Why the stock market does not need wall street
A game of cat and mouse continues. On 7 August, the us Commission on securities and stock exchanges (SEC) has deferred the application from the BZX exchange Cboe which is asking to change the rules to come on the market on the bitcoin ETF from VanEck organization SolidX Bitcoin Trust. The issue has been postponed until 30 September, and its transfer to the SEC is following the same path that led to the refusal for the approval of the ETF, which asked the Winklevoss brothers — the owners of several hundred thousand bitcoins. And yet, the ETF is likely to be approved — if not from the Winklevoss or Cboe BZX, so from other applicants. And if not this year then next for sure. So I think in the investment Fund Canaccord Genuity, where it is believed estimated date of approval ETF March 2019. Close date February 27 of next year — calls and lawyer Jake Czerwinski.
Anyway, the question arises: why cryptocurrency world is mostly so glad to see the traditional classical financial instruments — ETF — will work on the basis of cryptocurrency? Among the usual arguments — the fact that ETF will lead the market money institutional investors. However, all shows that the money is already on the market, but cryptocurrency is not expensive. Moreover, the decision of the owner of the new York stock exchange Intercontinental Exchange (ICE) about the preparations for the launch in November of cryptocurrency platform Bakkt the market responded with a decline in the value of most altcoins. It is noteworthy that the very cool things about ICE news from the head of the largest crypto currency exchange world Binance Chanpen Zhao: from his tweets it became obvious that he calmly refers to the emergence of “regular” courts, implying that they play by very different rules.
Only Tom Lee of Fundstrat Global Advisors found reason for optimism, drawing attention to the fact that the share of bitcoin in the market increased. Why the market ignored the news, which any other time would have caused a noticeable rally? Known manages investments Caitlin long explains that at least some investors remained wary about the possible adverse effects that cryptocurrency could eventually be integrated to existing financial instruments and platforms for trading assets. It is noteworthy that an important statement: the arrival of institutional investors is not necessarily good for cryptocurrency, however, further arguments Caitlin long need to be clarified.
Long rightly believes that the main problem that can occur when cryptocurrencies will begin to engage specialists from wall street, to which she also referred, is that it may be phenomenon of “paper bitcoin”. We are talking about that, and ETFs, and other types of trading, including derivatives on cryptocurrencies, can lead to the fact that the volume of trade in such instruments may exceed the amount of available amount of cryptocoins is exactly the same as trading “paper oil” are maintained on the number of barrels of raw materials, which do not exist in reality.
And then long makes the conclusion that if this approach is applied, it will cause holders (Hodler) cryptocurrency easily bankrupt traders on wall street who try to act cryptomelane on the same schedule as other assets. This statement is based on the assumption that it is “practically impossible that someone gained control of bitcoin or other cryptocurrencies”. Meanwhile, according to Canaccord Genuity, “less than two years ago, China accounted for about 90% of all bitcoins”, and this meant that even then there were risks of based on this cryptocurrency from the decisions of the authorities of China. In addition, there is no assurance that the owners of large fortunes in bitcoins and other cryptocurrencies will not prefer to keep them in a “cold wallet”, such as investment Bank Goldman Sachs, which is developing such a project, while not hiding the skepticism about the cryptocurrency. Does all this trap?
A crypto-investors, such as billionaire Mike Novogratz and bill Miller, used to work with other assets that are hosted “in secure storage” units major shopping areas, as, for example, in warehouses at the London metal exchange. Such “warehouses” there are securities in the form of depositories. We offer storage services amount of cryptocoins seem logical from the point of view of the players in the traditional financial market and imposed as a necessary condition for “institutional investors want to buy cryptocurrencies”. That situation will not go the way of other assets, is unlikely to count. “Paper bitcoin” — this reality, which will certainly occur if you go the integration of cryptocurrencies in the classical world of Finance according to the rules of the latter. The same Kathleen long, praising the fact that futures on bitcoins is carried out based on the actual amount of cryptocoins that providing them exceeds 100%, says that the pressure in the direction increasing the volume of trade in such tools will increase, and this leads to the fact that there will be a “paper bitcoin”, unsecured real cryptocurrency.
Indeed, the entire modern, classic, of course, the financial world is based on the fact that the trade with leverage with more leverage is not just a possibility, and even necessity. In addition, the traded assets must be “locked” in centralised structures. Those are the rules, but whether or not the cryptocurrency adapt to them for the sake of some alleged money institutional investors?
“Paper oil” showed that despite the large amounts of money were pumped in the futures for this raw material, the dynamics of prices has not always been positive, and when she showed growth rates, it “coincided” with the geopolitical plans of the US authorities and their allies. Bitcoin could then be manipulated asset, as most of the assets which trading on the classic exchanges. No coincidence that the US is trying to bring natural gas trading at the same level of securitization that deals with oil: for this, first it is proposed to link the world price of this raw material to the value in the port of Louisiana, and then to launch futures on natural gas. After that, on free market pricing of this raw material will be forgotten.
Similar situation with the U.S. dollar, which became the “squared paper”: the entrepreneur Robert Kiyosaki believes that the uncontrolled emission of the U.S. dollar and the failure in 1971 of the gold standard turned these papers in “fake”, which will be replaced by bitcoins, gold and silver.
There is a loss of confidence in the most assets in the world, which is reflected in the lack of predictability and validity of changes in their prices. The lack of transparency of decision making, for example, the emissions of the US dollar is also evident. While classical financial world in the face of the ICE suggests exactly the opposite, saying through its President, Jeffrey Sprecher that ICE intends using Bakkt to bring “trust and transparency previously not regulated markets” cryptocurrency.
But first would cost to offer exchanges to try to work with possible future cryptocurrency that would let the Central banks (CBDC), but in this case, it would become obvious that the rate of such amount of cryptocoins will not be a market.
It is clear that cryptocurrencies offer to play by the rules, first written for traditional assets, according to which “paper trading” is the norm, secondly, it is not proposed to change these rules to incorporate the principles that have cryptocurrency, and thirdly, the benefits of this partnership not sounded. A one-sided game for cryptocurrency market is not just losing, but dangerous because of their identity, which is based on decentralization, and the priority is not trade, and the use amount of cryptocoins can be lost and the cryptocurrency market in the face of stronger competitors, playing by their rules, will inevitably lose.
More it would be fair to the cryptocurrencies, which embody the advanced technology of the blockchain, they themselves became the legislators of the financial MOU. Rights in this sense, the Australian billionaire Fred Šebesta, who intends to open scriptbank. To do this, he will use a valid credit organization, which is in Australia, where Šebesta is one of the owners to convert it into a new institution working under the rules of the cryptocurrency market. Thus, not banks are starting to use cryptocurrencies, and cryptocurrencies are beginning to use existing credit institutions, transforming them to fit their principles. The same should happen through cooperation cryptocurrency exchanges.