CME. However, investors will need to deposit money to cover their investment margin, and trading will be quoted in US dollars. In reference to margin covers, he added:

In principle, investors should prepare money as a buffer for price movement around 20-30% above the margin. The buffer might be lower for some, depending on the risk management of individuals. For example, if they have a strict policy to stop losses, the buffer may be lower than 10%.

Thailand has one primary crypto exchange offering Bitcoin and ten other altcoins directly in fiat and a few more obscure ones in Bitcoin. Junta leader Prayut Chan-ocha recently warned about the risks of crypto trading and advised that the public be educated about it before jumping in.

Will the rest of Asia open up or continue to crack down on crypto? Share your thoughts in the comments below.


Images courtesy of GoodFreePhotos, Pexels, and Bitcoinist archives.

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