In the first edition of CRYPTO TREND we introduced Crypto Currency (CC) and answered several questions concerning this new market space. There is a lot of NEWS in the forex market every day. Below are a few highlights that provide us a glimpse of how new and exciting this market space is:
World’s largest futures exchange to produce a futures contract for Bitcoin
Terry Duffy, president of the Chicago Mercantile Exchange (CME) said “I think sometime in the second week in December you will see our [bitcoin futures] contract out for listing. Today you cannot short bitcoin, so there’s only 1 way it could go. You either buy it or sell it to somebody else. So you develop a two-sided market, I think it’s always much more efficient.”
CME intends to launch Bitcoin futures by the end of the year pending regulatory review. If successful, this can give investors a viable way to go “long” or “short” on Bitcoin. Some sellers of Exchange-Traded Funds also have filed for bitcoin ETF’s that track bitcoin futures.
These developments have the potential to allow people to spend money on the crypto currency space without owning CC’s outright, or using the services of a CC exchange. Bitcoin futures will make the digital asset more useful by allowing users and intermediaries to hedge their foreign-exchange risks.
That could raise the cryptocurrency’s adoption by merchants who want to accept bitcoin payments but are wary of its volatile value. Institutional investors may also be used to trading regulated futures, which aren’t suffering from money-laundering worries.
CME’s move also suggests that bitcoin has become too large to ignore, since the exchange seemed to rule out crypto futures recently. Bitcoin is just about all anyone is discussing at brokerages and trading firms, which have suffered amid rising but unusually placid markets.
If futures at an exchange became popular, it would be nearly impossible for just about any other exchange, like CME, to catch up, since scale and liquidity is essential in derivatives markets.
“You can’t ignore the proven fact that this is becoming more and more of a story that will not disappear completely,” said Duffy in an interview with CNBC. There are “mainstream companies” that want usage of bitcoin and there’s “huge pent-up demand” from clients, he said. Spice Duffy also thinks bringing institutional traders into the market will make bitcoin less volatile.
Japanese village to use crypto currency to improve capital for municipal revitalization
The Japanese village of Nishiawakura is researching the idea of holding a short Coin Offering (ICO) to raise capital for municipal revitalization. That is a very novel approach, and they may ask for national government support or seek private investment.
Several ICO’s have had serious problems, and many investors are sceptical that any new token will have value, particularly if the ICO turns out to be a another joke or scam. Bitcoin certainly was no joke.
INITIAL COIN OFFERING – ( ICO )
We didn’t mention ICO in the first edition of Crypto Trend, so let’s mention it now. Unlike an Initial Public Offering (IPO), in which a company has an actual product or service for sale and wants you to buy shares within their company, an ICO could be held by anyone who would like to initiate a fresh Blockchain project with the intention of fabricating a new token on their chain.
ICO’s are unregulated and several have been total shams. A legitimate ICO can however raise a lot of cash to fund a fresh Blockchain project and network. It really is typical for an ICO to create a high token price close to the start and then sink back again to reality soon after.
Because an ICO is relatively easy to hold once you learn the technology and have several bucks, there were many, and today we’ve about 800 tokens in play.
Each one of these tokens have a name, all of them are crypto currency, and aside from the very popular tokens, like Bitcoin, Ethereum, and Litecoin, they’re dubbed alt-coins. At this time Crypto Trend does not recommend taking part in an ICO, because the risks are extremely high.
Once we said in Issue 1, the forex market is the “wild west” at this time, and we are recommending caution. Some investors and early adopters have made large profits in the forex market space; however, there are several who have lost a whole lot, or all. Governments are considering regulations, as they want to know about every transaction to be able to tax them all. Each of them have huge debt and are strapped for cash.
Up to now, the crypto currency market has avoided many government and conventional bank financial problems and pitfalls, and Blockchain technology gets the potential to solve many more problems.
An excellent feature of Bitcoin is that the originators opt for finite number of coins that can ever be generated – 21 million – thus making certain this crypto coin can never be inflated. Governments can print as much money (fiat currency) because they like and inflate their currency to death.
Future articles will explore specific recommendations, however, make no mistake, early investing in this sector will be only for your most speculative capital, money that you could afford to lose.