Do you remember when Bitcoin $12,000 was cool? Do you remember when Bitcoin $12,000 was actually news? I do. Because it was just 24 hours ago.
Everyone’s favorite digital delusion hit $12,000 on Wednesday morning and it was the talk of the financial world. It would subsequently rise $100/hour (on average) on its way to $14,000 by late Wednesday evening. Last night, we brought you a handful of amusing Bitcoin statistics and guess what? They’ll all need to be updated because Bitcoin crossed $15,200 on Thursday morning:
“No climb is excessive until there are no more marginal buyers — levels are irrelevant,” Bloomberg’s Mark Cudmore wrote overnight.
Yes, that much is clear. And now, some of the world’s largest banks are raising concerns about the imminent launch of Bitcoin futures by the Cboe (Dec. 10) and the CME (Dec. 18).
“In light of the CFTC and NFA’s public statements regarding the riskiness of the underlying cryptocurrency products, we believe that the launch of new exchange-traded derivatives in cryptocurrencies deserves a healthy dialogue between regulators, exchanges, clearinghouses and the clearing firms who will be absorbing the risk of these volatile, emerging instruments during a default,” an open letter addressed to the CFTC from the Futures Industry Association (whose members include Goldman, Morgan Stanley, JPMorgan and Citi), reads. The FIA continues:
Given the lack of historical data on these products, it is further concerning to clearing members that they will bear the brunt of the risk associated with them through their guarantee fund contributions and assessment obligations, even if not participating in these markets directly, rather than the exchanges and clearinghouses who have listed them.
Basically, they are not enamored with the expedited self-certification process nor are they particularly excited about having to effectively shoulder the burden when something invariably goes wrong. You can read the full letter below.
“Several brokers among the top 10 largest providers have privately confirmed to the Financial Times that they will not clear the products immediately,” FT reported late Wednesday, adding that “ABN Amro told clients it would clear bitcoin futures but only if they submitted requests in writing, and said it would assess the customer’s trading systems and track record in meeting risk limits.”
Meanwhile, the above-mentioned Mark Cudmore thinks the risk may come not from buying Bitcoin on leverage, but rather from Bitcoin as collateral.
“Because investors are buying, holding and seeing incredible gains, we are hearing stories of people in the street who have their overall paper wealth increase significantly due to a few bitcoins [and] this may lead them to upgrade their lifestyle but belief will prevent them from locking in their profit,” Cudmore notes, before warning that “that’s when they will be particularly vulnerable.”
In the interim no one will care, because as of Thursday morning, Bitcoin’s market cap is above a quarter trillion.
Nothing further (for now).
Full FIA letter