16 December 2017

Bitcoin Futures

Last weekend saw the launch of bitcoin futures trading, and since this month has five Saturdays, I'll use the extra Saturday to write a short post about the event. The main product page appears to be XBT-Cboe Bitcoin Futures (cboe.com). It starts,
The First U.S. Bitcoin Futures • Bitcoin futures are now available for trading on the Cboe Futures Exchange, LLC (CFE). CFE launched trading in Cboe bitcoin futures on December 10 under the ticker symbol "XBT". This brings many benefits to traders, including transparency, efficient price discovery, deep liquidity and centralized clearing. XBT futures provides a centralized marketplace for participants to trade based on their view of bitcoin prices, gain exposure to bitcoin prices or hedge their existing bitcoin positions.

The related press release said,

Cboe Plans December 10 Launch of Bitcoin Futures Trading • CHICAGO – December 4, 2017 – Cboe Global Markets, Inc. (Cboe: CBOE | Nasdaq: CBOE), one of the world’s largest exchange holding companies, today announced that Cboe Futures Exchange (CFE), plans to offer trading in bitcoin futures beginning at 5:00 p.m. CT on Sunday, December 10, 2017, at the start of Global Trading Hours. Monday, December 11, will be the first full day of trading, and trading will be free through December.

Cboe’s bitcoin futures will trade on CFE under the ticker symbol 'XBT'. XBT [SM] futures are cash-settled contracts based on Gemini’s auction price for bitcoin, denominated in U.S. dollars. Gemini Trust Company, LLC (Gemini) is a digital asset exchange and custodian that allows customers to buy, sell, and store digital assets such as bitcoin. XBT futures are specifically designed to allow participants to implement straightforward trading strategies, through settlement to a single, tradeable auction price.

Ed Tilly, Chairman and Chief Executive Officer of Cboe Global Markets, said: "Given the unprecedented interest in bitcoin, it’s vital we provide clients the trading tools to help them express their views and hedge their exposure. We are committed to encouraging fairness and liquidity in the bitcoin market. To promote this, we will initially offer XBT futures trading for free."

Tyler Winklevoss, Chief Executive Officer of Gemini, said: "Developing a regulated derivatives market is the next logical and crucial step towards advancing the broader digital asset market. We have been working for years to build infrastructure to grow the digital asset market and today’s news marks a significant milestone."

On Friday, December 1, Cboe announced that CFE had filed a product certification with the Commodity Futures Trading Commission (CFTC) to offer bitcoin futures trading. More information on XBT futures is available at www.cboe.com/xbt.

Over the last five years, the total value of all bitcoin outstanding (i.e., "market capitalization") has grown from less than $1 billion to over $183 billion with daily notional turnover over $10 billion. The total value of all cryptocurrency tokens outstanding is now approximately $332 billion.

The link www.cboe.com/xbt returns the main product page I gave above. That last paragraph of the press release has a footnote that says,

All data given as of December 1, 2017, source: https://coinmarketcap.com/

The Coinmarketcap.com link, which I can't remember seeing before, currently lists 1360 cryptocurrencies, sorted in descending order by market cap ('Total Market Cap: $583,439,429,633'); that's $583.4 billion! Has the introduction of futures dampened the explosive price rise of bitcoin? Not exactly. Here's a bitcoin price chart for the first week of futures trading.


Bitcoin (BTC) Price Index

As for what the pundits are saying, I'll cover that in my next two posts, 'Bitcoin in the News : 2017-12 Price++'.

By at No comments:
Labels: , , ,

09 December 2017

Bitcoin in the News : 2017-11 More++

In my previous post, Bitcoin in the News : 2017-11 Price, I identified three stories that fueled the price of bitcoin in November:-
  • Bitcoin futures on CME (Chicago Mercantile Exchange)
  • Collapse of SegWit2x
  • Reaching the $10.000 mark

Curiously, those three stories occurred at the start, at the middle, and at the end of the month. Predictably, they each provoked an avalanche of commentary in the financial press. I'll mention just one article on each, although there were many more. Coincidentally, these three articles are all from cnbc.com:-

After these stories, the theme repeated the most involved the B-word : Bubble! I'll mention just two of the half-dozen that popped up:-

  • 2017-11-01: The Head and Tail of Bitcoin Bubble (entrepreneur.com) • 'More than as an instrument to buy and sell goods and commodities, increasingly money is being invested in bitcoin to make even more money.'
  • 2017-11-21: Bitcoin: An Unknowable Bubble? (seekingalpha.com) • 'There is a much-discussed in the crypto-sphere chart making rounds these days, plotting Bitcoin price dynamics against the historical bubbles of the past.'; chart gives graphical overview of past bubbles

Looking back, the first occurrence of the B-word on this blog was a passing reference in the post titled '2017-05 Price' (June 2017). Looking forward, there will be more occurrences until the bubble finally bursts. And burst it will -- maybe at a much higher price level -- but it will inevitably happen when everyone wants to exit at the same time. 'What goes up must come down', 'trees don't grow to the sky', yada-yada, etc. etc. (NB: I'm not a gloom-and-doom person, it's a party. I was reminded of this in a Yahoo.com article from Rick Newman, one of my current favorite financial writers.):-

  • 2017-11-30: Owning bitcoin is so much fun • The title I originally recorded was 'Owning part of a bitcoin is the most fun I’ve ever had investing-- even if it collapses', which echoes my sentiment exactly.

Bitcoin articles have been appearing with increasing frequency in Yahoo. (NB: Exploding popularity often precedes a bubble.) Another article bearing the same date as the one above was by Daniel Roberts, another favorite financial writer:-

Because I had never heard of most of these people, it's worth noting their names (listed alphabetically) and their companies. The ones I don't know I should research further, but there's only so much time in a day.

1. Brian Armstrong, Coinbase
2. Vitalik Buterin, Ethereum
3. Juthica Chou, LedgerX
4. Jack Dorsey, Square (also CEO Twitter)
5. Terry Duffy, CME Group (Chicago Mercantile Exchange)
6. Charlie Lee, Litecoin
7. Naval Ravikant, MetaStable, CoinList
8. Elizabeth Rossiello, BitPesa
9. Barry Silbert, Digital Currency Group ('portfolio of more than 100 investments includes all the biggest names')
10. Balaji Srinivasan, Earn.com
11. Elizabeth Stark, Lightning Labs

Yahoo has a page on bitcoin, BTC/USD ('BTCUSD=X; CCY Delayed Price. Currency in USD'), with links to current articles. I'll add this to the right navigation bar.

This would be a good point to sign off, but I touched an important subject in last month's post, Bitcoin in the News : 2017-10 More++, and there were a few relevant articles this month: 'How to value bitcoin (or any other cryptocurrency)?':-

We know how to value stocks by looking at various ratios of the underlying company, market share (and pricing power) being one piece of the analysis. How those ratios compare to the stock's current price -- showing good or bad value -- is a matter of judgement. What are the factors besides dominance that temper the judgement for a crypto-currency?

By at No comments:
Labels: ,

02 December 2017

Bitcoin in the News : 2017-11 Price

I ended last month's bitcoin price review, Bitcoin in the News : 2017-10 Price, with the cryptocurrency just under $6500. This month's chart shows the price starting at $7000. Why the gap of $500? Maybe it's an error in the charting service; maybe it's the day or two difference in my capture of the chart; maybe it's something else. Whatever the reason, it's not the gap at the start of the month that matters; it's what happened during the rest of the month that matters.


Bitcoin (BTC) Price Index

The main critical points were around 12 November (I'm not sure where to attach the dates on the x-axis) and around 28 November. Let's look once again at the stories from Cointelegraph.com's Bitcoin Price Analysis to understand the dynamics.

Wait a moment! It looks like there was another critical point at the beginning of the month. Maybe the gap I flagged does matter after all.

  • 2017-11-02: Bitcoin Shatters $7k Barrier After Futures Trading Announcement by CME Group • 'Bitcoin continued its five-day surge, rising from $5,750 on Oct. 28 to just over $7,000 at press time on the GDAX exchange. The currency’s definitive smashing of its most recent all-time high and the $7,000 barrier seems to be tied to its increasing integration in mainstream finance.'
  • 2017-11-03: The What and Why Bitcoin Price Reached $7,000 • 'This week, Bitcoin price, on its usual upward trajectory, barely blinked as it smashed through the $7,000 mark. [...] The biggest factor behind the rally was the announcement of Chicago Mercantile Exchange’s decision to offer Bitcoin futures.'

Let's skip ahead to mid-month.

  • 2017-11-13: Counting Costs of Bitcoin’s Big Three Drops of 2017 • 'A lot has happened in a week for Bitcoin. The on-again-off-again plans for SegWit2x were officially put on ice and the effervescent Bitcoin celebrated by reaching yet another all-time high of $7,888. However, what comes up, must come down. Bitcoin then went into a spiral as a number of factors influenced its latest drop of 29 percent, which saw $38 bln wiped clean off the market cap.'
  • 2017-11-13: Bitcoin Price is Up 17%, Will it Achieve a New All-Time High in Short-Term? • 'Bitcoin price has risen by 17 percent within the past 24 hours, after dipping below $5,560 earlier today. Since then, Bitcoin price has stabilized at $6,450, recording a daily increase of around $890. [...] Triggered by the sell-off of major Bitcoin investors and the rapid surge in the value of Bitcoin Cash, Bitcoin price plunged over the past weekend.'

That second article continued, 'As expected, Bitcoin price recovered relatively quickly as the Bitcoin Cash price declined from over $2,800 to $1,200'. Is there an inverse, negative correlation between the prices of Bitcoin and Bitcoin Cash? If so, why? I covered the introduction of Bitcoin Cash in Bitcoin [Cash] in the News : 2017-08 Price (September 2017), but there was no indication that the two crypto currencies were in any sort of quantum entanglement. To be watched...

The end of the month saw the bitcoin price hit five figures for the first time. That milestone number provoked an avalanche of stories.

  • 2017-11-28: Increasing Adoption Demonstrated by Huge Trading Weekend for Bitcoin, Soaring Prices Market-Wide • 'In a sign that adoption is massively increasing, trading numbers from last weekend indicate that the volume of cryptocurrency trades exceeds that of many U.S. equities trading markets.'
  • 2017-11-28: Why Bitcoin Continues Its Phenomenal Rise • 'Bitcoin continues its phenomenal surge in the financial trading market as it already reached the $9,000 per token mark as of late November 2017. The leading cryptocurrency was also traded at $10,000 in some markets. The sustained upward trajectory of the most popular cryptocurrency has continued to baffle both the virtual currency markets and the wider investment community'
  • 2017-11-28: Bitcoin Price Hits $10,000 • 'Black Friday [Thanksgiving weekend] saw the currency hit new highs in the upper $8,000s before surmounting the $9,000 level Saturday and immediately charging toward the $10,000 mark Sunday.'
  • 2017-11-30: Experts Answer Question: “How Did Bitcoin Reach $10,000?” • 'In January this year, $1,000 was the milestone Bitcoin owners were eager to reach. The digital currency hit that, overcame it and increased ten-fold to over $10,000.'

That last link lists two answers to the 'How' question:-

  • Institutional money
  • Newcomers are still early adopters

Will those two groups -- institutions and newcomers -- continue to provide funds? They represent opposing points of view toward investing that are often described as 'smart money' and 'dumb money'. They can't both be right, can they?

By at 1 comment:
Labels:
Subscribe to: Posts (Atom)