Today is a record moment in US history. The total national debt has surpassed $22 trillion for the first time ever.
The runaway mountain of debt is a terrifying reminder of how fragile the fiat monetary system is. If you want to watch it pile up in real time, visit the US debt clock. It’s a sobering vision of a system out of control.
This is why bitcoin matters. Bitcoin, with its fixed supply and anti-inflationary policy, is an antidote in waiting.
US Debt Climbs by $1 Trillion in a Year
The national debt jumped $30 billion in the last month alone. In total, the US racked up more than $1 trillion worth of debt in the last year.
The debt has spiraled since Donald Trump introduced his $1.5 billion tax cut plan last year. However, we should point out that Obama was a much worse offender. The national debt doubled under his presidency.
The national debt doubled under Obama’s presidency. Source: debtconsolidation.com
This isn’t the fault of any one president. It’s the fault of an economic system that is slowly failing us.
Although many will maintain the economy is booming, this is a car crash coming in slow-motion. As Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities explained to CNBC:
“Even if you think that public debt just doesn’t matter to economic outcomes, the thing you have to admit is that when we hit a downturn, governments are less likely to take significant steps if the debt is as high as ours is now.”
This is Why Bitcoin Matters
When the next recession comes (and it will), the US will find it much more difficult to pay back the debt. And they’re unlikely to support struggling institutions like they did in the wake of the 2008 crisis.
Instead, they’ll be forced to turn to the Federal Reserve to print more dollars.
In effect, this increases inflation and pushes down the purchasing power of your money. In the worst cases, it can lead to hyperinflation as we’ve seen in Venezuela.
Bitcoin is the alternative monetary system. It’s the antithesis of fiat money like the dollar.
Unlike fiat, it has a fixed supply so central banks can’t endlessly print more. And its monetary policy is not controlled or manipulated by any one entity.
When the debt bubble finally pops, people will flock to an alternative. ShapeShift CEO Erik Vorhees has predicted that the growing national debt will inevitably lead to a crypto boom.
For now, the national debt continues to build. As Judd Gregg and Edward Rendell of Campaign to Fix the Debt conclude:
“[This] is another sad reminder of the inexcusable tab our nation’s leaders continue to run up and will leave for the next generation.”
Featured Image from Shutterstock
Source: US National Debt Hits Terrifying $22 Trillion. This is Why Bitcoin Matters.
The company announced Monday that it has partnered with New Zealand-based blockchain data and research firm Brave New Coin to offer information on the two new indices starting Feb. 25.
The Bitcoin Liquid Index (BLX) and the Ethereum Liquid Index (ELX) will offer “real-time” information on the Nasdaq Global Index Data ServiceSM (GIDS), its consolidated data feed, Nasdaq said.
Specifically, the BLX and ELX indices will offer a “real-time spot or reference rate” for the price of 1 bitcoin (BTC) and 1 ethereum (ETH) respectively, quoted in USD, and “based on the most liquid ends of their markets.” The data will be refreshed at a frequency of thirty seconds.
Nasdaq said both the indices are calculated using a methodology that has been “independently audited” against the International Organisation of Securities Commissions (IOSCO) principles.
“The BLX is one of the most widely-referenced BTC indices among crypto traders and has been calculated back to 2010. Likewise, the ELX has been calculated back to 2014,” the exchange operator added.
Nasdaq has been very active in the crypto and blockchain space, including investors in industry startups. Last month, the firm led a $20 million Series-B funding round of enterprise blockchain startup Symbiont.
Back in November, it was revealed that Nasdaq has partnered with investment management firm VanEck to “bring a regulated crypto 2.0 futures-type contract” to the market in 2019, though no additional details have been revealed since then.
Nasdaq image via Shutterstock
Source: Nasdaq to Add Bitcoin and Ethereum Indices to Global Data Service
Amidst the worst bear market in the 10-year history of the crypto market, Bitcoin traders have pivoted from long-term strategies to derivatives and options.
According to a Bloomberg report, individual Bitcoin traders, as well as many initial coin offering (ICO) projects and investment firms, are engaging in over-the-counter (OTC) derivatives trading.
Hundreds of Millions of Dollars in Bitcoin Derivatives
Outside of the crypto exchange market, investment firms like QCP have actively been trading derivatives with other entities within the digital asset sector.
The report revealed that QCP has initiated several multi-month call options with counterparties such as ICOs and miners.
Derivatives deal in the OTC market would work like this: if an investment firm projects the Bitcoin price to go up in the near-term, it strikes a deal with an entity holding a certain amount of Bitcoin.
If the price of Bitcoin hits the target of the investment firm, it will be able to purchase the amount of Bitcoin listed in the options contract based on the market price of when the deal was established.
However, if the price of Bitcoin falls, the counterparty gets to take a premium plus the original amount of BTC that was initially offered.
Last month, Bloomberg reported that QCP established a deal with an ICO project involving 250 BTC worth $900,000 when the price of BTC was $3,625.
Chart via TradingView
QCP and the counterparty agreed on a strike price of $4,200 and if BTC increases above the $4,200 mark in the upcoming months, the investment firm will be able to purchase 250 BTC at $3,625. But, if BTC falls, it will have to pay the ICO project $66,250.
ICO firms, mining companies, and individual investors in the cryptocurrency market are actively engaging in such deals due to the lack of volatility of cryptocurrencies and the massive 80 percent decline the asset class has suffered since January 2018.
Alameda Research CEO Sam Bankman-Fried said that investors are trying to acquire as much cash as possible during the bear market to acquire digital assets as they fall in value.
“Anyone sitting on a stockpile of tokens saw in the bear market of 2018 that their business is at the mercy of crypto prices. It can be crucial for those players’ survival to have some cash if digital asset prices go down,” Bankman-Fried said.
As of February, around $500 million is estimated to be involved in the OTC Bitcoin derivatives market.
Ultimate Sign of Crypto Winter
Investors have become desperate to acquire more cash in the bear market, foreseeing a further drop from the current price range.
Optimistic deals such as Morgan Creek’s recent $40 million raise from two public pension funds, an insurance company, a university endowment, and a hospital have improved the sentiment of the market.
But, investors are still uncertain about the near-term of the cryptocurrency market and generally do not expect an accumulation to occur prior to the latter half of 2019.
“I’ve been too optimistic about the pace of institutional adoption in the past. It’s coming, but I can’t estimate which quarter (Whether that’s this year or 2022) that we’ll see a big spike. As a humble guess, something like Q3 2019,” Paul said earlier this month.
The third and fourth quarter of 2019 posses a variety of catalysts and fundamental factors that could lead the cryptocurrency market to increase substantially in valuation.
Historically, BTC has tended to increase in price a year before a block halvening. The next block halvening of BTC is estimated to occur in June 2020. Hence, traders expect BTC to begin recovering by around May of this year.
Major financial institutions like Fidelity, Nasdaq, and ICE are expected to introduce cryptocurrency investment vehicles around the same time frame.
However, until that point, the sentiment of investors in the cryptocurrency market will likely remain gloomy, which could fuel the activity in the OTC derivatives market.
Click here for a real-time bitcoin price chart.
Featured Image from Shutterstock. Price Charts from TradingView.
Source: Bitcoin Traders Turn to Derivatives in Droves: The Ultimate Sign of Crypto Winter?
Source: The Daily: Bittrex Opens OTC Desk, Bakkt Acquires Futures Team The Daily
In today’s edition of The Daily, we cover a number of stories that show how the cryptocurrency ecosystem is evolving to become more inviting to institutional investors. Bittrex exchange opens an OTC trading desk, Bakkt “acquihires” a futures compliance team, and Swiss investment bank Vontobel launches a custody solution.
Also Read: Bitwise Asset Management Files With SEC for New Bitcoin ETF
Bittrex Opens OTC Desk
U.S.-based digital asset exchange Bittrex has announced that it has opened an over-the-counter (OTC) desk, which includes trading on nearly all 200 tokens available on the platform. It will offer approved customers with reduced price risk, rapid trade execution and guaranteed pricing for large trades, which are typically $250,000 or greater. The new OTC desk will also accept both cryptocurrency and USD wire transfers for deposits.
“We’re excited to offer this new, game-changing trading option for our customers,” said Bittrex CEO Bill Shihara. “With one of the most extensive selections of digital assets of any OTC desk available, this offering will be another way for Bittrex to further advance adoption of blockchain technology worldwide, while also providing our customers with price certainty and a fast and easy way to trade large blocks of digital assets.”
Bakkt Acquires Futures Team
Bakkt, the digital asset subsidiary of Intercontinental Exchange (NYSE: ICE) which recently raised $182.5 million, has completed its first acquisition. The company announced it entered into an agreement to acquire certain valuable assets of Rosenthal Collins Group (RCG), an independent futures commission merchant.
The goal of the deal is to purchase capabilities needed for developing the bitcoin futures platform. The transaction is expect to close in February and will include the members of the RCG team joining Bakkt. It is said to enhance the company’s risk management and treasury operations with both systems and expertise, as well as to contribute to its regulatory, AML/KYC and customer service operations.
“This acquisition underlines the fact we’re not standing still as we await regulatory approval by the CFTC for the launch of regulated trading in our crypto markets,” stated Bakkt CEO Kelly Loeffle. “Our mission requires significant investment in technology to establish an innovative platform, as well as financial market expertise to deliver the most trusted fintech ecosystem for digital assets.”
Vontobel Launches Crypto Vault
Investment bank Vontobel, the third-largest provider of B2B custody and execution services in Switzerland, has launched a ‘Digital Asset Vault’. The service allows Vontobel’s clients, which include over 100 banks and wealth managers, to issue instructions for the purchase, custody and transfer of digital assets integrated within their familiar banking infrastructure and regulated environment. Financial intermediaries could also use the service to offer their own clients a solution for digital assets.
“Digital Asset Vault represents the logical next step in the development of our range of services for digital assets. With our innovative strength and experience, we have thus closed the gap between existing and digital assets. By incorporating digital assets into our own banking infrastructure, we have also become the first provider to already meet the high standards required by financial intermediaries and their regulators,” stated Roger Studer, head of Vontobel Investment Banking.
What do you think about today’s news tidbits? Share your thoughts in the comments section below.
Images courtesy of Shutterstock.
Verify and track bitcoin cash transactions on our BCH Block Explorer, the best of its kind anywhere in the world. Also, keep up with your holdings, BCH and other coins, on our market charts at Satoshi’s Pulse, another original and free service from Bitcoin.com.
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Ten years after the global banking crisis, the Swiss financial industry faces its next crucial challenge.
Once again, it must fundamentally renew itself, and perhaps even selectively reinvent itself. The driving force behind this new evolution is the growing digitalisation of the banking sector.
The stakes are high for the established players in the field, who ultimately fight for their own survival. Small agile fintech companies, as well as large innovative tech giants, are lurking ominously, ready to jump at the opportunity to serve the digital needs of a new generation of consumers with forward-looking digital solutions.
The issue of digitalisation is of crucial significance to Switzerland, and its implications for one of the country’s most important – if not the most important – economic sector are not to be underestimated.
In light of this, the Swiss Finance Institute has partnered with zeb to examine, through a representative study, the current status of digitalisation within the Swiss banking sector. The main objective of the study is to determine the level of digital maturity of Swiss banks compared with the rest of Europe.
Overview of bank survey’s participant structure
Swiss banks are well-positioned, however it is too early to claim victory
The study findings show that the financial sector has recognized that it risks being relegated to second place by new market players if it does not combat them with effective countermeasures and does not consider digitalisation as an opportunity to be seized upon.
The digitalisation of the financial sector is turning out to be a truly Herculean task for individual bank institutions. Although all market players grapple with the topic of digital banking, they are following different solution approaches and tackling individual challenges.
This much can be said: in comparison with the rest of Europe, Swiss banks are well-positioned in terms of knowledge, however they still lag behind in terms of implementing those insights into concrete measures.
The specific characteristics of the Swiss banking landscape, including the importance of private banking as well as the relatively small size of the Swiss market on the European scale, explain the fact that the digitalisation of the banking business is tackled at a slower, more collected pace.
In light of these and other specificities of the Swiss banking sector, the study results can be summarized around three essential findings
3 Essential Findings from the Study
In the process of digitalization, Swiss banks follow an intelligent “fast follower” approach.
As mentioned above, Swiss banks in general are strategically well-positioned to successfully master the upcoming digitalisation of their business.
The study clearly shows that. The greatest threat lies in the infamous “Kodak effect.” Ultimately, companies need to pick the right time to launch a digital offering whose scope and outcome are defined by their own customers’ needs.
Like the former American leader in conventional photography, Swiss banks have also recognized early on the disruptive potential of the digitalisation of their business activities.
Until now, however, due to a lack of strategic necessity and to relatively weak competition, Swiss banks have failed to uncompromisingly implement and launch their digital concepts.
Hopefully, the Swiss banking sector, unlike Kodak, will not miss the right moment to implement its existing strategies and concepts and to catch up with its leading international competitors as well as with new contenders.
Banks need to actively embark their employees on the journey towards digitalisation
The digitalisation of the financial sector begins in people’s minds, as does the corresponding fundamental change of the whole industry.
Only when banks succeed in preparing and motivating their employees can digitalisation be successful for all involved. The anxieties of many bank employees concerning the digital future remain a huge obstacle.
Concerns about job security are tangible and stand in the way of constructive debate on the topic. The ball is not in the court of the employees as much as in the court of management. A digital business model certainly requires employees to gain new skills and competencies. Job requirements will of course change.
However, it would be wrong to assume that the human factor will become less important in a digital world. On the contrary, the capacity to innovate and be creative cannot be outsourced to machines.
The same is true of individual, customized client advice in the segment of private banking. It is apparent, however, that many banks suffer from a lack of digital leadership.
Banks need prominent, assertive leaders, who will be entrusted with the task of implementing digitalisation and will be widely supported in the day-to-day business.
Individual figureheads are still considered as “eccentrics”, although it is precisely these creative minds who have the power to move things ahead and to spark enthusiasm within their company’s own ranks.
A strict separation of IT and business expertise is not conducive to achieving objectives
Traditionally, banks are hierarchical structures and follow well-established rules that leave employees very little room for maneuver within the narrow scope of their areas of responsibility.
Consequently, interdepartmental projects often fail due to disputes over respective areas of responsibility or particular interests. This issue could be tackled by implementing an agile organizational model, made of small flexible teams who could, independently of conventional structures, think and act cross-functionally.
IT and business experts, however, still often work separately on the topic of digitalisation, although a dynamic network encompassing and combining the expertise of all areas involved could deploy much more creative power.
While many bank managers express their enthusiasm at the innovative capacity that is the hallmark of tech companies, for the time being no Swiss bank has made the decision to move away from the traditional top-down organizational model to a more modern network organization.
In summary, it should be noted that the focus of the Swiss banking sector should not be as much on digitalising the banking business, as on developing a digital Swiss banking, which will bring the unique features of the Swiss banking system in line with the unavoidable digital evolution.
DPI of Swiss vs. European banks
DPI of Swiss vs. European banksThe “Digital Pulse Check 3.0 – Switzerland vs. Europe” report is available online: www.sfi.ch/DigitalPulseCheckEN
Featured image credit: Edited from Freepik here, here and here
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Source: Digitalisation in the Banking Sector – Switzerland 1, Europe 0 ?