Bank of America is launching a crypto research team as institutional interest in digital assets rises

Bank of America bank branch on Park Avenue in New York City.
  • The new operation will be run by Alkesh Shah, who previously led the firm’s Global Technology Specialist team, according to a memo obtained by Insider. Bloomberg was first to report.
  • “Cryptocurrencies and digital assets constitute one of the fastest growing emerging technology ecosystems,” the memo said.
  • Joining Shah’s team are Mamta Jain and Andrew Moss.
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Bank of America is launching a cryptocurrency research team as institutional interest in the digital asset space continues to rise.

The new operation will be run by Alkesh Shah, who previously led the firm’s global technology specialist team, according to a memo obtained by Insider. Bloomberg was first to report. Shah will report to Michael Maras, the head of global fixed-income, currency, and commodity research for BofA.

The memo, dated July 8, was written by Candace Browning, head of global research, and addressed to Merrill Lynch Wealth Management employees and partners.

“Cryptocurrencies and digital assets constitute one of the fastest growing emerging technology ecosystems,” Browning said, adding that the sector is currently valued at about $2 trillion.

She continued: “We are uniquely positioned to provide thought leadership due to our strong industry research analysis, market-leading global payments platform and our blockchain expertise.”

Shah, who has 20 years of experience in technology and research, will cover global cryptocurrency, digital assets, and the related ecosystem, Browning said. He joined the bank in 2013 from Morgan Stanley and Lehman Brothers. He holds a BA from Cornell University and an MBA from Columbia Business School.

Joining his team are Mamta Jain – who has past experience in mobile and digital strategy for global banking and markets – and Andrew Moss, a vice president in the BofA’s data and innovation group.

The latest move by Bank of America comes after Goldman Sachs has already offered services related to cryptocurrency.

Read more: A crypto evangelist shares 5 altcoins that could explode in value, including one with 100-times potential – and breaks down his 3-part strategy for betting on speculative but potentially rewarding tokens

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Goldman Sachs will reportedly offer ether options for clients as the firm expands its crypto-trading business

Ether
  • Goldman Sachs will offer ether options and futures to its clients, Bloomberg first reported.
  • “We’ve actually seen a lot of interest from clients who are eager to trade,” Mathew McDermott of Goldman said.
  • The bank also has plans to facilitate trades via exchange-traded notes tracking bitcoin.
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Goldman Sachs will offer ether options and futures to its clients as the investment bank expands its cryptocurrency trading business, Bloomberg first reported.

“We’ve actually seen a lot of interest from clients who are eager to trade as they find these levels as a slightly more palatable entry point,” Mathew McDermott, head of digital assets at Goldman, told Bloomberg.

He continued: “We see it as a cleansing exercise to reduce some of the leverage and the excess in the system, especially from a retail perspective.”

The New York-based bank is expanding from its bitcoin offering after restarting its cryptocurrency trading desk to trade bitcoin futures earlier this year amid a boom in the popular coin. Goldman first set up a cryptocurrency desk in 2018.

The 47-year-old McDermott also told Bloomberg that Goldman has plans to facilitate trades via exchange-traded notes tracking bitcoin.

Cryptocurrencies, led by bitcoin, have staged a modest rebound on Monday following its massive crash in May when it lost almost half of its market value in one week alone.

Yet a recent finding from crypto-asset broker Voyager revealed that 81% of respondents in a recent survey are more confident in the future of cryptocurrency following last month’s sell-off.

“Institutional adoption will continue,” McDermott said. “Despite the material price correction, we continue to see a significant amount of interest in this space.”

In March, that bank’s COO and president John Waldron said he has seen an increase in interest from his clients when it comes to investing in bitcoin.

“Client demand is rising,” Waldron said in a Wolfe Virtual FinTech Forum. “The pandemic has been a significant accelerant. There is no question in our mind there will be more digital commerce … and (use of) digital money.”

Read more: Goldman Sachs says buy these 37 stocks that will offer strong returns with minimal risk through year-end as growth names regain leadership

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Turkey’s cryptocurrency nightmare worsened after a second exchange collapsed – stoking fears about bitcoin’s risks

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Turkey’s government is planning to crack down on cryptocurrencies.

  • A second cryptocurrency exchange has collapsed in Turkey, adding to the country’s crypto woes.
  • Analysts said the abrupt closure of the exchanges highlighted the risks of cryptocurrencies.
  • Many have turned to bitcoin and other assets to try to hedge against the country’s high inflationn rate.
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The cryptocurrency market has been dealt a major blow in Turkey after a second exchange went down on Friday. The closures have left hundreds of thousands of people without access to bitcoin and other assets, which many had bought as a hedge against rampant inflation.

Analysts said the events were a reminder to cryptocurrency investors everywhere to be sure to do business with reputable companies.

Vebitcoin, a Turkish crypto exchange which had around $60 million in daily trading volumes, announced it had stopped all of its activities on Friday. It put a message up on its website blaming financial strains.

The Turkish financial crimes watchdog then blocked all the exchange’s bank accounts in the country later that day, according to the state-run Anadolu news agency.

Vebitcoin’s announcement came days after rival Turkish crypto exchange Thodex stopped operations and its founder fled the country. The exchange had around 390,000 active users, according to reports.

The abrupt closure of the exchange was one catalyst for bitcoin’s dramatic fall below $50,000 from recent highs close to $65,000, analysts said.

“The collapse of two exchanges in Turkey sent a warning to many cryptocurrency traders who have gotten into crypto with unreputable companies,” Edward Moya, senior market analyst at Oanda, said.

Turkey’s cryptocurrency woes have been tied up with government efforts to crack down on the market.

Last week the country’s central bank backed a ban on crypto payments. It said using cryptocurrencies for payments could cause “non-recoverable losses” for the parties involved.

But many Turks have turned to cryptocurrencies as a hedge against inflation, which stood at 16.2% in March.

“People like the idea of cryptocurrencies because they’re unconstrained by the government,” Marshall Gittler, head of investment research at BDSwiss, said. “But that freedom comes with costs – it also means there’s no insurance and limited regulation.”

Philip Gradwell, chief economist at Chainalysis, said: “The troubles at Turkish exchanges illustrate the importance of clear and stable regulation for cryptocurrency.”

He added: “Investors in the USA and Europe are fortunate to have reputable cryptocurrency exchanges that operate within a strong regulatory framework, so the events in Turkey should not reduce their confidence.”

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Coinbase, the largest crypto exchange in the US, valued at $68 billion ahead of direct listing

coinbase mobile phone app
In this photo illustration, Bitcoin course’s graph is seen on the Coinbase cryptocurrency exchange application on February 12, 2018 in Paris, France. Founded in June of 2012, Coinbase is a digital currency wallet and platform where merchants and consumers can transact with new digital currencies like bitcoin, ethereum, and litecoin. The company is based in San Francisco, California generated in 2017 a record turnover of one billion dollars (about 810 million euros) with exceptional trading volumes, which made it the most downloaded mobile app on iOS last December.

  • Coinbase Global on Wednesday revealed that the company now has a valuation of $68 billion ahead of its planned direct listing, Reuters first reported.
  • If the filing is approved by regulators, it will mark a significant milestone for the digital currency ecosystem.
  • Coinbase CEO Brian Armstrong and other executives will host an “Ask me anything” session on Reddit through the end of the week.
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Coinbase Global, the largest cryptocurrency exchange in the US, on Wednesday revealed that the company now has a valuation of $68 billion ahead of its planned direct listing due in large part to recent private transactions, Reuters first reported.

The increased valuation signifies how much the company’s value has surged alongside the huge rally in the price of bitcoin, which hit record highs in March. The company in a regulatory filing that Reuters first reported said its shares in the private market traded at an average price of $343.58 per piece in the first quarter of 2021, a massive rise from $28.83 per piece in the third quarter of 2020.

If the filing is approved by regulators, it will mark a significant milestone for the digital currency ecosystem that has sometimes struggled to earn the confidence of more conservative regulators and investors. D.A. Davidson analysts in early March said the listing is crucial since it symbolizes the convergence of cryptocurrency and traditional finance.

D.A. Davidson analysts led by Gil Luria also added that Coinbase’s public debut will be the “Amazon moment for crypto,” as cryptocurrency will move from “a large curiosity to becoming the future path for much of the financial system.”

The San Francisco-based company, however, did not indicate if the US has authorized it to trade cryptocurrencies, which the government classifies as securities. Founded in 2012, Coinbase has registered roughly 114.9 million shares for its direct listing.

On Wednesday, Coinbase CEO and co-founder Brian Armstrong published a post on Reddit, asking people for comments and questions about his company, the valuation, its future financial performance, and cryptocurrencies as a whole. Armstrong and other executives will host an “Ask me anything” session on the social media platform through Friday at 10 pm ET.

Coinbase has 43 million users in more than 100 countries. Its competitors include Grayscale, Kraken, and Gemini, as well as broader consumer digital wallets like Square, PayPal, and Robinhood.

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Cryptocurrency inflows hit record high of $4.2 billion for the first quarter

Photo illustration of visual representations of digital cryptocurrencies
Photo illustration of visual representations of digital cryptocurrencies

  • Inflows to cryptocurrency investment products a new peak of $4.2 billion for the first quarter of 2021, according to CoinShares.

Inflows to cryptocurrency investment products reached a new high of $4.2 billion for the first quarter of 2021, according to data from digital assets investment firm CoinShares.

The new record broke the previous quarterly high of $3.9 billion in the fourth quarter of last year, CoinShares data show. Year to date, bitcoin has seen the highest inflows at $3.3 billion. Ethereum followed with $731 million.

Crypto assets under management, according to CoinShares, have also risen to $55.8 billion versus $37.6 billion at the end of 2020.

Bitcoin in March has staged another strong rally after an already impressive February, soaring to $61,742 on March 13. It has so far breached the $1 trillion market capitalization mark three times this year.

The uptrend builds on the token’s big wins in February, when it garnered support from heavyweight companies such as Tesla and Mastercard.

Bitcoin however has since consolidated its gains, partly in response to profit taking, but also as a reaction to India announcing it was mulling a law that would ban cryptocurrencies on Monday.

“Looking at the bigger picture, last weekend’s break above its previous high was a(nother) positive sign in the long run-up of [bitcoin] and a confirmation of the current uptrend,” Julius de Kempenaer, senior technical analyst at StockCharts.com told Insider.

He also said he sees the $52,000-level as the support and the $61,700-level as the resistance.

“The rhythm of higher highs and higher lows that is tracing out since the start of this year is still intact… As long as this support level and the rising trend line hold up, things continue to look good for [bitcoin].”

Inflows from retail traders have overtaken institutional investment this quarter, according to data published by JPMorgan strategists, proving the rising levels of interest from retail traders, most of whom are younger, more aggressive, and use mobile trading apps such as Robinhood.

In the same period, institutions bought 173,000 bitcoins, lower than the nearly 307,000 bought last quarter, compared to the 187,000 bitcoins bought by retail investors. JPMorgan tracked bitcoin futures, fund flows, and company announcements to gather this data.

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Binance, the world’s largest crypto exchange, appoints former US senator Max Baucus as government liaison

Crypto application.

Binance Holdings on Thursday announced it has appointed Maxwell Baucus, a former Senator for Montana, as its policy and government-relations adviser.

The 79-year-old Democrat will be providing high-level guidance to the world’s largest cryptocurrency exchange, bringing with him “a wealth of political and regulatory expertise” after more than 30 years in American politics, including a seven-year run as Chairman of the Senate Finance Committee, the statement said.

Baucus, who also served as US ambassador to China from 2014 to 2017, will “play a key role consulting and liaising with US regulators and authorities” on policies that will affect and impact the cryptocurrency ecosystem, the statement added.

“His experience at the highest levels of government and intimate understanding of global regulation brings exceptional value to Binance and enhances our already strong compliance and policy team,” Binance CEO Changpeng Zhao said.

The Malta-based company currently does not serve US residents. In 2019, it set up a San Francisco-based bureau in the hopes of addressing that.

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22% of Goldman Sachs clients expect bitcoin to exceed $100,000 in 12 months

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Bitcoin has fallen sharply from all-time highs this week

  • Goldman Sachs in a recent survey revealed that 22% of its clients expect bitcoin’s price to hit at least $100,000 in the next 12 months. 
  • 54% predict the price of the cryptocurrency will hover between $40,000 to $100,000 in the same period. 
  • Published on March 3, the investment bank surveyed 280 respondents on their exposure, perspective, and outlook of digital assets. 
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Goldman Sachs said that 22% of its clients expect the price of bitcoin to hit at least $100,000 in the next 12 months, according to a survey from the investment bank seen by Coinbase. Meanwhile, 54% of the respondents predict the price of the cryptocurrency will hover at $40,000-$100,000 in the same period. 

Published on March 3, the investment bank surveyed 280 respondents on their exposure, perspective, and outlook of digital assets. The same survey also showed that 40% have exposure to cryptocurrencies.

57% believe that positive news such as institutional investing drove the price higher. In February, major companies threw their weight behind bitcoin, including Tesla and MasterCard, while the token saw renewed backing from MicroStrategy.

Looking ahead, 34% of the respondents believe the greatest hurdle in allocating money to digital assets is regulation, while 24% see the lack of well-regulated and investible assets as the greatest obstacle.

US treasury Secretary Janet Yellen has been vocal about her criticism of bitcoin, saying it has been as a tool to “launder the profits of online drug traffickers.” The former Federal Reserve chief has also cast doubt on the utility of bitcoin as a form of payment.

On March 1, it was reported that Goldman Sachs Group restarted its cryptocurrency trading desk amid a boom in bitcoin. The desk, Reuters reported, will be part of the bank’s efforts to keep up with the rapidly evolving digital assets sector. 

Bitcoin in February cracked the $1 trillion dollar market capitalization threshold and jumped to $58,640, its highest record to date. Bitcoin has risen 63% year-to-date.

Bitcoin traded lower by 3% on Friday, at $47,516.

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Trading of first bitcoin ETF slows in Canada after a roaring debut for the groundbreaking fund

A visual representation of the digital Cryptocurrency, Bitcoin is on display in front of the Bitcoin course's graph
A visual representation of the digital Cryptocurrency, Bitcoin is on display in front of the Bitcoin course’s graph

  • The Purpose Bitcoin ETF during its first two days of trading saw nearly $400 million of shares change hands. 
  • But on Tuesday, Bloomberg reported the amount slumped to just $17 million. 
  • Buzz has also quieted down around Evolve Fund Group’s Bitcoin ETF, which launched a day after BTCC. 
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Just a few weeks after the first exchange-traded fund in North America made a roaring debut, the excitement looks to be waning. 

The Purpose Bitcoin ETF, which trades under the ticker BTCC, on Tuesday saw $17 million shares change hands, according to Bloomberg. That is compared to its first two days of trading, which saw $400 million of shares traded. 

In total, the long-awaited ETF has attracted over $500 million in assets. However, the recent steep decline may suggest the fluctuating levels of interest in bitcoin, which many view as a hedge against inflation.

“The initial surge in interest was evidence of some combination of pent-up demand, investors switching from other means of getting bitcoin exposure, and the fact that bitcoin’s price was notching new highs as the Purpose ETF began trading,” Ben Johnson, Morningstar’s global director of ETF research, told Bloomberg. “Longer term, I expect volumes will be correlated with bitcoin’s price.”

Buzz has quieted down around as well for Evolve Fund Group’s Bitcoin ETF (ticker EBIT), which launched a day after BTCC. Around $3 million shares traded on Tuesday, far less than the $15 million right after its release, according to Bloomberg.

Bitcoin had an epic run in February, touching the $1 trillion market capitalization mark and breaching the $58,000-level.

“This is a great time to be in crypto. We are seeing genuine adoption of this amazing technology, said Bitfinex CTO Paolo Ardoino. “If you look back at 2017 the capacity of the network was nowhere near what it is now.”

In the US, CBOE Global Markets filed with the Securities and Exchange Commission on Monday seeking approval to list shares of VanEck’s bitcoin ETF. It is among the latest attempt to launch a bitcoin ETF in the US.

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CBOE files for approval to list the first US bitcoin ETF

Bitcoin
Bitcoin.

CBOE Global Markets has filed a request with the US Securities and Exchange Commission seeking approval to list shares of asset manager VanEck’s bitcoin exchange-traded fund, in the latest attempt to launch a bitcoin ETF in the US. 

CBOE on Monday filed a Form 19b-4 seeking permission to list and trade shares of the VanEck Bitcoin Trust. The filing builds on Van Eck’s earlier S-1 filing from December 30. VanEck also filed a proposal in September 2019, which it withdrew.

The form signifies the beginning of the formal review process, which could result in the first US bitcoin ETF. If approved, VanEck’s fund will also be CBOE’s first cryptocurrency product since the exchange holding company halted offering bitcoin futures in February 2019. CBOE in December 2017 was the first regulated financial institution to offer bitcoin futures contracts in the US.

Once the regulator announces that it is reviewing the application, the first 45-day timeline begins, in which the SEC is mandated to either approve or reject the application. It can also extend the review period for up to 240 days.

The SEC in the past has rejected numerous applications for bitcoin ETFs. The CBOE in its filing highlighted the advantages of a bitcoin fund, especially for retail traders.

“Exposure to bitcoin through an ETP [exchange-traded product] also presents certain advantages for retail investors compared to buying spot bitcoin directly. The most notable advantage is the use of the Custodian to custody the Trust’s bitcoin assets.” It did not disclose the name of the custodian.

In North America, two bitcoin ETFs have been approved by Canada, with The Purpose Bitcoin ETF beginning trading last month.

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Bitcoin could be like the FAANG stocks for the next decade – but it will take more than the buy-in of the retail army to get it there, an investment chief says

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“It’s going to require institutional capital.”

  • Bitcoin could become the next “great tech stock” of the coming decade, an investment chief said.
  • But only retail traders buying into the coin won’t be enough, according to Skybridge’s Brett Messing.
  • “It’s going to require institutional capital,” he said. “Retail can’t get it there.” 
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Bitcoin could become what Tesla, Facebook, and Google were for the last decade, according to Brett Messing, partner and chief operating officer at Skybridge Capital.

The investment chief explained that just like three of those tech stocks were some forms of networks, bitcoin too is a monetary network. 

“Bitcoin is actually going to be the great tech stock over the next decade, in addition to being digital gold,” Messing said at a virtual roundtable discussion this week.

According to him, there are two potential outcomes for the digital token in the near future: either it could remain a niche asset and trade between $5,000 and $50,000, or it could grow to be a “real asset” that could easily hit as much as $500,000. 

But in order for it to get to even a quarter of that level, “it’s going to require institutional capital,” he said. “Retail can’t get it there.” 

Bitcoin was last trading at $$32,129 on Friday, almost $10,000 lower than its record high of $41,000 earlier this month.

“It’s now a $600 billion asset class. I think it is arguably beyond the point at which it can be manipulated, and I think as it matures, that will become increasingly the case.”

SkyBridge Capital, run by hedge fund manager Anthony Scaramucci, invested $25 million into a bitcoin-focused fund that went live on January 4.  The “SkyBridge Bitcoin Fund” was launched so that the fund got in before bitcoin’s price soars even higher.

The firm’s flagship fund is a $7 billion Registered Investment Advisor (RIA), but for the purpose of managing the bitcoin fund, it isn’t acting as one. “By doing that, we don’t have to satisfy what’s called a custody rule under the Advisers Act,” Messing said, referring to the issue of custody service by hedge funds who hold large amounts of cryptocurrency.

But he expects Gary Gensler, President Joe Biden’s pick to run the US SEC, to be “very bitcoin-friendly,” and that one of his first acts will be to provide clarity on the custody role.

In terms of risks to bitcoin, government regulation is by far the biggest. Just like it is for technology companies.

Messing said: “If you talk to… what is Mark Zuckerberg worried about? What is Jeff Bezos worried about? The thing they worry about the most is the government, and that’s the first concern.”

A breakdown in infrastructure is another point of concern since bitcoin makes big moves everyday on exchanges that could falter.

Lastly, there could be a greater risk that no one is prepared for.

“We’re trying to be crypto-hip, but whoever knew that we’d be sitting here in a pandemic on Zoom?” said Messing. “No one predicted this. I imagine the risk for Bitcoin is one that none of us are going to identify.”

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