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NYSE Owner Buys Crypto Custodian in Latest Push to Offer Bitcoin

NYSE Owner Buys Crypto Custodian in Latest Push to Offer Bitcoin

Intercontinental Exchange (ICE), which owns the New York Stock Exchange, made a splash last August with big plans to get into the Bitcoin business. Those ambitions, however, have been stymied by regulatory delays, leading ICE on Monday to announce a series of measures to jumpstart its efforts.
Most notably, ICE has acquired a crypto custodian service called Digital Asset Custody Company, and arranged for its cryptocurrency subsidiary—known as Bakkt—to become a registered trust with the state of New York.
These measures are intended to clear the way for ICE to offer Bitcoin futures contracts that settle in Bitcoin rather than cash. Such contracts have yet to materialize, in large part because the Commodity Futures Trading Commission objected to an earlier plan by Bakkt to “warehouse” physical Bitcoin.

If New York grants Bakkt’s application to operate as a trust, ICE will have the status of a “qualified custodian,” which will remove legal obstacles to holding cryptocurrency assets tied to futures contracts.
According to Kelly Loeffler, CEO of Bakkt, the company is not changing strategy but is instead clarifying its role in the larger world of crypto trading.
“There is no pivot. From the ground up what ICE has been building for two years is the safest version of a custody solution for digital assets,” she told Fortune.
Adam White, Bakkt’s chief operating officer, added that the company’s focus has not been directed at building an exchange as some have assumed. Instead, he says Bakkt’s technology efforts have been directed at security measures to safeguard customers’ assets.

White also claims that Bakkt’s technical and legal safeguards will persuade large institutional investors to add cryptocurrency to their portfolios. For practical purposes, the company hopes the investors will use other ICE services—namely its futures exchange and its clearinghouse—alongside its custody offerings in order to purchase crypto.
Bakkt, which has raised $182.5 million from ICE and strategic investors like Microsoft’s venture arm and Boston Consulting Group, did not disclose how much it paid for New Jersey-based Digital Asset Custody Company, but stated it would retain the CEO and all of its employees.
ICE’s emphasis on custody comes at a time when a number of established cryptocurrency companies, including Coinbase and Circle, are offering similar services to safeguard customer assets. It’s unclear if the offerings will persuade many institutional investors, including pension funds, to take the leap into crypto or which service they would select for custody.

White claims ICE’s familiar brand, combined with the ability to buy futures contracts that settle in Bitcoin, will spur institutional interest in cryptocurrency. He added that, at a time when the vast majority of Bitcoin trading volume is reportedly faked, the futures contracts will also serve as a signal into Bitcoin’s true price.
In recent weeks, Bitcoin has been consistently trading above $5,000, which some see as a signal the market is coming out of a long-running “crypto winter” that followed the bubble of 2017.
While ICE’s custody plans could spur increased trading in the crypto markets, the company in the meantime must wait for New York regulators to approve its application to become a trust, a process that could take months.
Despite the delays, ICE is pursuing the grander ambitions it announced last summer. Specifically, Monday’s announcement reiterated an earlier pledge to one day use blockchain to “enable faster, less costly, and more efficient payments for companies like Starbucks.”

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Bitcoin Beats Other Cryptos in ‘Smarter’ Bull Market, Says Billionaire Investor

Bitcoin Beats Other Cryptos in ‘Smarter’ Bull Market, Says Billionaire Investor

Bitcoin Beats Other Cryptos in ‘Smarter’ Bull Market, Says Billionaire InvestorBitcoin’s dominance will only be more pronounced in this bull market and that’ll show in its value, according to Mike Novogratz. | Source: ShutterstockBy CCN: Mike Novogratz, the billionaire CEO of Galaxy Capital and a former hedge fund manager at Fortress Investment Group, believes alternative cryptocurrencies, or altcoins, will be outperformed by bitcoin in the bull market.Not this time. Market getting smarter. $btc will outperform.— Michael Novogratz (@novogratz) May 19, 2019The statement of Novogratz comes after the bitcoin price risen by more than 115 percent year-to-date against the U.S. dollar, leading the crypto market to add $124 billion to its valuation.Will bitcoin continue to outperform altcoins?Historically, altcoins have relied on the price trend of bitcoin and have rarely demonstrated independent price movements in extended time frames.Altcoins typically surge in value when the bitcoin price shows stability at a tight price range, leaving investors to take high-risk and high-return options over the dominant cryptocurrency.The optimism towards bitcoin, despite the emergence of sophisticated altcoins, is well founded due to the involvement of major financial institutions in the likes of Fidelity and TD Ameritrade building infrastructure on top of bitcoin.Fidelity and ICE, the parent company of the New York Stock Exchange, are initially launching custodial services for bitcoin, targeting institutional investors.According to TD Ameritrade’s executive vice president Steven Quirk, tens of thousands of clients at the brokerage already trade crypto assets in some capacity.But, traders suggest that if the sentiment around the crypto market remains overwhelmingly positive, investors will eventually explore alternative opportunities for high-return trades, which then may fuel a rally for altcoins.One cryptocurrency trader said that bitcoin is likely to climb further throughout 2019, triggering a healthy market for altcoins:The rest of this year will be characterized by rapid BTC advances, healthy corrections and periods of sideways price action, when altcoins will fly. Put that nonsense rhetoric about waiting for capitulation and still not making our bear market lows away. Wrong cycle.Full on degen altcoin season still on track for June. Next few weeks, as BTC finds a range, we’ll continue to see the popular altcoins bounce back 1st. In June, all altcoins across the board will bounce back hard. More disbelief on its way.The concern of some investors like Novogratz on the prospect of a booming market for altcoins is that many retail investors were hurt in the 2017 bull market taking high-risk trades, trading against stable assets like bitcoin.As the market matures and as investors in the market become smarter, Novogratz indicated that the appetite for altcoins could decline.The crypto market has added more than $100 billion to its valuation year-to-date (source: coinmarketcap.com)Similarly, Jeff Sprecher, the chairman of the New York Stock Exchange, said in November 2018:Somehow bitcoin has lived in a swamp and survived. There are thousands of other tokens that you could argue are better but yet bitcoin continues to survive, thrive and attract attention.At the time, Sprecher emphasized that Bakkt, a futures market operator created by NYSE’s parent company ICE, will focus on building a regulated infrastructure for bitcoin first ahead of other assets.Sentiment is generally positiveOn May 17, as CCN reported, the bitcoin price plummeted by 18 percent within hours following an unexpected 5,000 BTC sell order on Bitstamp that led prices of bitcoin and ethereum to crash on BitMEX.The market absorbed the abrupt decline in the bitcoin price fairly well, indicating that the confidence in the near-term price trend of crypto assets remains strong.While investors have cautioned that bitcoin has shown oversold conditions in recent weeks as it surpassed key resistance levels, the momentum of the asset could prevent it facing a large correction some expect would occur in the near-term. About The AuthorJoseph YoungHong Kong-Based Finance and Cryptocurrency Analyst. Contributing regularly to CCN and Hacked. Providing unique insights into the crypto and fintech space since 2012.This article was edited by Samburaj Das.
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Bitcoin’s price has pumped beyond its ‘intrinsic value,’ JPMorgan says

Bitcoin’s price has pumped beyond its ‘intrinsic value,’ JPMorgan says

Banking behemoth JP Morgan Chase & Co. has taken another shot at Bitcoin, BTC claiming the cryptocurrency‘s latest rally has pushed its price beyond its “intrinsic value.”
“Over the past few days, the actual price has moved sharply over marginal cost,” JPMorgan analysts wrote in a note obtained by Bloomberg. “This divergence between actual and intrinsic values carries some echoes of the spike higher in late 2017, and at the time this divergence was resolved mostly by a reduction in actual prices.”

To come to this conclusion, the JP Morgan team treated Bitcoin as a commodity, calculating its “cost of production” based on a number of factors, including estimated computational power, electricity expense, and hardware energy efficiency.
“Defining an intrinsic or fair value for any cryptocurrency is clearly challenging,” the analysts continued. “Indeed, views range from some researchers arguing that it has no fundamental value, to others estimating fair values well in excess of current prices.”

Bitcoin‘s price briefly dropped from almost $8,000 to $7,050 on May 17, after $250 million of long positions got liquidated on BitMEX. Since then, BTC has surged back to $7,893 at the time of writing.
By now, JP Morgan has made a habit out of thrashing Bitcoin and cryptocurrencies. Back in 2017, CEO Jamie Dimon called the currency a “fraud” – a statement he later softened, suggesting he simply doesn’t care about Bitcoin. Since then, JP Morgan launched its own blockchain-based “digital currency,” which was neither a cryptocurrency, nor a stablecoin.

Published May 20, 2019 — 11:54 UTC

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