Cryptocurrency Futures, Derivatives, ETF & ETO… What next?
I am a bit of a “Crypto Optimist” when it comes to looking at the developments around the digital coins/assets. This past week Square — the digital payment service company which added the functionality of buying/selling Bitcoin through their mobile app earlier this year reported 2nd quarterly earnings of $37 million up slightly from $34 million of the first quarter. The increase may not be significant but it shows growing adoption of the digital asset which is slowly but surely leading to financial inclusion & access to all.
Bitcoin Futures have been trading on the CBOE (Chicago Board Options Exchange) since December 2017 giving the market participants a chance to invest & divest in the primary digital currency. The beauty of the Futures contracts is that you can bet for or against the underlying asset. Basically you can trade the digital assets both ways.
The Bitcoin Futures craze is spreading even further with ICE (Intercontinental Exchange) the company that own NYSE (New York Stock Exchange) announcing it is launching BAKKT — a regulated digital ecosystem to trade Bitcoin futures in partnership with big names like Microsoft, Starbucks, and BCG. The intention is the same — integrating Bitcoin into the mainstream financial ecosystem.
It’s not just Bitcoin anymore — since BitMex (a peer-to-peer platform), the Cryptos derivatives exchange launched ETH/USD 50x leveraged futures as announced by their CEO on Twitter. The trading platform does offer BTC/ETH futures already and it is the same company that came in the limelight for offering BTC/USD futures with a 100x leverage earlier.
I should remind you though that such high leverages mean taking up a lot of risk, therefore, you should exercise proper risk management before jumping to trade futures.
Bitmex has been quietly adding other futures as well with most notable ones being EOS & Tron earlier in June, albeit with lower leverages. Apart from these, other futures contracts available on the exchange include Bitcoin Cash, Ada, Litecoin, and XRP — all in bitcoin cross pairs. Bitmex also offered another innovative product called “perpetual contract” which functions like the futures contract without an expiration date so you can become a “Futures HODLer”.
Most of the recent efforts in Digital asset markets have been revolving around developing products that are more catered to institutional investors which is a must to give a lift to the sagging fortunes of Cryptos by making them more acceptable & attractive investment instruments.
One such initiative has been taken by SBI Holding — the Japanese Financial services giant, which has invested about $9 million in a North Carolina based company Clear Markets, with the intention of building a Cryptocurrency Derivatives exchange. This exchange will let the institutional investors trade in a multitude of digital assets which would include hedging positions.
Even the cautious market like Germany is following suit where the second-largest exchange Boerse Stuttgart is planning all under one roof regulated platform where coins of hosted ICOs will be traded in parallel to the mainstream Cryptocurrencies. This comes on the back of an earlier announcement by the exchange of the development of an app Bison where users will be to buy/sell Cryptocurrencies free of charge. The app launches in Germany this coming Autumn.
Bitcoin ETF (Exchange-traded fund) has been the talk of the town for quite some time now with the expectation of one being approved by the SEC sometimes later this year or early next year. But then you must have heard all the FUD about the recent rejection by the SEC of the Winklevoss brothers’ application for a bitcoin ETF yet again!
Two things here — first there are 5 applications of bitcoin ETF under consideration by the SEC one of which is backed by the CBOE the same exchange that has Bitcoin futures listed so one getting rejected on some technical grounds doesn’t mean the world is coming to end for Bitcoin & Cryptos, and secondly, the SEC commissioner who dissented with the decision came out publicly acknowledging the fact that there is no reason not to approve a bitcoin ETF. She also followed up by saying that they don’t want to stifle the innovation to which I say Bravo! So hold on to your guts…
Neufund is a Berlin-based Blockchain-powered Equity fundraising platform which intends to offer a new product called ETO (Equity Token Offering) whereby companies can issue tokens in a public or private setting with the ETOs amalgamating the advantages of IPOs (Initial Public Offerings), ICOs (Initial Public Offerings) & VCFs (Venture Capital Funds). Neufund has the following projects in the pipeline with an impressive line up of partners
- Binance & Malta Stock Exchange — Creating the First Global Decentralized Exchange
- BitBay Cryptocurrency Exchange — Secondary market for ETOs where investors can buy/sell equity tokens with fiat currencies available on the exchange
- 7 Companies from 5 Countries — Will be conducting ETOs for them, tokenizing their Equity
Falling price in Cryptos is not the only factor determining their mainstay. The sheer innovation & diversification of investment products in digital assets being made available to institutional & individual investors alike shows the wider acceptance of Cryptocurrencies among the masses as this technological field continues to evolve. As we look ahead to the future and wonder… What next?
Originally published at www.datadriveninvestor.com on August 4, 2018.