Everyone in the cryptocurrency ecosystem is talking about the same thing: the launch of Bitcoin futures ETFs (Common Investment Funds) that caused the best-known digital currency to be currently trading above $ 60,000 when it was only a month could be had for just over $ 40,000.
The first to launch that alternative was the “ ProShares Bitcoin Strategy ETF ” and, as Bloomberg explains , it is already close to the limit on the number of contracts it can issue in the month of October. When that news came out, he had already sold 1,900 contracts when the monthly limit imposed by the CME (Chicago Mercantile Exchange) is 2,000. By November there are already 1,400 signed contracts and the total maximum is 5,000.
It bodes well for the launch of the second Bitcoin futures ETF , which debuted last Friday. It is the “Valkyrie Bitcoin Strategy Exchange-Traded Fund” And little by little we will see that others will join the offer.
Someone who was already exposed to Bitcoin and did not need a Common Investment Fund to do so was Tesla. In its third quarter earnings report , it reported that it did not buy or sell digital assets during that period, which implies that the company has US $ 1.6 billion of that currency.
Let us remember that in February he had bought US $ 1,500 million in that currency . In that same note to its investors, the automotive company noted an “impairment” (accounting loss) of US $ 51 million “related to Bitcoin.” One question I ask myself is why would it have registered a red number if Bitcoin rose in price in that period.
For his part, Elon Musk , the founder and CEO of Tesla, tweeted that he only owns Bitcoin, Ethereum and DogeCoin, which he bought “out of curiosity” and recommended not investing all your capital in crypto, adding that “the true value lies in building products and provide services to human beings, not in money in any way “
But investing in Bitcoin futures mutual funds or buying the digital currency outright is not the only way an institutional investor can gain exposure to cryptocurrencies. There are those who prefer to invest in companies directly related to the ecosystem.
This is the case, for example, of FTX, an exchange based in the Bahamas, which raised more than US $ 420 million in an investment round that valued its company at US $ 5 billion. That same cryptocurrency exchange had already achieved a total of US $ 900 million in July. Investors include Argentina’s famous friendly fund BlackRock.
They are clear market signals that reflect strong support for the future of the decentralized finance ecosystem.
But it is not only companies that are interested in the crypto world. WalMart , the famous supermarket chain in the United States, opened 200 Bitcoin ATMs in its branches. It did so in association with CoinStar, the supplier of the machinery, and with the crypto exchange CoinMe. It is only a pilot test, but the plan is to open 8,000 ATMs throughout the country and according to Coin ATM Radar there are already more than 25,000 ATMs installed in service stations and merchandise sales outlets, of which CoinStar operates more than 4,000 .
But not only the Walmart case marks the growth in retail demand that crypto and especially Bitcoin are having, yesterday we learned that Mastercard is preparing to announce that all banks and businesses associated with its network will be able in the short term to integrate cryptocurrencies to their products, which would include Bitcoin, crypto-income products, corporate loyalty programs, and so on.
Beyond the growth that Bitcoin has had, both in its institutional and retail acceptance, and beyond the increase in its price, its volatility does not seem to fall. This was highlighted by John Paul Koning in a tweet where he shows a graph presented by “buybitcoinworldwide.com” in which it can be observed that the price rises and falls measured by the standard deviation do not seem to loosen over time.
There is a well-known hypothesis among bitcoiners that, supposedly, the higher the price and use of this digital currency, the lower its price volatility, which in turn would generate a greater demand for transactional use, thus generating a virtuous circle. . Well, it seems that reality does not accompany them and they must conform as a volatile asset. I wonder what would happen if Bitcoin were not volatile, how much of its activity would disappear?
It was precisely to eliminate volatility in the crypto world that stablecoins were created, which, as the reader knows, are tokens that try to follow the price of an asset such as the dollar. The star, at least for its use in the ecosystem, is undoubtedly Tether, the cryptocurrency that has more than 50% of the market , according to coinmarketcap. His bad reputation is known and even the Financial Times dedicated a full note to him last week describing the scandal in which he was involved with the exchange Celsius, for having lent him tokens using Bitcoin as collateral and that we described from this column very recently. weather.
It was simply a non-backed issuance of dollars and it may be a case that helps us understand how the banking system actually works. Many believe that banks, when they make loans, what they lend are previously received deposits, but anyone who understands a little accounting knows that this is materially impossible.
Tether is nothing more than the registry of the debt that its issuer has with the holder of that token and, therefore, to make a loan, it must necessarily issue a new Tether because lending an existing Tether would imply the need to get the token from another fork. The only difference with the traditional banking system is that the registry in which the debt is recorded is a decentralized blockchain, which in turn has its pros and cons.
It is the same thing that Facebook intends to do when it launches its own stablecoin called Diem but which, as readers of this column know, is a project that is long delayed especially due to regulators. It is for this reason that the social network would be launching its virtual wallet called Nuvi using a cryptocurrency already issued.
In fact, the pilot test is already working and started last Tuesday in Guatemala and using USDP as the stablecoin of choice. USDP is the acronym for the Paxos Standard crypto dollar, which has a charter from New York State that makes it, perhaps, the safest stablecoin of all, that is, the antithesis of Tether. To carry out the custody and exchange of dollars for tokens, the Coinbase exchange will be used, which arouses certain suspicions since it is one of the participants in Circle, issuer of the rival stablecoin USDC.
The reaction of the congressmen in the United States did not wait and several Democratic senators issued a letter in which they urged the Zuckerberg company to stop its Novi project and not move forward with Diem. In it they explain that this company cannot be trusted to manage the country’s monetary system.
Diem, for his part, issued his own statement explaining that Diem and Facebook are not the same but that they are separate and independent companies. Given the relevance of the social network and the reach of the enormous number of users it has, it is unlikely that the rulers will allow themselves to be persuaded by this argument.
The relationship between crypto startups and regulators is not easy. Who knows the subject very well is Coinbase, named above, and that had its run-in when it wanted to launch its product “Lend” and obtained the preventive threat from the SEC to prevent it from doing so. In response, and after withdrawing from its project, the exchange maintained that there should be a special regulator for digital asset activities, presumably being an industry different from anything known so far.
The same Koning who spoke about the volatility of Bitcoin explained that if crypto was given special treatment, traditional companies would stop issuing shares in order to avoid regulations associated with securities. In fact, the rationale behind these rules is the same risks that would be incurred in the digital world and, therefore, it is quite clear that Coinbase’s order will be rejected.
Perhaps the most important project is that of Facebook’s crypto and although Nuvi is not the same, it will also be able to take advantage of the vast network of users that the social network has. The fact that its pilot test is already active should indicate that the final entry of that company into the ecosystem is becoming more real every day.
Whether through Facebook, Mutual Funds or through WalMart and Mastercard, the options to achieve exposure to cryptocurrencies seem to have no limit. However, the regulators will not allow anything and, as we have been pointing out from this column, the only way to be successful will be by adapting to current regulations.