THURSDAY, 15 NOV 2018

 

CONNECT

Facebook Linked In Twitter
GAP_Group_2018_728x90px
Invest Cyprus 30/04-30/03/2019
IMH LTD

Akinci Insists on a Non-Functional State

Andrej Kiska: Slovakia Will Continue the Same Policy on Cyprus Problem

IMH LTD
INB_1000_Eng_03/08-15/11_468x60px

INTERNATIONAL

brought to you by CIPA

Bitcoin to Start Futures Trading Stoking Wild West Worries

Bitcoin to Start Futures Trading Stoking Wild West Worries

Bitcoin fans are salivating over the potential of long-awaited legitimacy for the cyptocurrency when futures trading launches this weekend, but experts worry the risks associated with bitcoin’s Wild West-like nature could overshadow the debut.

The first bitcoin future trades kick off Sunday 10 December at 6 p.m. EST (2300 GMT) on Cboe Global Markets Inc’s Cboe Futures Exchange, followed a week later by CME Group Inc’s CME.

Nasdaq Inc plans to get into the mix next year, Reuters reported. While Cboe, CME and Nasdaq offer strictly policed trading environments, the underlying bitcoin market is riddled with crypto-exchanges lacking even basic oversight. That has stoked fears of market manipulation, inaccurate pricing, and systemic risk to clearing houses.

“I‘m kind of taken aback by what’s happened in the last three months,” said Richard Johnson, an analyst at Greenwich Associates who owns digital currencies and considers himself a bitcoin bull. “I‘m concerned things are moving a bit too quickly.”

 

Bitcoin’s more than 10-fold upsurge this year has led to warnings of a bubble by the likes of JPMorgan Chase & Co Chief Executive Officer Jamie Dimon, who called it “a fraud” that will eventually blow up. Others, like Wall Street adviser Tom Lee, expect bitcoin to top $100,000.

On Wednesday 6 December, its hypervolatility was on full display as it broke through $13,000 for the first time on the Luxembourg-based Bitstamp exchange, jumping more than 11 percent on the day. Since August 2011, bitcoin has averaged a daily price change of nearly 3 percent, up or down, compared with a daily average change in the U.S. dollar-euro cross rate EUR= of less than 0.5 percent since the euro's debut in 1999.

“Maybe it’s just the most unique market that is going to continue to go up forever and ever and so everybody on the long side is going to make money and it’s a great thing, but I’ve been around long enough to know that’s not going to work out so well,” said John Lothian, CEO of advisory firm John J Lothian and Company.

As a virtual currency, bitcoin can be used to move money around the world without the need for a central authority, such as a bank or government, which is a double-edged sword, said Steve Grob, director of group strategy at Fidessa. “There is no backstop. If suddenly tomorrow everyone decided bitcoin was worthless, it would be worthless, and I’m not sure whether people have really thought that one through,” he said.

Traditional banks remain skeptical of dealing with bitcoin exchanges. Earlier this year, Wells Fargo & Co stopped processing wire transfers for an exchange called Bitfinex, leaving customers unable to transfer U.S. dollars out of their accounts, except through special arrangement with the exchange’s lawyer.

Still, new entrants, from retail investors to high-frequency traders, have piled into bitcoin. U.S.-based crypto-exchange Coinbase said it added 100,000 accounts in the three days around the U.S. Thanksgiving holiday, for 13.1 million overall.

If the futures market were to exceed the size of the spot market, with current daily trading volume of around $6 billion per day, the underlying price could be more susceptible to manipulation, said Kevin Zhou, co-founder of crypto currency fund Galois Capital. “You’ve seen these problems before in bitcoin futures, where right before the settlement, the price pegs it high or low and then bounces back right after,” he said.

As volumes increase, there are also questions about the robustness of the technology at bitcoin exchanges, Lothian said. “Particularly when you’re talking about a high-frequency approach to this where people are trying to arb multiple exchanges.”

Last month, the Gemini bitcoin exchange, which will set the price for Cboe’s futures contract, and GDAX and Kraken, two of the four exchanges in CME’s bitcoin index, had systems issues. “Every single bitcoin exchange receives and is receiving complaints by users due to the unbelievably surging bitcoin price and the result that has on capacity,” Christina Yee, a Kraken representative, recently told Reuters in an email.

Kraken is planning to launch a new trade engine “soon” which should increase the exchange’s capacity, Yee said.

MORE ON INTERNATIONAL

Pound Falls as Brexit Uncertainty Rises

The pound has fallen against the dollar amid political uncertainty as Prime Minister ...

Alibaba Singles Day Sales Frenzy Surpasses Records

Alibaba invented the occasion to celebrate the unattached as an antithesis to the ...

UK Economy Grows at Fastest Rate Since 2016

The UK economy grew by 0.6% in the three months to September, with warm weather boosting ...

FROM AROUND GOLDNEWS

   

Full Steam Ahead for Cybarco

The leading luxury developer and the backbone of the reputable Lanitis Group, Cybarco is continuing to set new standards for property development in Cyprus ...
   

Stephen Carver: Project Management is a Mindset That is Applicable Across All Sectors

Stephen Carver is constantly rated as one of the top 3 lecturers at Europe’s top Business Schools - Cranfield. He has a reputation of taking complex ...
   

Andrej Kiska: Slovakia Will Continue the Same Policy on Cyprus Problem

Slovak President Andrej Kiska has assured new Cypriot Ambassador Michalis Stavrinos that his country will continue following the same policy on the Cyprus ...
   

Poland Supports a Lasting and Functional Solution That Will Make Cypriots Feel Safe

Poland’s new Ambassador to the Republic of Cyprus, Irena Lichnerowicz-Augustyn,  said her country supports any lasting and functional solution that ...
   

Atlantica Hotels & Resorts Wins 13 Awards at The Tui Northern Region Hotel Awards – London 2018

We are proud to announce that Atlantica Hotels & Resorts has been recognized with 13 major awards at the TUI Northern Region Hotel Awards ceremony which ...
   

UK Inflation Holds Steady at 2.4% in October

The UK inflation rate remained steady at 2.4% in October, confounding analyst expectations of a rise to 2.5%. The Consumer Prices Index (CPI) figure included ...
   

Japan GDP: Natural Disasters Hit Economic Growth

Japan's economy shrank in the third quarter as natural disasters hit spending and disrupted exports. The economy contracted by an annualised 1.2% ...
   

Beer Deliveries up by 3.6% in First 10 Months of 2018

Beer deliveries during the period of January - October 2018 reached 37.10 million litres, recording an increase of 3.6% compared to the same period of 2017, ...
 

YOUR COMMENTS

HEADLINES

MOST POPULAR

Infocredit_01/08-30/11_300x250px
GloriaJeans_300x250px

IMH LTD