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Report: Goldman Sachs And Other Wall Street Banks Are Exploring Bitcoin-Backed Loans
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Tag: Wall Street
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Co-Opted By Wall Street: Bitcoin’s Biggest Risk?
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Crypto Market Down $200B as Wall Street Futures Tumble on Renewed COVID-19 Concerns
The new COVID-19 variant coming from South Africa has brought more pain to all financial markets. As the futures contracts of the world’s most prominent stock indexes have slumped, the cryptocurrency space experienced a massive correction. Bitcoin dumped to a six-week low, while some altcoins saw double-digit price drops.
Bitcoin and Global Markets Tumble
The primary cryptocurrency was on its way towards $60,000 yesterday after recovering from the previous drop below $56,000. It came roughly $500 away from challenging that coveted level, but it failed, and the landscape changed vigorously hours later.
Bitcoin dumped by $5,000 in a few hours to an intraday low of $54,300, which became the lowest price point since October 13th. As reported earlier, this enhanced volatility caused mass pain for leveraged traders as the liquidations skyrocketed to over $700 million on a daily scale.
This price crash coincides with similar developments in the global stock markets. Prompted by fears of a new COVID-19 variant coming from some African nations, the futures contracts of Dow Jones, the S&P 500, Nasdaq, and other popular indexes plummeted.
The Dow’s futures are down by more than 2%, those for the S&P 500 by nearly 1.7%, while oil prices dropped even harder. US crude oil futures declined by over 5.5%.
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The situation in Asia is identical, with Japan’s Nikkei and the Hong Kong Hang Seng losing around 2% each.
Altcoins Have it Worse
As it usually happens when bitcoin heads south, so do the alternative coins. Ethereum exceeded $4,500 yesterday at one point, but a substantial correction of over $400 has driven it south below $4,100 as of now.
Binance Coin traded north of $610 but it’s down to $580 now. Solana (-6.5%), Cardano (-5%), Ripple (-7%), Polkadot (-8.5%), Dogecoin (-7%), Shiba Inu (-2%), and Litecoin (-9%) are deep in red as well.
Avalanche and CryptoCom’s token have lost the most from the larger cap alts. AVAX has dumped by 12% to below $110, while the recent high-flyer CRO has plummeted by more than 20% and sits beneath $0.7.
The crypto market cap is down by nearly $200 billion in a day to below $2.5 trillion on CoinMarketCap.
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Jerome Powell Could Slow Down The Cryptocurrency Industry, Mike Novogratz Says
Mike Novogratz is not happy with U.S. President Joe Biden’s decision to pick Jerome Powell to chair the Fed for a second term. And he’s speaking not as a Bitcoiner but as an overall investor: He believes Powell could be detrimental to the markets’ growth.
In an interview for CNBC this week, Novogratz hinted that from his point of view, Jerome Powell had failed to understand the political and economic reality of the United States and that the markets have a similar view, being pessimistic about his tenure.
Careful With Jerome Powell
Speaking about the cryptocurrency market, Mike Novogratz said that “people are getting pretty bearish” on crypto after Jerom Powell’s appointment, especially following the changes in the “macro story.”
“We have inflation showing up, you know, in pretty bad ways in the U.S. So, we can see, is the Fed going to have to move a little faster … That would slow all assets down. It would slow the Nasdaq down. It would slow crypto down if we have to start raising rates much faster than we thought.
The United States is experiencing its highest inflation in 30 years. At 6.2% annually, the consequences are already starting to ripple through the rest of the world, with 39 of the 46 world’s largest economies showing higher inflation year-on-year.
Mike Novogratz argues that now that Powell has the confidence of a new mandate, he can be more aggressive with his policies without needing to measure his actions so as not to put his job at risk. And Jerome Powell’s thinking so far seems to favor an expansionary monetary policy.
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Mike Novogratz Remains Focused on the Cryptocurrency Industry
However, Mike Novogratz is a cryptocurrency lover and doesn’t plan to stop being one. As CEO of Galaxy Digital, he has to constantly study market trends and expectations. He assures that the more distant future looks promising for cryptocurrencies after the short-term ups and downs.
The crypto ecosystem is growing, and more and more institutional investors are entering the game, spurring the industry’s growth.
“The amount of institutions Galaxy sees moving into this space is staggering. I was on the phone with one of the biggest sovereign wealth funds in the world today, and they’ve made the decision on a go-forward basis to start putting money into crypto. I’ve had the same conversations with big pension funds in the United States.”
Novogratz always argued —especially in 2017 and 2018— that institutional investors would play a major role in the rise of the cryptocurrency industry and that Bitcoin could easily reach $100K soon.
Last month, Novogratz warned that the end of the NFT rush could be approaching and advised investors to take profit and bet on Bitcoin or Ethereum.
As Cryptopotato reported on October 8, Novogratz explained that many NFTs trade for large sums of money primarily because of the emotionality of those involved and expectations – not because of proper fundamentals:
“That’s not normal, in any way, shape, or form … It seems to me like a pretty good time to at least book some profits, and fold it back into Bitcoin or Ethereum or another token.”
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On Bitcoin Criticism By Wall Street
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Brace For Impact: Wall Street Is Headed Straight For Bitcoin, Says Analyst
Wall Street has previously not been at the forefront of bitcoin trading in the past. However, that looks poised to change. The approvals of three bitcoin ETFs in the past week have brought about more institutional interest in the digital asset and Wall Street brokers are starting to turn their attention to the cryptocurrency. The first Bitcoin ETF recorded trading volumes of over $1 billion on its first day. This success has not missed the radar of Wall Street.
Analyst Christopher Brendler sat down with Coindesk to talk about the future of bitcoin in Wall Street. According to Brendler, Wall Street brokers are getting increasingly positive about BTC investments. It is important to note that bitcoin has outperformed both the Nasdaq and the S&P year-over-year, as seen in a report from Wealthier Today.
Interested In Bitcoin And Mining
Brendler had previously collated data on how the bitcoin mining industry was being viewed by players in Wall Street. He found that brokers had a positive view of the industry in the short term. Brendler estimated that about 15% of Wall Street brokers from the payments side of things were beginning to take investments in the cryptocurrency more seriously. This number at been at a meager 5% of Wall Street brokers at the beginning of the year.
Related Reading | American Singer Mariah Carey Offers Free $20 In Bitcoin To Promote Adoption
Interest has mostly grown due to the growth of bitcoin in the past year. The asset whose price had been below $30,000 at the beginning of the year had grown over 100% to a new all-time high in October.
BTC price suffers beatdown from $63K | Source: BTCUSD on TradingView.com
The asset itself has not been the only one to record tremendous growth in recent months. Mining stocks have also benefitted from the market rally. The report stated that mining stocks Marathon Digital and Riot Blockchain have seen growth up to 1,500% and 600% respectively in the past year, considerably higher than the 377% of BTC in the last year.
Institutional Investors Are Pouring In
Institutional investors have continued to pitch their tent with bitcoin. This has translated into more interest in the market from Wall Street brokers. Bendler noted some skepticism from these investors. However, they still remained bullish on the digital asset in the long term. “While most investors are still new to this area, there was also quite a few already involved and able to dig deep into our new coverage,” said Bendler.
Related Reading | Analyst Puts Bitcoin Bottom At $50,000, Here’s Why
As interest from Wall Street grows, it is expected that we will see more inflows in bitcoin. The money coming in will help to drive the price of bitcoin both in the short and the long term.
Bendler explained that the investors familiar with the market were bullish crypto miners. Although they erred on the side of caution when it came to valuation in the space. This has, however, not caused them to shy away from the space. With returns from the crypto market beating out traditional investment vehicles, it is only a matter of time before Wall Street is fully invested in the market.
Featured image from Ethereum World News, chart from TradingView.com
Wall Street Brokers Growing Interested In Bitcoin And Miners, Analyst Says
- Interest from Wall Street in Bitcoin is growing, having tripled since the beginning of the year, DA Davidson’s analyst said.
- Analyst Christopher Brendler estimates that three times as many Wall Street brokers that cover the payments sector are taking bitcoin seriously now than in January.
- DA Davidson recently started researching the industry and is bullish on BTC miners in the short term.
Wall Street is growing more aware and interested in Bitcoin and bitcoin mining companies, wealth management firm DA Davidson’s analyst Christopher Brendler wrote on October 25, per a CoinDesk report. The asset manager started research coverage of bitcoin mining stocks on October 15. According to Brendler, interest in BTC and miners has increased significantly since the beginning of the year.
Brendler “estimates that about 15% of the Wall Street brokers that cover the payments sector are taking bitcoin seriously now, up from about 5% at the start of this year,” per the report.
Institutional and professional investors are getting more interested in Bitcoin and bitcoin mining, according to the analyst, who wrote that “while most investors are still new to this area, there were also quite a few already involved and able to dig deep” into DA Davidson’s new coverage of the industry.
The Wall Street firm recently initiated research coverage of bitcoin miners, sharing a bullish short-term outlook for their stocks. On its coverage debut, the firm said it expected “these stocks to revalue much higher as earnings estimates crush near-term estimates, even if bitcoin consolidates.”
But some institutional investors still have some reservations about miners’ valuation, the analyst said.
“We admit traditional valuation metrics may not apply in this sector as future cash flows are exceedingly difficult to predict,” Brendler added.
The ability of bitcoin miners to earn BTC directly and get bitcoin-backed loans to pay for USD expenses allows them to HODL their earned coins and grow their balance sheet as bitcoin appreciates against the dollar.
Wall Street jinx? Traders weight ‘sell the news’ potential after Bitcoin ETF launch
Wall Street opened its doors for the first Bitcoin (BTC) exchange-traded fund (ETF) on Oct. 19, with the listing of ProShares Bitcoin Strategy (BITO) on the New York Stock Exchange. The fund attracted more than $1 billion in trading volume on its first day, while Bitcoin’s price rallied to a new record high of $67,000.
But the spot gains did not stay for too long, with BTC paring some gains going into the weekend.
Bitcoin’s price corrected by almost 11% from its all-time high to reach levels below $60,000 on Saturday, raising fears about selloffs that typically come after the launch of major crypto derivatives products on Wall Street.
Analysts call for wider BTC correction
Nunya Bizniz, an independent market analyst on Twitter, recalled two of such major events: the listing of the first Bitcoin futures on the Chicago Mercantile Exchange (CME) and the debut of the crypto trading service Coinbase’s stock (COIN) on the Nasdaq stock exchange.
Notably, CME launched its Bitcoin futures product on Dec. 18, 2017, the date on which Bitcoin rallied toward its then-record high of around $20,000. But the launch also marked the beginning of one of Bitcoin’s longest bear cycles, which bottomed around $3,200 12 months later.
Similarly, the much-celebrated COIN’s debut on Wall Street on April 4, 2021, coincided with Bitcoin rallying to a new all-time high around $65,000 just 10 days later. Nonetheless, the upside move met a bout of strong selloffs, causing BTC to correct to as low as $28,800.
Nooo, God. No God, please no! No! No! Nooooooo! pic.twitter.com/ITKFBJqK6h
— Nunya Bizniz (@Pladizow) October 22, 2021
As a result, the recent ProShares Bitcoin ETF left Nunya Bizniz and many other analysts worried about the so-called “buy the rumor, sell the news” correction. For instance, analyst Lark Davis noted that he “wouldn’t be surprised” if Bitcoin’s price crashes following the ProShares ETF launch just like it did after the CME Bitcoin Futures launch.
#bitcoin CME futures
– Announced October 31st 2017.
– BTC rallies 224%
– Launch on December 18th, the day BTC hit the 2017 market highWould not be shocked to see the ETF launch play out exactly like this.
Epic buy the rumor, sell the news event pic.twitter.com/sKrmhdLxQv
— Lark Davis (@TheCryptoLark) October 8, 2021
Also, Dan Morehead, CEO and co-chief investment officer of Pantera Capital, wrote in a newsletter earlier this month that he “might want to take some chips off the table” ahead of the Bitcoin ETF launch.
Impressive debut for Bitcoin ETF
Despite historic bearishness associated with high-profile Wall Street crypto listings, some analysts believe the Bitcoin ETF’s impressive debut will result in limited downside moves in the spot BTC market.
Todd Rosenbluth, head of ETF and mutual fund research at CFRA, told the Financial Times that ProShare’s $1-billion debut is “a sign of the pent-up demand” among traditional finance companies looking to score a slice of the rising crypto industry.
JPMorgan Chase added that retail traders accounted for only 12%–15% of net inflows into BITO on the first two days of trading.
Related: Bitcoin decides fate of $60K as weekly close keeps BTC traders on their toes
That pointed to a significant interest in Bitcoin ETFs among institutions, with cash-marginated Bitcoin futures open interest rising by up to 79% month-to-date and CME basis going from negative in July to above 16% earlier this week.
Noelle Acheson, head of market insights at crypto trading firm Genesis, noted that Bitcoin’s perpetual futures rolling basis, a metric to gauge the demand for leverage, ticked up but was still only 13.08% compared to mid-April’s 34.6%.
High leverage remains a common factor across recent spot BTC market corrections. In other words, the neutral funding rates at the moment suggest that the chance of a big pullback is relatively low.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
ProShares Bitcoin Futures ETF Will Reach Wall Street on Tuesday (Report)
The long-anticipated launch of a Bitcoin Futures ETF in the United States might be over as a more recent report claimed such a product will go live for trading on October 19th.
- The topic of whether or not the United States Securities and Exchange Commission will ever greenlight an exchange-traded fund tracking the performance of bitcoin has been going on for years.
- Following countless rejections, the watchdog seems to have changed its mind on an ETF for BTC futures contracts, as several reports from last week claimed.
- A more recent one from the New York Post even provided a specific date when such a product will go live in the US.
- It reads that ProShares and the New York Stock Exchange have both confirmed that the formers’ Bitcoin Futures ETF will officially be released tomorrow – October 19th.
- Michael Sapir, CEO of ProShares – the issuer of the ETF – said, “2021 will be remembered for this milestone.”
- He believes that investors who have been staying away from the asset until now will receive “convenient access to Bitcoin in a wrapper that has market integrity.”
- The SEC’s Chairman, Gary Gensler, previously hinted that a Bitcoin Futures ETF could be approved due to the enhanced protection for investors.
- ProShares filed for its Bitcoin Strategy ETF earlier this year.
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Bakkt Goes Public: to Be Listed on New York Stock Exchange
Several months after initially outlining plans to become a publicly-traded firm, Bakkt has announced that the event will take place on Monday – October 18th. Thus, Bakkt will join the likes of Coinbase as a cryptocurrency-related company having its shares traded on giant stock exchanges.
- CryptoPotato reported at the start of this year Bakkt’s intentions to go public through a merger with VPC Impact Acquisitions Holdings.
- The two parties indeed merged shortly after clearing the way for ICE’s Bitcoin futures platform to have its shares traded on a US exchange with an estimated enterprise valuation of $2.1 billion.
- The company published a press release earlier this week confirming that it has completed all negotiations.
- Bakkt’s shares of Class A common stock and warrants will begin trading on the New York Stock Exchange on Monday, October 18th, 2021, under the ticker symbols BKKT and BKKT WS.
-
“Today marks a special day for Bakkt. Closing the business combination provides us with the necessary capital to continue to do what we do best, which is to innovate. We are thrilled to enter the next chapter, and we look forward to propelling our growth initiatives and advancing our mission of connecting the digital economy.” – commented the CEO Gavin Michael.
- According to the publication, Bakkt has earned gross proceeds of roughly $450 million through the business merger. The company plans to utilize the funds to finance investments in “the platform’s capabilities and marketing efforts, and accelerating current and future partnerships.”
- Thus Bakkt will join Coinbase, which became the first giant crypto company to go public. As reported in April this year, COIN started trading on Nasdaq and the company’s valuation at the time exceeded $100 billion.
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