Tag Archives: cryptocurrency

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Bitcoin Price Surge in Advance of SEC Decision to Approve Bitcoin ETF

Speculators betting on the SEC approving the very first Bitcoin ETF listing helped push the price of the digital currency aka crytopcurrency to a record high in advance of a March 11 SEC meeting in which regulators are scheduled to determine whether the Winklevoss Bitcoin Trust ETF [proposed ticker NASDAQ:COIN] is fit for every day investors to purchase and trade on public markets.  In over-the-counter trading on Friday, the price of a single bitcoin soared to as high as $1,200 per bitcoin i Europe’s Bitstamp exchange, before easing to about $1,190. Aggregated bitcoin exchange prices pegged the price at closer to $1174. That put the total value of all bitcoins in circulation — or the digital currency’s “market cap”, as it is known — at close to $20 billion, around the same size as Iceland’s economy.

bitcoin-etf-sec-decision-marketsmuseThe bitcoin ETF is the brainchild of Harvard-educated investors Cameron and Tyler Winklevoss, the twin brothers who for years claimed to be the genius behind the creation of Facebook (NYSE:FB). The pair first submitted their initial offering prospectus for a bitcoin exchange-traded fund nearly four years ago. They have since modified the offering documents several times in an effort to appease securities regulators. If approved, everyday investors will have simple access to the cryptocurrency on a major exchange for the very first time, which would no doubt legitimize Bitcoin’s existence and according to some, likely push its value much higher.

Two other prospective bitcoin ETF issuers have more recently filed offering prospectuses with the Securities & Exchange Commission. SolidX Partners sought SEC approval last July for its bitcoin ETF, SolidX Bitcoin Trust , which also would be listed on the NYSE. In January, Grayscale Investments filed to list its own Bitcoin Investment Trust on the NYSE.

According to ETF Daily News, “A ten-day rally for the cryptocurrency has narrowed its gap with the precious metal to the smallest on record. Each asset has been touted as an alternative to regular currencies, because of constraints on their supply and the capacity they offer to sidestep governments.”

bitcoin-price-vs-gold-price

First invented in 2008, the price of a bitcoin has performed better than any other currency in every year since 2010 apart from 2014, when it was the worst-performing currency, and has added almost a quarter to its value so far this year.

Per ETF Daily News, many hurdles remain for the ETF to pass regulators’ tests. “The SEC is worried about Bitcoin’s safety, security, volatility, and shareholder protection. “Traditional financial players have largely shunned the web-based “crytpocurrency,” viewing it as too volatile, complicated and risky, and doubting its inherent value. ” On the other hand, some analysts say regulatory approval of a bitcoin ETF would make the currency relatively attractive to the often more cautious institutional investor market.

But despite potentially high returns, low correlations with other currencies and assets, falling volatility and increasing liquidity, there is scant evidence so far that most major players are considering investing in the digital currency.

“Bitcoin is just not liquid enough for us to even think about,” said Paul Lambert, fund manager and head of currency investment at Insight, in London.

“We manage billions and billions of dollars we’d need to be able to go into that market and trade in hundreds of millions of dollars at a time, and my sense is it’s not like that.”

 

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What’s Next? A Blockchain-Powered ATS for Equities

“What’s Next? Well, for those familiar with Patrick Byrne, the controversial and innovative founder of Overstock.com, one of the first online retailers to embrace the use of bitcoins, it should not be a surprise that Overstock’s chief honcho would ‘get the joke’ and realize its all about the underlying technology that powers cryptocurrency applications, known as distributed ledger. While bitcoin currency continues to encounter challenges in terms of mass embracement, the real grease that makes the makes the wheels turn is under the hood. With that, Overstock subsidiary “T0” (T-zero) is taking a page from both the industry consortium formed by R3 and the Senahill-backed Symbiont –both of which target institutional capital markets usage–and aiming it’s own sights on retail investors by setting to launch an equities-centric Alternative Trading System aka ATS powered by their own blockchain formula.

A distributed ledger is a consensus of replicated, shared, and synchronized digital data geographically spread across multiple sites, countries, and/or institutions.
A blockchain is a type of distributed ledger, comprised of unchangable, digitally recorded data in packages called blocks.
Rob Daly of MarketsMedia (not related to MarketsMuse) provides the scoop..

Online retailer Overstock.com expects trading to begin on its blockchain-based alternative trading system before the end of the year, according to company officials.

The ATS will be operated by Overstock.com subsidiary TO as part of the company’s Medici Project, and it will only handle trades in the company stock, at least at first. So while it’s not an immediate competitive threat to the existing field of 13 U.S. stock exchanges plus several dozen ATSs, the initiative will be closely watched as a gauge of the potential of distributed-ledger technology in capital markets.

The ATS will write completed trades to its blockchain instead of routing them to the National Securities Clearing Corp., a subsidiary of Depository Trust & Clearing Corp., for clearing.

Overstock.com plans to prime the liquidity on the ATS through a new issue of corporate shares to existing shareholders the day before trading commences on the new trading venue.

judd bagley blockchain ATS
Judd Bagley

T0 officials plan to formally announce its partnership with a broker-dealer on Sept. 12. “For those who want to trade on the ATS, they will have to create an account with the broker-dealer,” said Overstock’s man-in-charge Judd Bagley, who declined to name the brokerage firm.

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Investors will be able to select from multiple “very vanilla” order types, which are still in development, he added. T0 may use a so-called maker-taker rebate model to encourage liquidity, but officials have not made a final decision.

The new trading venue is a mix of internally developed technology and the technology T0 acquired with its purchase of order-routing firm SpeedRoute in October 2015. T0 built its matching engine internally as well as the necessary interfaces to the rest of the U.S. equity marketplace.

The company, in conjunction with Bay-area consultancy PeerNova, also developed a proprietary blockchain architecture for the ATS instead of using Bitcoin, Ethereum, or Ripple.

To continue reading the story from MarketsMedia, please click here

cryptocurrency

Goldman Sachs Wants Patent To Settle Trades in Bitcoin Tool

(TradersMagazine) Trading settlement and clearing could go the way of bitcoin, as white glove bulge bracket brokerdealer Goldman Sachs and fintech aficiondo has filed a patent for technology to settle securities in the cyber cryptocurrency.

As first reported in Bitcoin Magazine on November 19, the United States Patent & Trademark Office (USPTO) published Goldman, Sachs & Co.’s patent application 20150332395 or “Cryptographic Currency For Securities Settlement.” The patent described “ […] methods for settling securities in financial markets using distributed, peer-to-peer, and cryptographic techniques ” using a cryptocurrency named SETLcoin.

The application lists Paul Walker and Phil J. Venables as the inventors of the technology.

Walker is the co-head of technology at Goldman and a member of the Board of Directors of the Depository Trust and Clearing Corporation (DTCC).  Venables is managing director and chief information security officer at Goldman Sachs.

The patent application addresses chain of custody of an asset, counterparty risk and settlement through a cryptocurrency called SETLcoin. According to the patent application viewed by Bitcoin Magazine, SETLcoin ownership can be used to prevent fraud, including float fraud such as kiting.

Goldman Sachs and IDG Capital Partners co-led a $50 million strategic investment round in Bitcoin company Circle in late April of this year. This was the first publicly announced cryptocurrency investment by Goldman. However, as reported by CB Insights, Goldman’s investment activity into fintech startups has been intensifying.

bitcoin

Bitcoins Become Trading Firms’ Focus

MarketsMuse blog update profiles how the increasing interest in bitcoins is leading some investors in opening bitcoin financial services firms. Many believe that this move can help reduce the volatility and increases favorability of bitcoins.  This update is courtesy of the Wall Street Journal’s article, “Big Investor Involvement Could Boost Bitcoin“, with an excerpt below.

Some of the U.S.’s biggest proprietary traders and investors are testing the waters for a bigger move into bitcoin, giving a potential boost to the fledgling virtual-currency industry.

While still cautious of becoming exposed to “cryptocurrencies,” some of the firms, which trade with their own money on the.ir own behalf, say they see potential for big profits in trading bitcoin as more investors enter the market and financial-services firms use the currency to streamline transactions.

Their involvement could help reduce volatility in the market for bitcoin, which has struggled to gain legitimacy in part because of concerns about wild swings in its price.

Among the companies at the forefront of this move is DRW Holdings LLC, a high-frequency trading firm in Chicago founded by former options-pit trader Donald Wilson in 1992. DRW is a founding investor in a new bitcoin financial-services firm called Digital Asset Holdings that launched last month. Cumberland Mining & Materials LLC, a DRW subsidiary, has “begun to experiment with cryptocurrency trading,” DRW said.

To continue reading the article on bitcoin firms from the Wall Street Journal, click here.