Ever-volatile bitcoin is embraced by Wall Street

This June 17, 2014 file photo taken in Washington, DC shows bitcoin medals. (AFP / KAREN BLEIER)
Updated 30 November 2017
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Ever-volatile bitcoin is embraced by Wall Street

NEW YORK: Bitcoin’s stratospheric rise this week follows the digital currency’s embrace by mainstream trading platforms and is seen by some in finance as normal growing pains often experienced by innovative technologies.
After starting the year at around $1,000, bitcoin, which first appeared in 2008, on Wednesday surged as high as $11,434 before promptly falling 15 percent. Near 1700 GMT Thursday, the virtual currency stood at $9,420.
Nasdaq is the latest major financial market to reportedly planning to launch a bitcoin futures exchange next year, although the exact timing is unclear. The Chicago Mercantile Exchange and the Chicago Board Options Exchange announced plans to offer bitcoin trading in the next few months.
Brokerage firm Cantor Fitzgerald also is looking to begin trading bitcoin derivatives on an exchange it owns.
“The asset class is not going away,” Cantor Fitzgerald chief executive Shawn Matthews told the Wall Street Journal.
“If you look at the next level, it will be the institutions coming in and being larger participants in the marketplace, especially as liquidity gets better.”
The exchanges will trade bitcoin derivatives, not the currency itself, including futures, which set prices for a commodity or financial instrument at a future date.
“The listing of bitcoin products by derivative markets is a major indirect endorsement that this thing is here to stay,” said David Yermack, a finance professor at New York University, adding that the markets will attract new investors who bet that bitcoin will fall in value.
Yermack, who teaches a course on bitcoin and cryptocurrencies, is closely watching the development of blockchain, the underlying technology behind bitcoin.
Bitcoin has been propelled by the rising prominence of blockchain, which leading banks increasingly view as being at the heart of financial technology, Yermack said.
Still, “it is hard to come up with an explanation for why (bitcoin) has been driven by a factor of 10 since the start of the year,” Yermack told AFP.
“It is just mind blowing.”
The embrace of bitcoin by mainstream exchanges has aided the digital currency’s image after it was once associated with drug dealing and money laundering. It also was viewed as risky because it is not regulated or backed by a central bank.
“The biggest problem the banks have faced has been the regulatory uncertainty,” said Lou Kerner, a self-described crypto “evangelist.”
The announcements by the CME and others “addresses it for that particular kind of assets,” he said.
Kerner, who believes bitcoin eventually will become more valuable than gold, batted away talk that the cryptocurrency is overvalued.
“You can find a lot of people to tell you it’s a bubble, and that is what they said at $100, at $1,000, at $10,000, but that does not really add anything to the dialogue,” he said.
Jeff Currie, head of commodities research at Goldman Sachs, also views bitcoin as comparable to gold, likening its creation through sophisticated computer technology to metals mining.
“Bitcoin is a commodity, not much different than gold,” he said Wednesday on Bloomberg Television. “I don’t see why there is all this hostility to it, because it fits the same as many other commodities.’
But a key problem facing bitcoin is its limited liquidity, he said, with total market value globally of $170 billion compared with the $8.3 trillion gold market.
“If you give bitcoin decades to grow and it becomes as big as gold, which I am not trying to forecast ... then the volatility would come down,” he said.


Gulf countries strengthen oil coordination amid tensions: Kuwait

Updated 20 May 2019
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Gulf countries strengthen oil coordination amid tensions: Kuwait

  • ‘It is normal amid this escalation that Kuwait and the Gulf Cooperation Council countries take these steps’
  • Kuwait was in ‘constant contact’ with its ally, the US

KUWAIT CITY: Kuwait’s deputy foreign minister said countries in the Gulf have strengthened coordination to provide oil to global markets amid increased regional tensions.
“It is normal amid this escalation that Kuwait and the Gulf Cooperation Council (GCC) countries take these steps,” Khalid Al-Jarallah told reporters late Sunday on the sidelines of a Ramadan sit-down organized by the Iraqi embassy.
“There is cooperation and coordination between Kuwait and the Gulf countries to provide guarantees for oil tankers and continuous supply of energy to global markets.”
Jarallah’s comments come days after sabotage attacks against tankers in highly sensitive Gulf waters and the bombing of a Saudi pipeline — the latter claimed by Iran-aligned Yemeni rebels.
Both attacks targeted routes built as alternatives to the Strait of Hormuz, the conduit for almost all Gulf exports.
The US Fifth Fleet headquartered in Bahrain said the six-nation Gulf Cooperation Council began “enhanced security patrols” Saturday in international waters, in “tight coordination with the US navy.”
Iran has repeatedly threatened to close the strait in case of war with the United States, which earlier this month announced it was sending an aircraft carrier and strike group to the region.
Kuwait’s deputy foreign minister said “tension was escalating quickly” but he remained hopeful.
He added Kuwait was in “constant contact” with its ally, the US.
On Saturday, OPEC giant Saudi Arabia called for urgent meetings of the GCC and the Arab League to discuss recent “aggressions and their consequences” in the region.
The two summits are scheduled to be held in Makkah on May 30.
Jarallah welcomed the kingdom’s invitation, saying Kuwait was keen to take part in discussions on issues “potentially dangerous” to the region.