While Bitcoin celebrates its anniversary, leaders of the financial industry have probably joined the game in order to increase the liquidity of the cryptocurrency derivatives market.
📌 31st of October: Bitcoin's 10th Birthday
10 years ago, an anonymous author (or authors) under the pseudonym Satoshi Nakamoto published Whitepaper document with the intriguing title "Bitcoin: A Peer-to-Peer Electronic Cash System". This paper (available nowadays for anyone who wants to) described the principle of the payment system, which does not require the participation of intermediaries - states, banks, or other organizations.
Today we know Bitcoin as a rather ambiguous phenomenon, which caused a lot of noise, not only in mass media, but even in the highest financial echelons. Started from this point, Satoshi Nakamoto has changed the views of people on how money and financial markets are arranged. Besides high poetry, cryptocurrencies have become the exchanging method for dark marketplaces as well as the object of dangerous financial speculations and simple human greed. However, all this happened much later.
Some of the key events:
- August 18, 2008. The domain name bitcoin.org has been registered.
- October 31, 2008. Bitcoin White Paper has been released.
- January 3, 2009. The first BTC block has been created (the so-called "genesis block").
- January 12. The first transaction in Bitcoin's network (block 170). Sender: Satoshi Nakamoto. Recipient: Hal Finney.
- October 5. Bitcoin receives exchange rate against the US dollar: $ 1 = 1.309.03 BTC.
The price of the coin has been increasing over the years. So, on February 9, 2011, Bitcoin traded at $1, and already on June 2, Bitcoin's exchange rate to USD has risen to $10 for 1 coin. In 2013, on the 1st of April, the cryptocurrency rate on MtGox and other major exchanges reached $100. November 2013 was the month of high volatility for the "digital gold", however, 1 BTC has successfully climbed to $1,000.
📌 US SEC Publishes Bitcoin ETF Memorandum
The SEC regulator has published the results of a meeting with SolidX, VanEck, CME and CBOE actually wishing to receive approval on Bitcoin ETF establishing (exchange-traded funds). This summer, the Commission denied obtaining the needed permission for all companies that submitted an application. Anyway, the consideration of these cases has been postponed for a later period.
In the course of this meeting, it became clear that the regulators still estimate the market of cryptocurrency derivatives as low. According to the document, the lack of developed exchanges for contracts of this type led to the refusal for SolidX and VanEck, and it`s probably also important for all other applicants.
It is reported that part of the claims submitted as the reason for the refusal is now cancelled. The ETF idea still has problems with the liquidity of the derivative market, and the currency storages also - there are no complaints specifically to the applicants/beneficiaries. As we remember, after October 26, the SEC will announce the final decision. But this document is likely to be regarded as a hint of a future refusal and an indication of deeper market problems (as the Commission considers them).
Remind: the U.S. Securities and Exchange Commission has to form the complete decision on Bitcoin ETFs until November 5. This will affect 9 ETFs applications: from ProShares, Direxion, and GraniteShares namely.
📌 BTC Futures & Main Launch Date On Bakkt Announced
Bakkt, the newest platform for storing, trading and wide use of digital currencies, promoted by ICE and other major players will be launched this December. Its first product - BTC/USD Daily Futures Contracts - will become available for trading starting from Dec. 12 2018.
«The Bakkt Bitcoin (USD) Daily Futures Contract is a physically-settled daily futures contract for bitcoin held in Bakkt LLC, ICE’s digital asset warehouse, and will be cleared by ICE Clear US Inc.»
As many noticed, during the December 2017, the two largest exchanges - the Chicago Board Options Exchange (CBOE) and the Chicago Mercantile Exchange (CME) offered the first derivative contracts tied to Bitcoin. This December will also bring a new product in the form of a cryptocurrency-based asset, but this event takes place on a completely different market landscape, and it is still quite possible that the media will speculate even on this weak correlation.
📌 Bitfinex/Tether Faced Banking Issues
This pair became the most restless, although, in relation to investors, more important things happened (such as hacks, thefts, etc.). This month Bitfnex stopped working with fiat deposits, while Tether's rate dropped to $0.96 (now it is equal to $1.01, as usual). For some time, representatives of the exchange were in no hurry about to give any explanations on that case, but then media revealed that the deposits would not be available for a week.
Several times, Tether and Bitfinex reported on their stable status and ability to meet their financial obligations. All that remains behind the scenes is the problem of finding partners and a servicing bank, and, as we understand, in the end, this problem was solved.
In addition, Bitfinex presented the new deposit system, and this is not the last update on the exchange. A new set of tools for the programmable trading ("Honey Framework") has also become available to users. Quite recently, the exchange`s community also received a version of the Bitfinex mobile app.
But some questions exist. The exchange received accusations due to the publication of data on non-existent USDT/USD pair on the popular service Coinmarketcap; trading volumes for this pair amounted to several tens of millions of dollars. Bitfinex responded to the charges by stating that this is «another not-so-brilliant example of anti Bitfinex/Tether FUD».
📌 The First ERC20 Appears On Coinbase
One of the largest exchanges, Coinbase, has opened trading for 0x (ZRX), first ERC-20 currency on the platform which is now traded against other assets. Coinbase also has been working on reforming the listing process - now tokens can be added either by request or independently.
At the same time, Coinbase managed to avoid further legal investigation of the possible insider trading connected with Bitcoin Cash listing. California District Court rejected the lawsuit against the exchange. Recently, it also became known that the platform is not preparing for the IPO launch (according to Coinbase Inc. President and Chief Operating Officer Asiff Hirji).
📌 Fidelity Launches Cryptocurrency Product
Another interesting news concerns the entry of Fidelity Investments into the cryptocurrency market. The product intended for institutional clients will provide services for Bitcoin or another, second-largest cryptocurrency asset — Ethereum. Moreover, at first, the company simply announced the development of a crypto product (1), then clarified the trading orientation of the platform (2), and then finally stated that they're going to open cold storage for digital assets (3).
According to this, the launch of the exchange or trading platform from Fidelity, most likely, won't take place in near future. The upcoming solution will provide storage of large volumes of crypto only, allegedly at a sufficiently high level of security.
📌 TD Ameritrade Backs Cryptocurrency Exchange & Launches Futures in Early 2019
The new regulated cryptocurrency exchange ErisX, supported by its investor TD Ameritrade, will release Bitcoin, Bitcoin Cash, Ethereum and Litecoin deliverable futures. The news has been almost forgotten since the beginning of October, but nevertheless, it is connected with direct derivative trading, not only with storing or servicing digital assets, which means an impact on the market's liquidity.
📌 Goldman Sachs Will Issue Bitcoin Derivatives
According to The Block, citing an informed source, Goldman Sachs is preparing to launch Bitcoin derivatives for a limited number of customers. The largest financial conglomerate organized testing of its own product, which is practically no different from futures provided by the CBOE and CME exchanges, except that it is a non-deliverable nature. The contract, if it will happen, will be released for the first cryptocurrency only, but there is no similar contract for Ethereum planned yet.
It was known Goldman was about to launch cold storage service for cryptocurrencies. Although now the company does not exclude this, first of all, they're talking about futures [now presented in experimental mode for some participants]. The fact that the conglomerate will issue its own derivative assets has also been known earlier - since May of this year.
📌 BTC Stabilizes, Trading Volumes Fall
BTC trading volume this month amounted to $109.5 ($109,621,131,008) billion dollars. Given that in September this figure was about $124 billion, the total decline in BTC trading resulted in more than 11%. Now the total market capitalization is barely above $200 billion, which shows us that bearish sentiments are still very high.
As for the general discourse of cryptocurrency, it has not changed much, during this month. Although the comparison of the stock market and digital assets is often extremely incorrect, many still draw a parallel between these two parts of the world economy. It is believed that the ultra-volatile Bitcoin is trying to become a defensive asset, amid some decline in stock markets.
The 2017 BTC bubble stage is long over, and now Bitcoin is stabilizing. This sparked some interest in coin from poorly developing economies, where national currencies are losing out against the US dollar. But the idea of protecting national risks with digital assets is still just an idea, it is a rhetorical thing that appeared quite a long time ago, and is still haunting the cryptocurrency area. The states are the main buyers of developing economies, and they`re in no hurry to buy anything other than green currency, and some classic assets like gold, probably.
📌 Opinions Changed: «Bitcoin Bear Market Could Last 18 Months»
If we continue to analyze the media controversy regarding how Bitcoin cost will change, we will find that expressed opinions being more realistic. BitMEX CEO Arthur Hayes shared with Yahoo Finance that “[his] view is the volatility environment that exists right now could persist for another 12 to 18 months, the flatness". This does not apply to the technology itself, as well as big plans for 2019 (for example, launches of ETFs, new crypto products, platforms), but it is likely that such a plot may take place.
📌 Tether's Capitalization Lost More Than $1 Billion
USDT continues to lose in market capitalization - now the decline is estimated at $1 billion. On October 30, Tether Limited withdrew 100 million USDT from circulation, leading to declining at 1.8 billion. Shortly after that, 50 million USDT also disappeared from the market (literally the next day).
Without taking into account the inner Tether's business and what's going with this, token's direct competitors, such as TrueUSD, USD Coin and Paxos Standard continue to grow in terms of market cap. More generally, interest in such a topic as stablecoins probably correlates with the stagnation of the market, however, even this object has the right to be considered.
📌 Morgan Stanley Considers Crypto As Institutional Asset Class, Thinking More Investors Trust In It
Morgan Stanley also summed up the development of the cryptocurrency market to date. They looked at changes in several areas at once, such as private investment, hedge funds, venture capital - here growth remains fairly stable and currently estimated at $7.1 billion (for companies working with cryptocurrencies).
The big financial institutions are increasing their financing in long-term cryptocurrency investigations, so Morgan citing Fidelity’s new crypto division, Seed CX investments, BitGo, Binance, Coinbase’s fundraising round and regulatory progress. The report also reflects some particular aspects of the digital market, for example, Tether/Bitcoin volume and price correlations and more.
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