In the first issue of CRYPTO TREND, we introduced cryptocurrency (CC) and answered a few questions about this new market space. There is a lot of NEWS in this market every day. Here are some highlights that give us an idea of how new and exciting this market is:
The World’s Largest Futures Exchange to Create a Bitcoin Futures Contract
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] listing contract. You can’t short bitcoin today, so there’s only one way. You either buy it or sell it to someone else. So you create a two-sided market, I think that’s always much more efficient.”
CME intends to launch bitcoin futures by the end of the year pending regulatory review. If successful, this would give investors a viable way to go “long” or “short” Bitcoin. Some exchange-traded fund sellers have also filed for bitcoin ETFs that track bitcoin futures.
These developments could allow people to invest in the cryptocurrency space without owning CC directly or using the services of a CC exchange. Bitcoin futures can make the digital asset more useful by allowing users and intermediaries to hedge their currency exposure. This could increase the adoption of the cryptocurrency by merchants who want to accept payments in Bitcoin but fear its volatile value. Institutional investors are also accustomed to trading regulated futures that do not suffer from money laundering.
The CME dip also suggests that Bitcoin has become too big to ignore, as the exchange seemed to shut out crypto futures in the recent past. Bitcoin is pretty much all that brokerage and trading firms are talking about, which has suffered amid a bullish but unusually calm market. If the exchange’s futures took off, it would be nearly impossible for any other exchange like CME to catch up, as scale and liquidity are important in derivatives markets.
“You can’t ignore the fact that this is becoming more and more a story that won’t go away,” Duffy told CNBC. There are “massive companies” that want access to bitcoin, and there is “tremendous pent-up demand” from customers, he said. Duffy also believes that bringing institutional traders into the market could make bitcoin less volatile.
A Japanese village will use cryptocurrency to raise capital to revive the town
The Japanese village of Nishiwakura is exploring the idea of holding an initial coin offering (ICO) to raise capital to revive the municipality. This is a very new approach and they can seek national government support or seek private investment. Several ICOs have faced serious problems, and many investors are skeptical that any new token will have value, especially if the ICO turns out to be another joke or scam. Bitcoin was certainly no joke.
INITIAL COIN OFFERING – ( ICO )
We didn’t mention ICOs in the first issue of Crypto Trend, so let’s mention it now. Unlike an initial public offering (IPO), where a company sells an actual product or service and wants you to buy shares in its company, an ICO can be conducted by anyone who wants to initiate a new Blockchain project with the intention of creating a new token on their chain. ICOs are not regulated and some have been fake. However, a legitimate ICO can raise a lot of money to fund a new Blockchain project and network. Usually for ICOs, a high token price is generated at the beginning and then it soon comes back down to reality. Since ICOs are relatively easy to do if you know the technology and have a few dollars, there have been a lot of them, and today we have about 800 tokens in play. All of these tokens have a name, they are all cryptocurrency, and except for the very famous tokens like Bitcoin, Ethereum, and Litecoin, they are called altcoins. At the moment, Crypto Trend does not recommend participating in ICOs as the risks are very high.
As we said in Issue 1, this market is now the “Wild West” and we recommend caution. Some investors and early adopters have made big profits in this market space; however, there are many who have lost much or everything. Governments are considering regulations because they want to know about every transaction in order to tax everyone. All of them have huge debts and no money.
Until now, the cryptocurrency market has avoided many government and conventional banking financial problems and pitfalls, and Blockchain technology can solve many other problems.
A great feature of Bitcoin is that the creators chose a finite number of coins that can be generated – 21 million – thus ensuring that this cryptocurrency can never be inflated. Governments can print as much money (fiat currency) as they want and inflate their currency to death.
Future articles will cover specific recommendations, however, make no mistake, early investments in this sector will only be directed at your most speculative capital, money you can afford to lose.
CRYPTO TREND will be your guide if and when you are ready to invest in this market space.
Stay tuned for updates!