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Technology Banks on Sidelines May Limit Early Bakkt Bitcoin Futures Volume

22:45  25 september  2019
22:45  25 september  2019 Source:   bloomberg.com

NYSE Owner to Offer Futures Paying Out in Bitcoin Next Month

NYSE Owner to Offer Futures Paying Out in Bitcoin Next Month 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 Friday granted a 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.

(Bloomberg) -- The number of banks willing to act as a gateway to allow customers to buy and sell Bitcoin futures on Intercontinental Exchange Inc. may be a key to the success or failure of the new contract.

On the first day of trading, 72 monthly contracts changed hands Monday, followed by 166 Tuesday. As of 2:19 p.m. Wednesday in New York, 69 monthly futures had traded. Only one one-day contract traded so far this week. When the CME Group Inc. started its Bitcoin contract in December 2017, 221 contracts traded in the first hour, with several thousand now trading daily. A key difference between the two is that ICE’s future delivers actual Bitcoin if an investor holds to expiration; CME’s contract settles in cash.

Ver’s Bitcoin.com Seeks to Launch Derivative for Bitcoin Cash

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.

a screenshot of a cell phone: Futures Arrive With Volatility© Bloomberg Futures Arrive With Volatility

Cryptocurrencies sold off broadly on Tuesday, with Bitcoin dropping below $9,000 for the first time in three months. On an intraday basis, Bitcoin’s 17% drop was its largest since January 2018. It extended its decline for a fourth day on Wednesday to trade at $8,361.

ICE spokesman Damon Leavell earlier this week declined to say how many so-called futures commission merchants were signed up to act as brokers.

“We do have a handful of FCMs expected to support the launch,” Leavell said in an email. “We had strong support from our day one traders,” he said yesterday in response to questions. “The first physical delivery of Bitcoin will take place on Wednesday and we continue to onboard trading and clearing firms.”

CME to start offering options on bitcoin futures early next year

  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.

Banks are staying away from Bitcoin futures in general due to risk concerns, Bloomberg Intelligence analyst Ben Elliot wrote earlier this year. “Morgan Stanley and Goldman Sachs are among banks clearing Bitcoin futures,” he wrote in May. “JPMorgan, Citi and other FCMs could enter the space if demand grows.”

Nuts and Bolts of How The Contracts Work

Another question is if ICE’s traditional customers are comfortable jumping into Bitcoin futures, said Rich Repetto, an analyst at Sandler O’Neill & Partners LP. Additionally, the fact that the ICE contract settles in Bitcoin may be making some users hesitant to trade for now, he said.

“That’s a whole new set of rules around a product that isn’t fully liquid or accepted,” Repetto said in an email response to questions.

To contact the reporter on this story: Matthew Leising in Los Angeles at mleising@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Dave Liedtka, Brendan Walsh

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

Bitcoin Speculators Gain Upper Hand as Derivative Trading Surges .
As Bitcoin becomes boring for many in the get-rich-quick crowd with volatility ebbing, trading in derivatives of the largest cryptocurrency is exploding. require(["medianetNativeAdOnArticle"], function (medianetNativeAdOnArticle) { medianetNativeAdOnArticle.getMedianetNativeAds(true); }); At $5 billion to $10 billion a day, the amount of derivatives traded globally exceeds Bitcoin spot volume by 10 to 18 times, according to estimates from data trackers Skew and BitcoinTradeVolume.com.

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