In the first edition of CRYPTO TREND we introduced Crypto Currency (CC) and answered several questions about this new market space. There are many NEWS in this market every day. Here are some highlights that give us a taste of how new and exciting this market space is:
The world’s largest futures exchange to create a futures contract for Bitcoin
Terry Duffy, president of the Chicago Mercantile Exchange (CME) said: “I think sometime in the second week of December you will see our [bitcoin futures] contract for quotation. Today you can’t sell bitcoin short, so there is only one way to do it. Either you buy it or sell it to someone else. To create a two-sided market, I think it is always much more efficient. “
CME intends to launch end-of-year Bitcoin futures pending regulatory review. If successful, this will give investors a viable way to go “long” or “short” on Bitcoin. Some sellers of exchange-traded funds have also applied for bitcoin ETFs that track bitcoin futures.
These developments have the potential to allow people to invest in the crypto currency space without directly owning CC or using the services of a CC exchange. Bitcoin futures could make the digital asset more useful by allowing users and intermediaries to hedge their currency risks. That could increase the adoption of the cryptocurrency by merchants who want to accept bitcoin payments but are wary of its volatile value. Institutional investors are also used to trading regulated futures, which are not plagued by money laundering concerns.
CME’s move also suggests that bitcoin has become too big to ignore, as the exchange seemed to rule out crypto futures in the recent past. Bitcoin is pretty much all the talk at brokerages and trading firms, which have suffered amid rising but unusually calm markets. If futures on one exchange took off, it would be nearly impossible for any other exchange, such as CME, to catch up, as scale and liquidity are important in derivatives markets.
“You can’t ignore the fact that this is increasingly becoming a story that won’t go away,” Duffy said in an interview with CNBC. There are “major companies” that want access to bitcoin and there is “high pent-up demand” from customers, he said. Duffy also believes that bringing institutional traders to market could make Bitcoin less volatile.
Japanese people to use cryptocurrency to raise capital for municipal revitalization
The Japanese village of Nishiawakura is investigating the idea of holding an Initial Coin Offering (ICO) to raise capital for municipal revitalization. This is a very novel approach and they can request the support of the national government or seek private investment. Several ICOs have been in serious trouble and many investors are skeptical that any new token will have value, especially if the ICO turns out to be another hoax or scam. Bitcoin was certainly not a joke.
INITIAL COIN OFFERING – (ICO)
We didn’t mention ICO in the first issue of Crypto Trend, so let’s mention it now. Unlike an Initial Public Offering (IPO), where a company has an actual product or service for sale and wants you to buy shares in their company, anyone who wants to start a new Blockchain project can have an ICO with the intention of create a new token in your chain. ICOs are unregulated and several have been a total sham. However, a legitimate ICO can raise a lot of cash to fund a new Blockchain project and network. It is typical for an ICO to generate a high token price near the start and then come back to reality soon after. Because an ICO is relatively easy to maintain if you know the technology and have a few dollars, there have been many, and today we have around 800 tokens up for grabs. All of these tokens have a name, they are all cryptocurrencies, and except for well-known tokens such as Bitcoin, Ethereum, and Litecoin, they are called altcoins. At this time, Crypto Trend does not recommend participating in an ICO, as the risks are extremely high.
As we said in issue 1, this market is the “wild west” right now, and we advise caution. Some investors and early adopters have made great profits in this market space; however, there are many who have lost a lot, or all. Governments are considering regulations as they want to know about every transaction in order to tax everyone. They all have huge debt and are short of cash.
So far, the cryptocurrency market has avoided many conventional banking and government financial problems and pitfalls, and Blockchain technology has the potential to solve many more problems.
A great feature of Bitcoin is that the creators chose a finite number of coins that can be generated, 21 million, ensuring that this crypto currency can never be inflated. Governments can print as much money (fiat currency) as they want and inflate their currency to death.
Future articles will delve into specific recommendations, however, make no mistake, investing early in this sector will only be for your most speculative capital, money that you can afford to lose.
CRYPTO TREND will be your guide when you are ready to invest in this market space.
Stay tuned!