In the first issue of CRYPTO TREND, we introduced cryptocurrency (CC) and answered several 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 insight into how new and exciting this market space is:
The world’s largest futures exchange for creating futures contracts 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] listing agreement. You can’t cut bitcoin today, so there is only one way. Either buy it or sell it to someone else. So you create a two-way 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, it will give investors a sustainable way to go “long” or “short” on Bitcoin. Some stock market traders have also applied for bitcoin ETFs that track bitcoin futures.
This development has the potential to allow people to invest in cryptocurrency space without owning a CC or using CC exchange services. The future of bitcoin could make digital assets more useful by enabling users and intermediaries to protect their foreign exchange risks. This could increase the adoption of cryptocurrency by traders who want to accept bitcoin payments but are wary of its volatile value. Institutional investors are also accustomed to trading in regulated futures, which are not bothered by money laundering concerns.
The CME move also suggests that bitcoin has become too big to be ignored, as the stock market seemed to have ruled out crypto futures in the recent past. Bitcoin is almost everything that someone talks about in brokerage and trading companies, which have suffered because of the growing, but unusually peaceful markets. If futures on the stock market took off, it would be almost impossible for any other stock exchange, such as CME, to catch up, since volume 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 said in an interview with CNBC. There are “mainstream companies” that want access to bitcoin and there is a “huge backlog of demand” from customers, he said. Duffy also believes that bringing institutional traders to market could make bitcoin less volatile.
The Japanese countryside uses cryptocurrencies to raise capital to revitalize municipalities
The Japanese village of Nishiawakura is exploring the idea of holding an Initial Coin Offer (ICO) to raise capital to revitalize municipalities. This is a very new approach and they may seek the support of the national government or seek private investment. Several ICOs have had serious problems, and many investors are skeptical that each new token will have value, especially if the ICO turns out to be another joke or scam. Bitcoin was certainly not a joke.
INITIAL COIN OFFER – (ICO)
We didn’t mention ICO in the first issue of Crypto Trend, so let’s mention it now. Unlike the Initial Public Offering (IPO), where a company has an actual product or service to sell and wants to buy shares in their company, an ICO can be held by anyone who wants to launch a new Blockchain project with the intention of creating a new token on their chain. The ICOs were unregulated, and some were completely fake. However, a legitimate ICO can raise a lot of money to fund a new Blockchain project and network. It is typical for an ICO to generate a high price token near the beginning, and then return to reality soon after. Since the ICO is relatively easy to maintain if you know the technology and have a few dollars, there were many, and today we have about 800 tokens in the game. All these tokens have a name, they are all cryptocurrencies, and except for very well-known tokens, such as Bitcoin, Ethereum and Litecoin, they are called alt-coins. At the moment, Crypto Trend does not recommend participating in the ICO, because the risks are extremely high.
As we said in No. 1, this market is currently the “Wild West” and we recommend caution. Some investors and early users have made big profits in this market space; however, there are many who have lost much, or all. Governments are considering regulations because they want to know about every transaction in order to tax them all. They all have huge debts and do not have enough money.
So far, the cryptocurrency market has avoided many government and conventional financial problems and pitfalls, and Blockchain technology has the potential to solve many more problems.
A great feature of Bitcoin is that the founders chose the final number of coins that can ever be generated – 21 million – thus ensuring that this crypto coin can never be inflated. Governments can print as much money (fiat currencies) as they want and inflate their currency to death.
Future articles will deal with specific recommendations, however, make no mistake, early investment in this sector will only be for 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.