TechnologyNYSE Owner to Offer Futures Paying Out in Bitcoin Next Month
Crypto Crash Prompts Guessing Game as Bitcoin Breaches $10,000 Again
Cryptocurrencies plunged suddenly in afternoon trading on Wednesday, spurring a guessing game of potential catalyst among enthusiasts and investors. The price of Bitcoin dropped below $10,000 for the first time since July. The largest digital token fell as much as 5.6%, before trading at $9,686 as of 3:40 p.m. in New York. Peer coins also sold off, with Bitcoin Cash falling close to 4% and Litecoin dropping about 8%. © Bloomberg Bitcoin dropped as much as 5.
(Bloomberg) -- Intercontinental Exchange Inc., the parent of the New York Stock Exchange, won an approval that clears the way for its Bakkt unit to allow investors to buy derivatives that pay out with Bitcoins for the first time.
The New York State Department of Financial Services on Fridaya charter to Bakkt Trust Co. to hold custody of customers’ tokens. The futures had already gotten a green light from the U.S. Commodity Futures Trading Commission under a self-certification process. The first contracts will be offered Sept. 23.
“We believe that the availability of a benchmark that can be referenced globally will create confidence in the true price of Bitcoin,” Kelly Loeffler, Bakkt’s chief executive officer, said in a telephone interview. “It’s an important step in creating more trust.”
Record Bitcoin-Yuan Divergence Suggests New Trade-War Fallout
Bitcoin is increasingly moving in an opposite direction to China’s currency -- suggesting it may have become a refuge for people hedging the yuan’s depreciation. The biggest digital coin reached a record inverse relationship in the past week, according to a Bloomberg analysis of their 30-day correlation. © Bloomberg Inverse correlation reaches record as China's currency weakens “There’s corroborating evidence for this, in that people in Asia were paying more for Bitcoin than elsewhere when the yuan fell,” said Dr. Garrick Hileman, a researcher at the London School of Economics and Blockchain.com’s research director.
Despite its status of the world’s most valuable cryptocurrency, Bitcoin is known for wild price swings that some say are the result of manipulation. Digital tokens trade on platforms that face far less regulatory scrutiny than exchanges for stocks or derivatives. Many of the venues are also located outside the U.S.
According to Loeffler, the fragmented nature of Bitcoin trading means that there’s a lack of confidence of prices. She said that ICE’s futures contracts will lead to a new one-year price curve for Bitcoin that traders can use to express views on the cryptocurrency as they would with other asset classes.
Some of the brokerages who already work with ICE to trade futures have agreed to also handle the crypto contracts, according to Bakkt.
Ver’s Bitcoin.com Seeks to Launch Derivative for Bitcoin Cash
Bitcoin.com, the firm backed by crypto evangelist Roger Ver, is working on multiple ideas to ramp up interest in Bitcoin spinoff Bitcoin Cash, including a futures contract. The goal is for Bitcoin Cash to become one of the largest cryptocurrencies in the world behind Bitcoin, according to the new head of its recently launched exchange unit, David Shin, who was most recently Asia head of global equity derivative sales at TD Securities. “Within a year I want to make that the second- or third-largest market cap,” Shin said. “To get from No. 4 to No. 3 or No. 2, we have to see more volume.
ICE has said its ultimate goal is to create an ecosystem that would encourage pension funds, endowments and other institutions to invest more money in cryptocurrencies, and make it much easier for consumers to buy products with the cryptocurrency. The venture, announced to much fanfare in August 2018, has lined up big-name backers, including Starbucks Inc. and Microsoft Inc.
The goal is to have Bakkt serve as backbone of digital payment infrastructure at retailers starting in 2020, Loeffler said.
Bakkt had facedamid skepticism from the CFTC officials around how clients’ tokens would be stored, and thus safeguarded from possible theft and manipulation, according to people familiar with the matter. The concerns prompted ICE to seek the license from New York.
While ICE’s Bakkt futures won’t be the first Bitcoin futures to be listed on a major U.S. derivatives exchange, they could be the most significant for the burgeoning crypto industry. CME Group Inc. and Cboe Global Markets Inc. launched contracts in December 2017 that pay out in U.S. dollars on expiration, not actual Bitcoin. The Cboe no longer offers them.
CME to start offering options on bitcoin futures early next year
CME to start offering options on bitcoin futures early next yearCME launched bitcoin futures in December 2017 and has signed up 3,300 individual accounts and had 20 successful expiration settlements since then, the company said.
When Bakkt’s one-day and one-month contracts expire they would pay out in Bitcoin tokens instead of U.S. dollars. The futures will be exchange-traded on ICE Futures U.S. and cleared on ICE Clear US, which are federally regulated by the CFTC.
Bitcoin erased losses of as much as 6% to trade little changed at about $10,400 after the announcement. The largest cryptocurrency has dropped about 13% this week. It traded around $7,400 when the the venture was first announced.
(Adds comments from Bakkt CEO in fourth and fifth paragraphs.)
--With assistance from Olga Kharif.
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