Bitcoin fundamentals – September briefing 2019

Bitcoin fundamentals – September briefing 2019

Quiet start

September month is one among most quiet in this year, not just because of fundamental news, but on price volatility as well. By looking at weekly chart of BTC – every next week has smaller range than previous one in September. News background is also not impressive. But – we have the major event right in September that whole market was wating for a long time. Bakkt launch. While I’m writing this, Bakkt is trading on ICE in its first trading session…

Positive camp

Bakkt starts trading on ICE exchange officially.

Clients’ deposits are insured for $125 Mln., and ICE has got all necessary CFTC permissions. Initial margin per contract stands around 3900$. Additional floating margin set in 400-1100$ range. Bakkt Warehouse accepts BTC trading deposits. First trade is done today 8:02pm ET at $10 115.

CME will have a new rival from on Monday, however, when the Intercontinental Exchange and its subsidiary Bakkt begin offering a new futures product. Unlike CME’s cash contracts, though, ICE will be offering a physically settled product, meaning customers will receive actual bitcoin instead of the cash equivalent.

Russian Sberbank and Trafigura company makes first deal using Blockchain technology.

And this trade is not BTC transfer. Sberbank has assigned accounts receivable of some Turkish company from Trafigura using Blockchain technology, which helped to reduce transaction costs and simlify contract.

At first glance, this is minor news guys, but it is really new word in application of Blockchain in other life spheres – banking is one of them. This is what Blockchain fans foresee 1-2 years ago.

CME Group Is Launching Bitcoin Options Early in 2020

Derivatives marketplace CME Group has announced that it will offer options on its bitcoin futures contracts starting in the first quarter of next year.

In its announcement on Friday, CME said the launch of bitcoin options is aimed to provide clients with “additional tools for precision hedging and trading.” The launch is pending regulatory review.

Tim McCourt, CME Group global head of equity index and alternative investment products, said:

“Based on increasing client demand and robust growth in our Bitcoin futures markets, we believe the launch of options will provide our clients with additional flexibility to trade and hedge their bitcoin price risk. These new products are designed to help institutions and professional traders to manage spot market bitcoin exposure, as well as hedge Bitcoin futures positions in a regulated exchange environment.”

BTC Hash rate hits all time record week by week, reaching 100Mln Th/s

It is widely suggested that Hash rate has relation to the price of BTC – greater has rate relates to higher BTC price. But recent 2-3 weeks doesn’t support this relation as BTC mostly stands flat and even has decreased a bit. But what is really true is the Bitcoin net becomes safer as more hash rate stands which means greater diversification of transactions.

Libra ‘Might Be Unstoppable’

Changchuan Mu, the new director of China’s Research Institute on Digital Currency:

“No countries welcome Libra, but it might be unstoppable anyways,” Mu said in the third lecture of the series. “It is very unlikely that one can totally stop people from buying Libra despite rigorous regulations.

 Even if Facebook is blocked in China, people will use indirect ways to purchase it from abroad once Libra comes out,” Mu said. But he thought that there was only one possibility to stop Libra: “If the U.S. bans Libra legally, then Libra will certainly be stopped.”

Thus, the list of positive news this month is not too extended, but they are valuable, especially Bakkt launch.

We also have something to point in our

Negative camp

Blockchain And Crypto Deals Are Down Sharply In 2019

The price of bitcoin has recovered pretty well from lows hit late last year. But investor enthusiasm for all things crypto and blockchain remains far below peaks scaled several quarters ago.

Altogether, investors have put an estimated $3.38 billion to work in initial coin offerings and private funding rounds for companies in 2019, according to Crunchbase data.* At this pace, annual investment portends to be a fraction of the 2018 investment total of $12.86 billion.

So far this year, investors have put about $2 billion into rounds for companies tied to crypto and blockchain technology, not including ICOs. That’s on pace to come in well below the $4.65 billion tally for all of 2018. We have more numbers in the chart below:

So, the data speaks pretty clearly: Blockchain and crypto-related funding is down but by no means dead after the cryptocurrency bubble popped. What’s lacking, however, is much in the way of punditry regarding why things are playing out this way.

That said, we’re still in early innings. And for now, it looks like neither the blockchain boosters nor the detractors have sealed a winning case.

SEC chairman says he doesn’t see bitcoin trading on a major exchange until it is ‘better regulated’

Bitcoin will need to become better regulated before it trade on a major exchange, SEC Chairman Jay Clayton says at the Delivering Alpha conference presented by CNBC and Institutional Investor.

Clayton also cautions about the difficulty of “price discovery” for investors trying to cash in on crypto.

“If [investors] think there’s the same rigor around that price discovery as there is on the Nasdaq or New York Stock Exchange … they are sorely mistaken.  We have to get to a place where we can be confident that trading is better regulated,” said Clayton, the opening speaker at the Delivering Alpha conference, presented by CNBC and Institutional Investor.

China’s Inner Mongolia to Shutter ‘Illegal’ Bitcoin Miners by October

China’s Inner Mongolia autonomous region is carrying out an inspection to eliminate “illegal” bitcoin mining operations by October, a government spokesman told CoinDesk, confirming a local report.

Inner Mongolia, in northern China, is among the most suitable areas to operate bitcoin mining businesses thanks to its cheap electricity supply, low land prices, cold weather and a small population.

“The move reflects the nationwide phase-out plan on the bitcoin mining,” the source added. The government’s proposed plan in April, pending final approval, is to drive out the digital currency mining industry from China.

China started to crackdown on bitcoin mining operations before the draft proposal in April by the National Development and Reform Commission, the primary government agency for economic planning.

The NDRC’s position indicated that the mining industry should be phased out of China as it does not fit in the future economic development plan of the country. Trading and possessing cryptocurrencies is illegal in China as part of broader currency controls, but crypto use is prevalent on the black market.

Germany’s Scholz: We cannot accept parallel currencies such as Facebook’s Libra

German Finance Minister Olaf Scholz said on Tuesday policymakers could not accept the emergence of parallel currencies such as Facebook’s planned Libra, adding that Berlin would reject any such plans.

“We cannot accept a parallel currency,” Scholz said during a panel discussion in Berlin. “You have to reject that clearly.”

And in essence:

And this is all, folks. As we said above – September is not replete with big events. We have just a few of them, but they are valuable especially Bakkt’s start.

Bakkt launch is a tricky moment and could trigger as the new spiral of development on BTC market as total disappointment if it does not match to expectations. Indeed, this start was waiting so long by whole market, and really big hopes are put on it. Now all investors keep an eye on forecasts and expectations of BTC’s fans  – whether they will be correct.

If no big shifts happen within 1-3 months the euphoria could turn to confusion, and that could bring negative impact on BTC when the World will see that no institutional money has come on the market and BTC still stands where it was in pre-Bakkt era. That’s being said, now we should not make a snap judgment but be patient and give market some time to react.

The second issue, concerning massive campaign against mining in China is also worthy of our attention as it cares two problems. First is direct impact of mining pause/contraction, second – psychological effect, as people see that government could freely intrude and stop anything which has relation to cryptocurrencies.

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Sive Morten

Sive Morten

By day Sive Morten works for the large European bank. In that roll he evaluates the markets including currencies market managing bank risks and evaluating the bank portfolio.

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