Bitcoin Lost Almost 20% of Its Value This Week

Bitcoin faced one of its biggest tests this week, losing almost 20 percent of its value after the world’s largest cryptocurrency reached a record high Monday.

The digital currency plunged as much as 30 percent on Friday, before paring losses, as this week’s selloff extended to a fourth day. The weekly decline is the biggest in almost three years. Other cryptocurrencies also tumbled: ethereum dropped as much as 36 percent and litecoin slumped as much as 43 percent, according to composite prices on Bloomberg.

Michael Novogratz, the former Goldman Sachs Group Inc. and Fortress Investment Group LLC macro trader, said he’s shelving plans to start a cryptocurrency hedge fund and predicted that bitcoin may extend its plunge to $8,000.

“We didn’t like market conditions and we wanted to re-evaluate what we’re doing," Novogratz said in a phone interview. He predicted last week that bitcoin could reach $40,000 within a few months.

Bitcoin dropped to as low as $10,776, before recovering to $14,303 at 4:04 p.m. in New York. It last traded below $10,000 on Dec. 1, when the U.S. Commodity Futures Trading Commission agreed to allow trading in bitcoin futures. The price of the digital coin had more than doubled in the prior three weeks.

The losses represent a major test for the cryptocurrency industry and the blockchain technology that underpins it, which have rapidly entered the mainstream in recent weeks. Bears cast doubt on the value of the virtual assets, with UBS Group AG this week calling bitcoin the “biggest speculative bubble in history.” Bulls argue the technology is a game changer for the world of investment and finance. Both will be closely watching the outcome of the current selloff.

“The sharks are beginning to circle here, and the futures markets may give them a venue to strike,” said Ross Norman, chief executive officer of London-based bullion dealer Sharps Pixley Ltd., which offers gold in exchange for bitcoin. “Bitcoin’s been heavily driven by retail investors, but there’ll be some aggressive funds looking for the right opportunity to hammer this thing lower.”

Traders who bought the currency on futures exchanges using collateral may start facing margin calls following the price decline. Two venues launched products in recent weeks that required hefty security, with Cboe needing 44 percent to clear contracts, and the CME 47 percent. Brokers set safety nets even higher.

Coinbase, one of the world’s largest cryptocurrency exchanges, said all buying and selling was temporarily disabled during today’s rout, after having delays in processing wire transfers and verifying new customers for the past week due to higher traffic. Bitcoin transaction volume jumped more than 30 percent on Coinbase’s GDAX exchange, while fees to approve and record the transactions on the blockchain surged to a record $55, according to Bit Info Charts.

Many of the recent news stories and market moves connected to cryptocurrencies appear to carry hallmarks of the mania phase of a bubble. Long Island Iced Tea Corp. shares rose as much as 289 percent on Thursday after the unprofitable Hicksville, New York-based company rebranded itself Long Blockchain Corp. Bank of Japan Governor Haruhiko Kuroda said on Thursday bitcoin isn’t functioning like a normal means of payment and is being used for speculation.

Still, cryptocurrencies are attracting established players. Goldman Sachs Group Inc. is setting up a trading desk to make markets in digital currencies such as bitcoin, according to people with knowledge of the strategy. The bank aims to get the business running by the end of June, if not earlier, two of the people said.

For related news and information:
XBT Curncy GP for bitcoin
VCCY for a cryptocurrency monitor

    Read more: http://www.bloomberg.com/news/articles/2017-12-22/bitcoin-plummets-toward-13-000-down-more-than-30-from-record

    Bitcoin falls $1,000 after South Korea promises crackdown on trading

    Move comes less than two weeks after high-profile digital currency exchange in Seoul was hacked and went bankrupt

    Bitcoin plunged by more than $1,000 (740) on Thursday after South Korea said it was planning a crackdown on trading in the digital currency in the latest of a string of warnings for investors.

    It dropped to about $13,500 after trading at about $15,400 on Wednesday. The dip was seen as a further illustration of bitcoins volatility.

    The cryptocurrency has surged in value this year by more than 900%, becoming one of the biggest stories in finance amid a slew of warnings of a pending market crash.

    Bitcoin recovered ground later on Thursday and was trading at about $14,000 at 5.30pm UK time.

    South Korea, which is one of the biggest markets in the world for bitcoin, said it was preparing a ban on opening anonymous cryptocurrency accounts and new legislation to enable regulators to close coin exchanges if they felt there was a need to do so.

    Q&A

    What is bitcoin and is it a bad investment?

    Bitcoin is the first, and the biggest, “cryptocurrency” a decentralised tradable digital asset. Whether it is a bad investment is the big question. Bitcoin can only be used as a medium of exchange and in practice has been far more important for the dark economy than it has for most legitimate uses. The lack of any central authority makes bitcoin remarkably resilient to censorship, corruption or regulation. That means it has attracted a range of backers, from libertarian monetarists who enjoy the idea of a currency with no inflation and no central bank, to drug dealers who like the fact that it is hard (but not impossible) to trace a bitcoin transaction back to a physical person.

    According to Reuters, the South Korean government issued a statement saying it had warned several times that virtual coins cannot play a role as actual currency and could result in high losses due to excessive volatility.

    The move came less than two weeks after the high-profile insolvency of one of the countrys digital currency exchanges, after the Seoul-based platform was hit by hackers for a second time.

    The exchange, called Youbit, shut down after losing 17% of its assets in a cyber-attack which was later blamed on North Korean hackers. The incident followed several other attacks against cryptocurrency platforms, such as a hack earlier in the month against the cryptomining marketplace NiceHash, which lost about 4,700 bitcoins in the attack.

    The crackdown in South Korea comes amid repeat warnings from leading figures in finance and some of the worlds top economists, who have said the currency is a vehicle for fraudsters and drug dealers. There are also fears that its rapid increase in value this year could quickly unwind, causing severe losses for investors.

    Sir Howard Davies, who chairs RBS, has likened investing in bitcoin to Dantes Inferno Abandon hope all ye who enter here while Jamie Dimon, the head of JP Morgan, has said bitcoin could potentially be worse than the tulip mania of the 17th century, when bulb prices rose vertiginously before crashing.

    However, several leading academics have said bitcoin poses no threat to the stability of the financial system, as its total value stands at about $240bn, paling in comparison with the total value of global shares at almost $80tn.

    Companies are also exploring ways to exploit blockchain which is the technology underpinning bitcoin and works by securely encrypting information to speed up everything in business from making payments to transferring data and contracts.

    Bitcoin rose to nearly $20,000 a week before Christmas, following the introduction of derivatives trading for major investment firms on the Chicago Mercantile Exchange, which enabled hedge funds to place bets on future prices. However, it then lost 25% of its value on 22 December, before recovering earlier this week and then slumping again on Thursday.

    While some have said more investors in the market could help support higher valuations, the currency is on a jittery run.

    Craig Erlam, senior market analyst at trading firm Oanda, said the recent fall in value could have made speculators more wary of the potentially negative news from Korea for its market price.

    We saw plenty of this in reverse on the way up, with positive news triggering significant rises and negative news being brushed aside. It wouldnt surprise me if we see prices heading back below $10,000 before they find their feet again, he said.

    Digital currencies have grabbed the attention of global regulators this year as a consequence of bitcoins rapid price growth, gaining in value from about $1,000 at the beginning of 2017. Other cryptocurrencies such as Ethereum, Ripple and Litecoin have also gained in value this year.

    Closer control of digital currencies by financial watchdogs could result in further volatility for bitcoin, as part of its attraction among supporters has been the lack of government and central bank oversight.

    The UKs Financial Conduct Authority has issued a warning about investing in initial coin offerings, which use digital tokens to raise funds for startup businesses and projects.

    Read more: https://www.theguardian.com/technology/2017/dec/28/bitcoin-falls-south-korea-crackdown-trading

    The Criminal Underworld Is Dropping Bitcoin for Another Currency

    Bitcoin is losing its luster with some of its earliest and most avid fans — criminals — giving rise to a new breed of virtual currency.

    Privacy coins such as monero, designed to avoid tracking, have climbed faster over the past two months as law enforcers adopt software tools to monitor people using bitcoin. A slew of analytic firms such as Chainalysis are getting better at flagging digital hoards linked to crime or money laundering, alerting exchanges and preventing conversion into traditional cash.

    The European Union’s law-enforcement agency, Europol, raised alarms three months ago, writing in a report that “other cryptocurrencies such as monero, ethereum and Zcash are gaining popularity within the digital underground.” Online extortionists, who use ransomware to lock victims’ computers until they fork over a payment, have begun demanding those currencies instead. On Dec. 18 hackers attacked up to 190,000 WordPress sites per hour to get them to produce monero, according to security company Wordfence.

    For ransomware attacks, monero is now “one of the favorites, if not the favorite,” Matt Suiche, founder of Dubai-based security firm Comae Technologies, said in a phone interview.

    Monero's Rally

    Monero outperformed bitcoin in the final months of 2017

    Source: Coinmarketcap.com

    Note: Figures shows percentage change in price compared with Oct. 31

    Monero quadrupled in value to $349 in the final two months of 2017, according to coinmarketcap.com, placing it among a number of upstart coins that rose faster than bitcoin, the world’s most valuable digital currency. Bitcoin roughly doubled in the same period, data compiled by Bloomberg show. Monero’s price has climbed another 7 percent so far this year, according to coinmarketcap.com.

    Read more: Ripple’s surge makes it the second-biggest cryptocurrency

    In monero’s case, criminals are snapping it up because bitcoin’s underlying technology can work against them. Called blockchain, the digital ledger meticulously records which addresses send and receive transactions, including the exact time and amount — great data to use as evidence. Match an address to a crime and then watch the bitcoin universe carefully, and you can see the funds disappear and reappear in other locations.

    Sleuths have developed databases and techniques for digesting that information to eventually nab wrongdoers. Say, for example, a coffee shop in Berkeley is known to have a certain bitcoin address, and a wallet used by an extortionist transfers the same amount there every morning at 9 a.m. Police can stop by and make an arrest.

    Started in 2014, monero is very different. It encrypts the recipient’s address on its blockchain and generates fake addresses to obscure the real sender. It also obscures the amount of the transaction.

    The techniques are so potent that software that flags coins suspected of being obtained through crime now tags just about anything converted into or out of monero as high risk, according to Pawel Kuskowski, chief executive officer of Coinfirm, which helps exchanges and other companies avoid tainted money. That compares with only about 10 percent of bitcoin, he said.

    “What we treat ‘high risk’ is something that’s anonymizing funds,” he said in a phone interview. “How are you going to prove that these funds are not coming from illegal sources?”

    Read a QuickTake: All about bitcoin, blockchain and their crypto world

    Monero is one of many privacy-focused coins, each offering different security features. Its main competitor, Zcash — which isn’t known to have a significant criminal following — can offer even better privacy protection. Instead of creating fake addresses to hide senders, it encrypts their true address. That makes it impossible to identify senders by looking for correlations in addresses used in multiple transactions to pinpoint the real one — a vulnerability for monero. Developers of the coin have made progress in reducing it, though.

    Still, Princeton University researchers recently developed a tool that helps them analyze Zcash transactions at least to some extent — but they haven’t been able to crack monero. And Zcash high-security features can’t be used on disposable burner phones, a favorite of criminals eager to stay anonymous.

    Developers behind monero say they simply created a coin that protects privacy. Most people use it legitimately — they just don’t want others to know whether they’re buying a coffee or a car, Riccardo Spagni, core developer at monero, said in a phone interview.

    “As a community, we certainly don’t advocate for monero’s use by criminals,” Spagni said. “At the same time if you have a decentralized currency, it’s not like you can prevent someone from using it. I imagine that monero provides massive advantages for criminals over bitcoin, so they would use monero.”

    ‘Utility’ Too

    Yet criminals are probably only a fraction of monero’s users, according to Lucas Nuzzi, a senior analyst at Digital Asset Research, which provides research to institutional investors.

    “As with any disruptive technology, many of the initial use cases revolve around illicit activities,” he wrote in an email. But as everyday people grow concerned about privacy and surveillance, “there is utility in these currencies that go beyond just a means of exchange for illicit goods.”

    For related news and information:
    Bitcoin price graph: XBT Curncy GP
    Cryptocurrency monitor: VCCY

    For more on cryptocurrencies, check out the  podcast: 

      Read more: http://www.bloomberg.com/news/articles/2018-01-02/criminal-underworld-is-dropping-bitcoin-for-another-currency

      Bitcoin loses a quarter of its value in one day’s trading

      Cryptocurrencys year-end rally fails as its investors are finally introduced to the law of financial gravity

      Bitcoin lost more than a quarter of its value on Friday as an analyst warned that investors in the cryptocurrency had finally been introduced to the law of financial gravity.

      In the latest illustration of bitcoins volatility, it slumped to below $11,500 at one point on Friday touching $11,159 having started the week at a record high close to $20,000 and in its biggest weekly fall since 2013. However, by 5pm London time it was trading at $12,800 as the currency endured a see-saw day.

      It is a sudden reversal of bitcoins upward trajectory this year, having started 2017 at $966, and sparked warnings that investors need to beware that they are not risking a rerun of the 17th century tulip bubble.

      Bitcoin trades on a number of exchanges and one, Coinbase, was reported to have suspended transactions temporarily while there was also a temporary halt of the new futures contract which allows investors to take bets on the value of the digital currency at a predetermined point in the future on the Chicago Board Options Exchange while it waited for the price to stabilised.

      Two futures contracts have been launched this month, which were regarded as taking a step towards legitimising digital currencies at a time when regulators are stepping up their surveillance of products linked to the new technology.

      Fridays slump was said to have been fuelled by the founder of another cryptocurrency selling his holdings. Charlie Lee, founder of Litecoin, said he was selling his holdings to avoid a conflict of interest that he faces when talking about the price of the currency which could appear to benefit him.

      Jasper Lawler, head of research at London Capital Group, said this decision was probably the root-cause of the insecurity thats been felt across the cryptocurrency space.

      Bitcoin investors were introduced to the law of gravity over the last 24 hours Long term holders will be used to this level of volatility but newer crypto traders could be permanently put off, said Lawler.

      The exponential price rise seen recently needs new investors to sustain it. In a bubble market its known as the bigger fool theory; you can buy high as long as there is a fool willing to buy it off you even higher, he added.

      Charles Hayter, founder and chief executive of industry website CryptoCompare, said: A manic upward swing led by the herd will be followed by a downturn as the emotional sentiment changes. A lot of traders have been waiting for this large correction.

      Sir Howard Davies, chairman of RBS, has likened investing in bitcoin to Dantes Inferno Abandon hope all ye who enter here while Jamie Dimon, the head of JP Morgan, has talked about bitcoin as being worse than tulip mania, which took place in the Netherlands in the 1630s, when bulb prices reportedly rose more than 1,000% in a month.

      Analysts said the dramatic moves in the runup to the end of 2017 meant that it was difficult to predict what would happen in the new year when trading volumes are expected to rise.

      Lukman Otunuga, research analyst at financial firm FXTM, said: The aggressively bearish price action witnessed this week may prompt investors to start questioning if bitcoin will recover from the selloff or remain depressed moving into the new year.

      Regulators have been sounding a cautious note about bitcoin, which is not regulated and is controlled by a network of computers that update all transactions which take place on a variety of trading platforms around the world. It only exists digitally and is mined using mathematical equations.

      While the Bank of England has said it is not a risk to financial stability, governor Mark Carney told MPs this week that he expected international regulators will discuss cryptocurrencies and the potential future role of central bank digital currencies.

      The Financial Conduct Authority has issued warnings about initial coin offerings (ICOs) which use cryptocurrencies to raise funds for startup businesses. Investors in ICOs pay in cryptocurrencies such as bitcoin and receive a coin in return, rather than shares in the company.

      Andrew Bailey, chief executive of the FCA, has said bitcoin is not a really currency but more like a commodity.

      Follow Guardian Business on Twitter at @BusinessDesk, or sign up to the daily Business Today email here.

      Read more: https://www.theguardian.com/technology/2017/dec/22/bitcoin-price-plunges-2000-12-hours-year-end-rally-fizzles-out

      Bitcoin is a bubble, but the technology behind it could transform the world | Will Hutton

      Blockchain poses as big a threat to banks as Facebook and Amazon did to conventional media firms

      Humanitys earliest, truly transformative general purpose technologies were the ability to cross-fertilise plants and cross-breed animals. Suddenly, it made more sense to farm than to hunt and gather. The surge in agricultural output meant humans could do other things than worry about survival; they could live in cities. Human civilisation began.

      The story of the subsequent millennia has been how some 30 general-purpose technologies of equal power, ranging from the printing press to the steam engine, have driven similar leaps in transforming our economy, our lives and our civilisation. Today, we are living through another.

      Digitisation is, if anything, even more powerful: it is a meta general-purpose technology. No area of human activity will be left untouched by the translation of the physical into digital data. Already, it has created astonishing new capacities: the chances are that you are reading this on a smartphone or tablet. But the adventure is only just beginning. Everything from banking to health is about to experience similar transformations.

      Last week, the growing impact of blockchain and the price of one of the crypto-currencies it underwrites bitcoin hit the front pages. Regulators stopped the US stock market trading in the Crypto Company (a tiny penny stock whose main asset is its name) after its shares jumped 2,000%, so that it briefly, and stunningly, joined the Fortune 500 with a value of $12bn. As extraordinary, when the Long Island Iced Tea Corp yet to make a profit announced that it was changing its name to Long Blockchain Corp, its shares jumped 500%. The price of bitcoin itself $1,000 at the start of the year briefly hit $19,000 per coin last week before falling to $11,000 and then recovering to $14,000 yesterday. A crazy wildness, emulating every financial bubble in history, has settled on US investors.

      But bubbles dont come out of nowhere. Peoples animal spirits are sparked by something real that collectively captures their imagination: blockchain and crypto-currencies are that something. Blockchain is a foundational digital technology that rivals the internet in its potential for transformation. To explain: essentially, blocks are segregated, vast bundles of data in permanent communication with each other so that each block knows what the content is in the rest of the chain. However, only the owner of a particular block has the digital key to access it.

      So what? First, the blocks are created by miners, individual algorithm writers and companies throughout the world (with a dense concentration in China), who want to add a data block to the chain. There is no government or central direction; no permission is needed to create a block and unless the law is broken, no government, regulator or police authority can close the block down.

      Just as the web once promised freedom, so does blockchain. The chain is self-policing. Anyone who attempts to launch an exchange of data outside the protocols of the chain will immediately be spotted by the other blocks and the exchange will be aborted. Suddenly, the world has acquired a system for the fast, trusted exchange of vast amounts of data without intermediaries or supervision.

      In the way that Facebook, Amazon, Netflix and Google (the Fangs) replaced conventional media and communication companies, that prospect faces banks, insurance companies and many public services. Our health data can be given to the whole chain for it to assess, rather than an individual doctor, and the chain can then assess and price an insurable risk. No intermediary is safe. No wonder investors are salivating at the prospect of old, analogue organisations being driven out of business and mega fortunes being made by the companies replacing them, perhaps by the Crypto Company or Long Blockchain Corp. If you had bought Facebook 13 years ago you would now be very rich.

      An
      An array of computers in Siberia mining for crypto-currency. Photograph: Vyacheslav Prokofyev/TASS

      One of the first casualties could be banking. Already, you can present your card to make a contactless payment in a store, pub or taxi. Cash has become digitised, although the payee wants to know that a bank has validated the creditworthiness of the payer before accepting the transaction.

      But blockchain changes everything. It becomes a means to transfer digital cash or crypto-currencies, of which the best known is bitcoin in vast amounts, across any border, instantaneously. The blockchain makes sure bitcoin is spent once; indeed, blockchain was first invented by the originators of bitcoin to make sure there was no fraud. No 30 limits. No credit or debit card necessary; no central bank or government needed to guarantee the value of the money. Just buy your bitcoin from an online broker and you have buying power in your digital wallet: better still, it may go up in value, giving you more buying power still. The whole analogue apparatus of the financial system could be as severely challenged as newspapers and retailers are by online reading and internet shopping.

      The question is whether banks are going to reinvent themselves using the blockchain as a key tool and become crypto-currency brokers before others. The trouble is that bitcoin, like other crypto-currencies, is not a reliable way of storing value a key function of money when its price can nearly halve in a week, as it did last week. Better not to think of bitcoin as money; rather, as a commodity that uses blockchain to make settlements faster, but it cant and never can be a way for the mass of workers to get paid or make their purchases. It could take millions of transactions away from banks and badly wound them, but its unlikely to replace them.

      But it could still represent a huge shock. Blockchain will administer similar shocks to insurance, healthcare and all mass payment systems. Intermediaries in the service industries will face a new world in which their routine functions will be performed by machines, programmed by artificial intelligence, while the blockchain becomes the new means to do business safely, faster and less riskily. There will be new concentrations of economic power because, like the Fangs, the blockchain economic model is more efficient and more effective the larger the network. Moving ever more economic activity into this universe, with its anonymised transactions and secret keys, may please the ultra libertarians but there remains a public interest in ensuring accountability, justice and fairness. We have, in short, to understand and shape this new world before it shapes us. There are precious few signs of that.

      Read more: https://www.theguardian.com/commentisfree/2017/dec/24/bitcoin-is-a-bubble-the-technology-behind-could-transform-world

      Bitcoin Futures Deliver Wild Ride as Debut Brings Rally, Halts

      Bitcoin has landed on Wall Street.

      Futures on the world’s most popular cryptocurrency surged as much as 26 percent in their debut session on Cboe Global Markets Inc.’s exchange, triggering two temporary trading halts designed to calm the market. Initial volume exceeded dealers’ expectations, while traffic on Cboe’s website was so heavy that it caused delays and temporary outages. The website’s problems had no impact on trading systems, Cboe said. Bitcoin’s spot price rose.

      “It is rare that you see something more volatile than bitcoin, but we found it: bitcoin futures,” said Zennon Kapron, managing director of Shanghai-based consulting firm Kapronasia.

      The launch of futures on a regulated exchange is a watershed for bitcoin, whose surge this year has captivated everyone from mom-and-pop speculators to Wall Street trading firms. The Cboe contracts, soon to be followed by similar offerings from CME Group Inc. and Nasdaq Inc., should make it easier for mainstream investors to bet on the cryptocurrency’s rise or fall.

      Bitcoin wagers have until now been mostly limited to venues with little or no oversight, deterring institutional money managers and exposing some users to the risk of hacks and market breakdowns. About 20 trading firms actively participated, Cboe Chairman Ed Tilly said in a Bloomberg Television interview.

      QuickTake: You Can Trade Bitcoin Futures. But Should You?

      Bitcoin futures expiring in January were 18 percent higher at $17,710 as of 12:25 p.m. in New York from an opening level of $15,000, on 3,561 contracts traded.

      “It was smooth, and bitcoin traders don’t seem to be put off by futures,” said Craig Erlam, senior market analyst in London at online trading firm Oanda. “There was a fear that short selling would have an adverse impact on price, but we haven’t seen that yet.”

      The spot price climbed 4.7 percent to $16,383 from the Friday 5 p.m. close in New York, according to the composite price on Bloomberg.

      The roughly $1,300 difference reflects not only the novelty of the asset but also the difficulty of using the cash-settled futures to trade against the spot, strategists said.

      “In a normal, functioning market, good old arbitrage would settle this,” Ole Hansen, head of commodity strategy at Saxo Bank A/S in Hellerup, Denmark, said by email. “If they were deliverable you could arbitrage the life out of it.”

      Proponents of regulated bitcoin derivatives say the contracts will increase market transparency and boost liquidity, but skeptics abound. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon has called bitcoin a “fraud,” while China’s government has cracked down on cryptocurrency exchanges this year. The Futures Industry Association — a group of major banks, brokers and traders — said this month that contracts in the U.S. were rushed without enough consideration of the risks.

      So far though, trading has kicked off without any major hiccups.

      Dealers said volume was high for a new contract, even though it was tiny relative to more established futures. And the trading halts took effect just as Cboe had outlined in its rules. Transactions stopped for two minutes after a 10 percent gain from the opening price, and for five minutes after a 20 percent jump. Another five-minute halt will take effect if the rally extends to 30 percent, Cboe said in a notice on its website.

      “It was pretty easy to trade,” Joe Van Hecke, managing partner at Chicago-based Grace Hall Trading LLC, said in a telephone interview from Charlotte, North Carolina. “I think you’ll see a robust market as time plays out.”

      For now, Cboe futures account for a tiny slice of the world’s bitcoin-related bets. The notional value of contracts traded in the first eight hours totaled about $40 million. Globally, about $1.1 billion of bitcoin traded against the U.S. dollar during the same period, according to Cryptocompare.com.

      Some people who would like to trade futures are having a hard time accessing the market because not all brokers are supporting it initially, said Garrett See, chief executive officer of DV Chain. Participation may also be limited because of higher capital requirements and tighter risk limits, See said.

      “We’re in the early stages here, and there’s not enough professional liquidity from the big market makers who can provide depth and hold in the movements,” said Stephen Innes, head of trading for Asia Pacific at Oanda Corp. “It’s going to be a learning curve.”

      It’s been painful for investors stuck on the sidelines. This year alone, bitcoin is up more than 17-fold. The surge has been driven largely by demand from individuals, with technical obstacles keeping out most big money managers like mutual funds.

      The new derivatives contracts should thrust bitcoin more squarely into the realm of regulators, banks and institutional investors. Both Cboe and CME on Dec. 1 got permission to offer the contracts after pledging to the U.S. Commodity Futures Trading Commission that the products don’t run afoul of the law, in a process called self-certification.

      QuickTake: All about bitcoin, blockchain and the crypto world

      Not everyone is happy with the roll out. Exchanges failed to get enough feedback from market participants on margin levels, trading limits, stress tests and clearing, the Futures Industry Association said this month. In November, Thomas Peterffy, the billionaire chairman of Interactive Brokers Group Inc., wrote an open letter to CFTC Chairman J. Christopher Giancarlo, arguing that bitcoin’s large price swings mean its futures contracts shouldn’t be allowed on platforms that clear other derivatives.

      Still, Interactive Brokers is offering its customers access to the futures, with greater restrictions. The firm’s clients won’t be able to go short, and Interactive’s margin requirement, or how much investors have to set aside as collateral, will be at least 50 percent. That’s a stricter threshold than both Cboe’s and CME’s.

      QuickTake Q&A: Understanding bitcoin’s rapid price rise

      The start of futures trading is an important milestone for bitcoin’s shift from the fringes of finance toward the mainstream, but it could be some time before the cryptocurrency becomes a key part of investor portfolios — if it ever does.

      “You never say never,” David Riley, who helps oversee $57 billion as head of credit strategy at BlueBay Asset Management LLP in London, said in an interview on Bloomberg Television. “But I do think we’re quite some way from making cryptocurrencies even a relatively small part of some of the funds we manage at the moment.”

        Read more: http://www.bloomberg.com/news/articles/2017-12-10/bitcoin-futures-trading-opens-bringing-crypto-to-wall-street

        Bitcoin: UK and EU plan crackdown amid crime and tax evasion fears

        Cryptocurrency close to record high despite news Treasury plans to end traders anonymity

        The UK and other EU governments are planning a crackdown on bitcoin amid growing concerns that the digital currency is being used for money laundering and tax evasion.

        The Treasury plans to regulate bitcoin and other cryptocurrencies to bring them in line with anti-money laundering and counter-terrorism financial legislation. Traders will be forced to disclose their identities, ending the anonymity that has made the currency attractive for drug dealing and other illegal activities.

        Under the EU-wide plan, online platforms where bitcoins are traded will be required to carry out due diligence on customers and report suspicious transactions. The UK government is negotiating amendments to the anti-money-laundering directive to ensure firms activities are overseen by national authorities.

        The Treasury said: We are working to address concerns about the use of cryptocurrencies by negotiating to bring virtual currency exchange platforms and some wallet providers within anti-money laundering and counter-terrorist financing regulation.

        Q&A

        What is bitcoin and is it a bad investment?

        Bitcoin is the first, and the biggest, “cryptocurrency” a decentralised tradable digital asset. Whether it’s a bad investment is the $97bn question (literally, since that’s the current value of all bitcoins in existence). Bitcoin can only be used as a medium of exchange and in practice has been far more important for the dark economy than it has for most legitimate uses. The lack of any central authority makes bitcoin remarkably resilient to censorship, corruption or regulation. That means it has attracted a range of backers, from libertarian monetarists who enjoy the idea of a currency with no inflation and no central bank, to drug dealers who like the fact that it’s hard (but not impossible) to trace a bitcoin transaction back to a physical person.

        The rules are expected to come into effect in the next few months. The Treasury said digital currencies could be used to enable and facilitate cybercrime. It added: There is little current evidence of them being used to launder money, though this risk is expected to grow.

        The bosses of Goldman Sachs and JP Morgan have criticised bitcoin as a vehicle to commit fraud and other crimes. But Sir Jon Cunliffe, a deputy governor of the Bank of England, last week said the digital currency was too small to pose a systemic threat to the global economy. He also cautioned that bitcoin investors needed to do their homework.

        Bitcoin was trading at $11,566 on Monday. It hit a fresh record high of $11,800 on Sunday but fell to $10,554 on news of the regulatory crackdown.

        zerohedge (@zerohedge)

        Reason For Bitcoin Sudden Plunge Revealed: UK Plans Regulatory Crackdown On Cryptocurrencies https://t.co/xIxdg6aUkU

        December 3, 2017

        The Labour MP John Mann, a member of the House of Commons Treasury select committee, suggested MPs would look into the regulation of virtual currencies.

        He told the Daily Telegraph: These new forms of exchange are expanding rapidly and weve got to make sure we dont get left behind thats particularly important in terms of money laundering, terrorism or pure theft.

        It would be timely to have a proper look at what this means. It may be that we want speed up our use of these kinds of thing in this country, but that makes it all the more important that we dont have a regulatory lag.

        Stephen Barclay, the economic secretary to the Treasury, set out the governments plans in a written parliamentary answer in October. The UK government is currently negotiating amendments to the anti-money-laundering directive that will bring virtual currency exchange platforms and custodian wallet providers into anti-money laundering and counter-terrorist financing regulation, which will result in these firms activities being overseen by national competent authorities for these areas.

        The government supports the intention behind these amendments. We expect these negotiations to conclude at EU level in late 2017 or early 2018.

        Follow Guardian Business on Twitter at @BusinessDesk, or sign up to the daily Business Today email here.

        Read more: https://www.theguardian.com/technology/2017/dec/04/bitcoin-uk-eu-plan-cryptocurrency-price-traders-anonymity

        Hedge Funds Prepare to Trade Against Bitcoin

        A bitcoin huge brief is developing.

        The prepared intro of bitcoin futures agreements at CME Group Inc., Cboe Global Markets Inc. and Nasdaq Inc.&#xA 0; will make it a lot easier to bank on a decrease. Hedge funds, which have actually mostly remained on the sidelines, are waiting on the Chicago Mercantile Exchange &#x 2019; s futures market to open for a fresh chance to wager versus the cryptocurrency, inning accordance with more than a half lots individuals trading the possessions.

        &#x 201C; The futures lower the frictions of going short more than they do of going long,&#xA 0; so it &#x 2019; s most likely net bearish, &#x 201D; stated Craig Pirrong, a service teacher at the University of Houston. &#x 201C; Having this instrument that makes it much easier to brief may keep the bitcoin rate a little closer to truth. &#x 201D;

        Bitcoin has actually acquired countless percent considering that it began selling 2010. A financial investment of $1 at the start would now be valued at more than $1.4 million. A dollar purchased the S&P 500 stock index for the very same duration would now deserve less than $4 consisting of reinvested dividends.&#xA 0;

        Some see the bitcoin market as &#x 201C; among the best shorting chances ever, &#x 201D; stated Lou Kerner, a partner at Flight VC who purchases the cryptocurrency. &#x 201C; You have a great deal of zealotry, and a great deal of individuals, including me, who believe it &#x 2019; s the best thing to ever occur in the history of humanity. You have a great deal of individuals who believe it &#x 2019; s a bubble and a Ponzi plan. It turns out both of them can &#x 2019; t be. &#x 201D;

        For more: Bitcoin goes to Wall Street whether regulators are prepared or not

        Bitcoin has actually been particularly unstable just recently, plunging almost 20 percent in less than 90 minutes on Nov. 29, to $9,009 after briefly topping $11,000. The cost has actually because recuperated, and was trading at more than $11,332.01 at 11:42 a.m. in New York on Monday, a 3.9 percent dive because Friday.

        Cboe stated Monday it will begin trading bitcoin futures on Dec. 10, while CME &#x 2019; s agreements are set to debut on Dec. 18.&#xA 0; Nasdaq is preparing to use futures in 2018, inning accordance with an individual knowledgeable about the matter. Cantor Fitzgerald LP &#x 2019; s Cantor Exchange is developing a bitcoin derivative, and start-up LedgerX currently provides choices.

        Ari Paul, co-founder of hedge fund BlockTower Capital and previous portfolio supervisor at the University of Chicago endowment, stated&#xA 0; individuals are misinterpreted if they believe the notoriously unpredictable cryptocurrency is a precise brief.

        &#x 201C; While some traders aspire to be able to brief bitcoin and will do so when the futures are introduced, there is a far higher quantity of loan excitedly waiting for the futures as a lorry to go long, &#x 201D; Paul stated.

        &#x 2018; Small Potatoes &#x 2019;

        There are restricted methods to brief bitcoin today, stated Michael Moro, president of Genesis Global Trading. The cryptocurrency trading platform has actually provided about $20 million to financiers to take bearish positions, which were primarily to hedge existing bets, he stated. Business like GDAX, BitMEX and Bitfinex permit financiers to purchase properties on margin for brief durations.

        &#x 201C; With the existing exchanges, nobody can get in and brief $1 million, &#x 201D; Moro stated. &#x 201C; It &#x 2019; s truly little potatoes on exactly what you can do today. The CME people open a brand-new frontier. &#x 201D;

        Bitcoin &#x 2019; s 90 percent rise this year has actually drawn a variety of responses from Wall Street. JPMorgan Chase &&Co. CEO Jamie Dimon notoriously called the cryptocurrency &#x 201C; a scams, &#x 201D; while bulls consisting of Thomas Lee at Fundstrat Global Advisors and hedge fund supervisor&#xA 0; Michael Novogratz have actually forecasted more increases.

        For more: Novogratz states crypto will be greatest bubble of life time

        The capability to short the currency is &#x 201C; a vital part of the environment, &#x 201D; stated Novogratz, who just recently started to raise $500 million to purchase cryptocurrencies. Novogratz, a bitcoin follower in the long term, has actually stated brief trades can be dangerous.

        &#x 201C; There is a great deal of froth, &#x 201D; he stated at a cryptocurrency conference recently in New York. &#x 201C; This is going to be the most significant bubble of our life times. &#x 201D;

        Short sellers basically obtain a security, wagering that the rate will fall and they can pocket the distinction when they return the holding. The technique brings dangers. Loaning bitcoin can be hard, and cost swings abrupt, stated Moro of Genesis.

        &#x 201C; The principle is that this is such an unpredictable market that it &#x 2019; s going to terrify a great deal of financiers away, &#x 201D; stated Kerner of&#xA 0; Flight VC.

        Investors might get stung like those who wager versus the web bubble in the late 1990s, stated Aaron Brown, a previous handling director at AQR Capital Management who purchases the cryptocurrency.

        &#x 201C; People who shorted the web in 1998 were right, however they went broke prior to they might gather any jackpots, &#x 201D; Brown stated. &#x 201C; One of the issues with it, if you think it &#x 2019; s a bubble or a Ponzi plan or whatever, it can go on for a very long time. &#x 201D;

          Read more: http://www.bloomberg.com/news/articles/2017-12-04/the-next-big-short-hedge-funds-prepare-to-trade-against-bitcoin

          Bitcoin is a vehicle for fraudsters, warns Goldman Sachs boss

          CEO Lloyd Blankfein attacks cryptocurrency after worth dives 20% in a day, stating bank will not get included till it ends up being less unpredictable

          The employer of Goldman Sachs ended up being the current prominent critic of bitcoin, declaring it was a lorry to dedicate scams as the worth of the cryptocurrency plunged 20% in less than 24 hours.

          Lloyd Blankfein , president of the United States financial investment bank, stated: “Something that moves 20% [over night] does not feel like a currency. It is a lorry to commit scams.”

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          Bitcoin is the very first, and the most significant,”cryptocurrency “– a decentralised tradable digital possession. Whether it’s a bad financial investment is the$ 97bn concern(actually, because that’s the existing worth of all bitcoins out there). Bitcoin can just be utilized as a circulating medium and in practice has actually been much more crucial for the dark economy than it has for a lot of genuine usages. The absence of any main authority makes bitcoin extremely resistant to censorship, corruption– or policy. That suggests it has actually brought in a variety of backers, from libertarian monetarists who take pleasure in the concept of a currency without any inflation and no reserve bank, to drug dealerships who like that it’s tough(however possible)to trace a bitcoin deal back to a physical individual.

          Thank you for your feedback.

          His remarks came throughout another hugely unpredictable trading session for the digital currency, which plunged by over $2,000 in a 24-hour duration. Having actually topped $11,000 to reach a brand-new record high of $11,395 on Wednesday, it was up to a low of $9,000 on Thursday, prior to getting a little later on in the day.

          Blankfein stated Goldman did not have to have a bitcoin technique, including the digital currency would have to be a lot less unpredictable and a lot more liquid to validate closer attention.

          “When do I need to have a bitcoin technique? Not today. Life needs to be truly rosy if that is exactly what we are discussing,” he stated. “Bitcoin is not for me. A great deal of things that have actually not been for me in the previous 20 years have actually exercised, however I am not thinking that this will exercise.”

          Blankfein is the current manager of a significant bank to voice scepticism about bitcoin, after JP Morgan’s president, Jamie Dimon, explained it as scams that would eventually explode and stated it was just suitable for usage by drug killers, individuals and dealerships residing in locations such as North Korea.

          On Wednesday, Sir Jon Cunliffe, a deputy guv of the Bank of England, stated the digital currency was too little to position a systemic risk to the international economy. He likewise warned that bitcoin financiers required “to do their research”.

          Despite the fall in bitcoin’s worth on Thursday, it stayed far greater than it was at the start of 2017, when it was trading at $998. It is the greatest gainer of all possession classes this year, triggering sceptics to state it a timeless speculative bubble that might break.

          Banks and other banks stay worried about bitcoin’s early associations with cash laundering and online criminal offense. Unlike conventional currencies, bitcoin is not released or managed by a reserve bank or federal government.

          bitcoin

          Lee Wild, head of equity method at online trading business Interactive Investor, stated the volatility in bitcoin trading was “wild west things”.

          “Cryptocurrency land’s severe volatility resembles catnip to high-risk traders, as well as standard financiers are dipping their toe. Provided there’s no rational method to value them with any precision, this stays wild west things.”

          Analysts at the spread wagering company, City Index, stated: “While standard properties are experiencing traditionally low levels of volatility, the whipsaw action of the bitcoin is drawing the attention of standard traders. Existing beginners and traders are significantly interested in worry of missing out on out.”

          Read more: https://www.theguardian.com/business/2017/nov/30/bitcoin-is-a-vehicle-for-fraudsters-warns-goldman-sachs-boss

          Bitcoin Guns for $10,000 as Cryptocurrency Mania Defies Skeptics

          Bitcoin blew previous $9,700 simply a week after topping $8,000 and approached its closest ever to 5 figures, getting traditional market attention as it defies bubble cautions.

          The most significant cost dive because August combined throughout Japanese trading hours and rose the biggest cryptocurrency &#x 2019; s&#xA 0; worth in flow above the marketplace caps of all however about 30 of the S&P 500 index members. The boost likewise buoyed its 10-day volatility to more than 15 times the level of the euro-dollar, the most traded currency set.

          &#x 201C; The more we find out about forks, it begins to fly greater once again, &#x 201D; stated Craig Erlam, senior market expert in London at Oanda, stated by telephone describing consistent speculation that a split — or fork in market parlance– might be in the offing. &#x 201C; It &#x 2019; s exceptionally hard to figure out a reasonable worth for bitcoin. And there &#x 2019; s no news of compound on the regulative front. &#x 201D;

          Bitcoin &#x 2019; s climb has actually stirred reflection by standard market individuals and fanned speculation of a prospective bubble. From Wall Street executives to investor, observers have weighed in as bitcoin has actually increased about 45 percent over the previous 2 weeks. By contrast, it took the S&P 500 Index given that February 2014 to attain a comparable boost.

          The rise has actually swept along private financiers. The variety of accounts at Coinbase, among the biggest platforms for trading bitcoin and competing ethereum, has actually practically tripled to 13 million in the previous year, inning accordance with Bespoke Investment Group LLC.

          For more on the forks and battles behind bitcoin &#x 2019; s turbulence, click on this link for a QuickTake

          &#x 201C; The weekend &#x 2019; s bitcoin cost walking is simply the extension of a long-lasting bull work on the cryptocurrency, sustained by the tsunami of speculative trading on Japanese exchanges and the entryway of institutional financiers throughout the world, &#x 201D; stated Thomas Glucksmann, Hong Kong-based head of marketing at cryptocurrency exchange Gatecoin Ltd. &#x 201C; It is most likely that the $10,000 mental stratosphere will press more institutional financiers into the mix. &#x 201D;

          Bitcoin reached an intraday record high of $9,747.49 on Monday, and was at $9,663 since 4:32 p.m. in New York, up 17 percent from Friday and movinged towards its most significant day-to-day boost given that Aug. 14.

          The rate of gratitude has actually made it hard for bullish experts and financiers to keep their forecasts as much as date.

          Hedge fund supervisor Mike Novogratz, who is beginning a $500 million fund to purchase cryptocurrencies, stated recently that bitcoin would end the year at $10,000. A day later on, Fundstrat head of research study Thomas Lee doubled his rate target to $11,500 by the middle of 2018.

          In an approach mainstream investing, CME Group Inc. has stated it prepares to begin providing futures agreements for bitcoin, which might start selling December. JPMorgan Chase &&Co., the &#xA 0; biggest U.S. bank, was weighing recently whether to assist customers bank on bitcoin by means of the suggested futures agreements, inning accordance with an individual with understanding of the circumstance.

          Bitcoin &#x 2019; s rise in worth is requiring Wall Street banks to stabilize customers &#x 2019; interest in hypothesizing on the cryptocurrency with executives &#x 2019; hesitation about its future. JPMorgan Chase &&Co. President Jamie Dimon has actually been among bitcoin &#x 2019; s most popular critics, calling it a scams and deriding purchasers as &#x 201C; silly, &#x 201D; while his financing chief, Marianne Lake, has actually struck a more measured tone. The company is &#x 201C; open minded &#x 201D; to the prospective usages for digital currencies so long as they are effectively managed, she stated last month.

          The overall market cap of digital currencies now sits north of $300 billion, inning accordance with information on Coinmarketcap.com &#x 2019; s site .

            Read more: http://www.bloomberg.com/news/articles/2017-11-26/bitcoin-surges-past-9-000-as-euphoria-reaches-a-fever-pitch