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Understanding the Consequences of an Ethereum (ETH) Futures Market in the US

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Last December, when we saw the Bitcoin futures market complex come into existence – first on the CBOE, and then on the CME a week later – it left a psychological scar in the crypto world that still resonates today.

Naturally, while financial theorists and academics continue to spin tales suggesting that Bitcoin futures actually hurt Bitcoin (and continue to do so today), the reality is this: by mid-December, excitement about Bitcoin had reached a fever pitch and the “bubble” was in full blossom (why do you think CBOE and CME were so eager to establish futures in the first place?). A market in that state is extremely fragile and any new catalyst can spark the needed deleveraging process. It’s a state of imbalance. And the universe abhors imbalance.

Moreover, it wasn’t the fact of Bitcoin futures coming into existence that caused Bitcoin to go down. It was the unsustainable parabolic rise in Bitcoin in the first place that caused Bitcoin futures to come into existence. However, as noted above, it left a scar.

This isn’t to suggest that Bitcoin can’t surpass its former highs. It surely can over time. However, a parabolic market mania is a parabolic market mania. It is unsustainable by definition. The advent of the futures market for Bitcoin was a well-timed crowning catalyst, much as we often see today when a group of stocks finally gets noticed enough to be crowned by a new ETF instrument. That invariably marks a top. Check out “FAN” for wind stocks, or “TAN” for solar stocks, or “MOO” for agriculture, or countless other examples. New financial instruments are often a symptom of a speculative imbalance rather than the cause of an inflection.

That takes us to the present day, and what, if anything, might result from the advent of Ethereum futures.

Ethereum Futures

First and foremost, markets are highly susceptible to post-traumatic stress disorder. In other words, the establishment of a “bogeyman” in the narrative of recent market history will impact how people position capital afterward, particularly when there are signs of the reappearance of that same bogeyman in the narrative.

In this case, the launch of an Ethereum futures contract in London in early May likely presented traders with a strong sense of “Oh no, here we go again!”, especially since Ethereum had rallied more than 100% in a single month into that launch, and subsequently started to decline immediately afterward.

However, while these fears may have a rational hook into the fabric of reality, there is another narrative that may deserve consideration.

The Big Point of Crypto Futures

At present, the principal use of the Bitcoin futures markets is for large-speculator hedging activity, according to CFTC reports. The data is incontrovertible at this point. The latest Commitment of Traders report for Bitcoin futures from the CFTC showed large specs carrying 1,945 contracts net short on CBOE and another 377 net short on CME.

In other words, big players (crypto hedge funds) are carrying large short positions in Bitcoin futures most likely as a hedge against regulatory hurdles to offset large bullish bets on speculative alt-coins.

This is the future of the cryptocurrency space: find the next coin that is going to ramp from $25M to $2B in market cap. These are lotto ticket bets. But in an inefficient market, that’s a reasonable strategy, especially if you can segment out and cancel the risk of broadly negative regulatory developments that hit the whole of the crypto landscape.

Where’s the Opportunity?

In itself, this is not a negative for Bitcoin. Those contracts held short are offset by small speculator long positions. But, more importantly, we are no longer in a crypto bubble. We are firmly deep into a crypto bear market that may be nearing its depths. Hence, the introduction of a new major futures contract that gives funds more access to hedging matter isn’t likely to have the same impact as it did in either of the prior two instances.

That’s where the interesting opportunity arises for Ethereum traders: the one thing you can probably bet on is that there is lots of money that “wants” to be in Ethereum, but is sitting on the sidelines because it doesn’t want to buy in front of the announcement that CBOE or CME is about to launch a contract.

In other words, it is hardly far-fetched to contemplate the idea that the Great Crypto Bear of 2018 might well be book-ended by the launch of major futures contracts in Chicago: Bitcoin Futures marking the birth of the bear, and Ethereum Futures marking the birth of the new bull.

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and/or its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency and read our full disclaimer.

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Bitcoin

Investors Beware: Another Large Bitcoin Crash Might Be Coming

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Bitcoin crash
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The crypto prices have surged quite high in the last few months. Of course, their progress is nowhere near the one seen in 2017, but they appear to be getting there, one day at the time. However, things might not be as simple as that, and according to recent performance — it is more than possible that a major Bitcoin crash is incoming.

The fact is that cryptos saw a massive amount of growth in a very short period. Bitcoin itself more than doubled its price in only two months. Now, the rally is starting to crash in on itself, and the coin is already about $1,000 lower than last week. If such development does come to pass, a lot of people will experience quite large losses, although experienced investors might find some opportunities, and leverage in order to enhance their holdings’ long-term value.

For example, Bitcoin dominance is expected to crash very quickly, which will work in favor of quite a lot of altcoins. While this does not seem to be the best time to invest in BTC, altcoins are another story, and diversifying a portfolio now might end up being very profitable in days to come.

Bitcoin behavior mirrors the pre-bear market situation

The crash that analysts are predicting right now comes as a direct consequence of all the hype that has been building up in…

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Altcoins

Top 3 Coins to Buy Before They Go Big

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coins
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Crypto bulls are back, that much is clear. The long-lasting, harsh crypto winter is gone, and the new era in digital currency sector opens up some rather interesting opportunities. With many more bull runs expected to come in months ahead, a lot of coins are likely to blow up and maybe even hit new all-time highs, although that still remains purely theoretical.

On the other hand, the fact is that numerous coins are seeing prices that were not achieved since early 2018, and the overall momentum remains bullish. With that in mind, even if new records do not come for a very long time — chances are that many of the coins will blow up enough for investors to see some serious gains in months to come. As a result, investing in some of these coins now might be a very profitable decision, for those who have the patience to wait a few months. Here are some of the projects believed to have the greatest potential to go big in the second half of 2019 and beyond.

1. TRON (TRX)

Putting TRON on the list should not really surprise anyone, as the project constantly comes up with new project updates, partnerships, and alike. It also constantly breaks records, as is becoming one of the biggest players in the dApp and smart contract development sector.

In the past few…

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Blogs

Can Crypto Credit Cards Disrupt the Fight Against Financial Crime?

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crypto credit cards
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It is commonly known that the world of finances has the biggest problem with the crime of all existing industries around the world. It has been so throughout history. While the financial world has evolved, so did the criminal activities, and they continue to be an issue. With the arrival of cryptocurrencies, many were hoping that financial crime might be disrupted. However, for now, at least, it appears that cryptos themselves cannot find a way to resolve issues such as international money laundering.

In fact, when it comes to money laundering, the crypto sector appears to be the weakest link, especially because of the nature of digital currencies. The anonymity that cryptos are being praised for means that anyone can get a payment from an unknown source from anywhere in the world. This method can then be used for financing drug trafficking, cyberattacks, terrorists, and more.

Until recently, it was not easy for bad actors to make use of cryptocurrencies obtained for illegal purposes. The number of merchants willing to accept the coins was low, and criminals were forced to find a way to exchange crypto into fiat currencies. However, this came with a set of issues, such as taking foreign exchange risks and then sending the money through wallets and exchanges to a banking system that would allow withdrawal. The banking account was the biggest obstacle here,…

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