Ethereum Spikes 12% in Hours as Report Suggests CFTC is Ready For ETH Futures

Ethereum has been in the doldrums lately. Bitcoin has made all the moves generally lifting crypto markets and increasing its own dominance largely at the expense of the higher cap altcoins such as Ethereum and XRP. That all changed today when ETH finally got some good fundamentals to send it surging 12 percent.
CTFC Ready For ETH Futures
According to an exclusive on CoinDesk, the US Commodity Futures Trading Commission (CFTC) is ready to consider an Ethereum futures contract providing it meets their criteria. The outlet cited an anonymous senior official who stated;
“I think we can get comfortable with an ether derivative being under our jurisdiction. We don’t do bold pronouncements, what we do is we look at applications before us,”
When Bitcoin futures were permitted in December 2017 both exchanges, CME and CBOE, where overwhelmed with demand. A similar Ethereum based product would also open up the doors for institutional interest however futures do not enable direct investment in the asset, only a way to bet on its future price.
ETH is pretty low right now and has been for several months, lulling under $200 since November last year. Long would be the obvious choice for any futures contract based on ETH.
The CFTC first eyed Ethereum in December when it published a ‘Request For Input’ seeking further details on the technology and is consensus model.  Comparing to Bitcoin, one senior economist with the regulator said that “a one-size fits all approach to crypto was not appropriate and we needed to know more.”
Where Next For ETH?
Ethereum prices reacted instantly and are currently up 12 percent on the day climbing from $160 to $180. Daily volume has ramped up to exceed $8 billion and ETH is now back at levels during the initial surge in early April.
There are strong signals for further upsides as ETH is currently above $177 resistance at the 50 day exponential moving average. A MACD crossover has also just occurred and analysts are looking at a push to $190 or even back to $200 if the momentum continues;

#ETH setup for a continued run as it holds above the 50 EMA at $177. Next resistance levels are $190 and $200. pic.twitter.com/ApkOAuUijK
— Formerly ScienceGuy9489 (@Etherdamus) May 7, 2019

The $160 range has been solid support several times in April and it has been bearish for some time despite subtle approval from the likes of Elon Musk and Amazon.
Ethereum has finally found the fundamentals it needed to push prices higher and shake the remnant crypto winter ice off. Since the beginning of 2019 ETH has made over 34 percent but compared to others, its performance has been lack luster to say the least. Bitcoin conversely has made over 50 percent in the same period and Litecoin has cranked up over 150 percent gains since the beginning of the year. Ethereum has a lot of catching up to do but today’s inertia may be the catalyst required to push it higher still.
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What Has Caused Ethereum to Surge and How Far Will it Go?

Crypto markets have started the week on a positive note with a $5 billion rally that has resulted in most tokens posting solid gains. The top performer at the moment however is Ethereum has it surges 12% and increases its lead over XRP in third.
Ethereum Beating Bitcoin on Recovery
Currently outperforming every crypto asset in the top 25, Ethereum has pumped 12% over the past few hours to take it to $138. Conversely XRP has not enjoyed much attention in this current rally so the market cap gap between the two of them has now widened to almost $2 billion.

Daily trade volume for Ethereum has also jumped from $2.8 billion to $4.7 billion after spending the past week hovering just above $120. Since its low for 2019 on February 6 of $103 Ethereum has made 34%. Bitcoin in the same period has only managed to gain 10% to its current levels.
Ethereum momentum is likely to be driven by the approaching Constantinople hard fork which introduces a number of network improvements. The estimated date now is March 1 according to this countdown timer to block 7280000. There will be two events taking place, Constantinople introducing several Ethereum Improvement Proposals, and Petersberg to remove one buggy EIP.
Some have speculated that the hard fork is actually bearish for Ether as postponing the difficulty bomb will result in a diminished supply reduction. The block reward adjustment buys a little more time until Proof of Stake is implemented with the Casper upgrade. At the moment though ETH is getting a solid boost as it heads towards $150.
Ethereum Futures Revisited
ErisX boss, Thomas Chippas, has recently revived interest in long awaited Ethereum futures by filing a letter to the US Commodity Futures Trading Commission (CFTC) outlining their importance for market health. The company, a designated contract market and pending derivatives clearing organization, has close ties to fintech industry giants such as Nasdaq, ConsenSys and TD Ameritrade and has largely been seen as a rival to Bakkt.
“ErisX believes that the introduction of a regulated futures contract on Ether would have a positive impact on the growth and maturation of the market for Ether, as well as the Ethereum Network more broadly,” the letter stated.
Chippas added that the CFTC has previously approved of Bitcoin related products and Ethereum is built upon some of the architectural principles of Bitcoin to extend its functionality. The letter continues to laud the benefits of Ethereum and how a regulated investment vehicle based upon it would ‘promote responsible innovation and development in the derivatives market.’
Ethereum is showing the love today at least as it outperforms the top twenty five crypto assets by a clear margin.
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Intercontinental Exchange (ICE) Chief Confident About Future for Bakkt and Crypto 

The ongoing regulatory delays and hurdles imposed by the US government have not dampened the enthusiasm for crypto related products such as the highly anticipated Bakkt launch.
Bakkt Will be a ‘Moonshot Bet’
The Intercontinental Exchange (ICE) has recently announced its fourth quarter earnings which have beat some Wall Street predictions. Chief executive Jeffrey Sprecher took the opportunity to speak on the sterling performance and shed some light on the Bakkt crypto project. Seeking Alpha ran a full transcript of the conference call in which Sprecher referred to Bakkt as a “moonshot bet”.
Over a billion dollars has been spent on strategic investments in 2018, including the Bakkt crypto futures project, according to CFO Scott Hill. Sprecher added that Bakkt had raised over $180 million from ICE and twelve other investors and partners including Fortress Investment Group and Susquehanna International Group. He said that “as we look to 2019 and beyond we’re excited about the opportunities that lie ahead, not only for our core business but also for newer initiatives,” which includes Bakkt.
The launch delays have been largely the fault of the US government shutdown imposed by president Trump. The highly anticipated product has been seen as a major on-ramp for crypto as it includes some major players. The firm aims to create a crypto ecosystem to bring huge companies such as Starbucks and Microsoft into the crypto industry. Sprecher stated;
“That infrastructure has attracted a lot of very, very interesting companies that have come — some that have invested in Bakkt, some are just working with Bakkt to try to tap into that infrastructure for some new use cases that will involve blockchain and digital assets and other things that we can provide these people. Obviously, we’ve announced the Starbucks — our work with Starbucks and Microsoft. We have very, very large retail franchises global connectivity to end users that we hope will be brought into that ecosystem and could create a very, very valuable company out of that initiative if our business plan plays out.”
Regarding the Bakkt launch date there were no specifics mentioned, only that it is expected ‘later this year’. Last month the company revealed more details about its Bitcoin futures products. The Bakkt BTC (USD) Daily Future will be a 1 BTC contract that will be physically delivered.
Bakkt also announced the acquisition of assets from Rosenthal Collins Group (RCG) last month. The ‘back office’ infrastructure will be needed to develop the crypto ecosystem and ensure full security and a trusted fintech solution for its clients.
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Ethereum Consensus Shift Could Delay Any Derivatives Products

The biggest thing on the launch pad this year is the Bakkt crypto exchange which is currently in a holding pattern while US government employees twiddle their thumbs during Trump’s shutdown. Several other contenders are hopeful about Ethereum futures but according to one crypto exchange boss they are unlikely to be seen soon.
Regulatory Concerns Mounting
According to Paul Chou, chief executive officer of LedgerX, odds of an Ethereum derivative product launching in 2019 are 50-50 at best. The company is one of several which already have Ethereum options ready to trade. But just like Bakkt it is currently in the queue waiting for the CFTC to wake up from the prolonged government shutdown.
According to The Block regulators still don’t really understand Ethereum and are waiting for a ‘request for input’ which solicits information from market participants; “The RFI seeks to understand similarities and distinctions between certain virtual currencies, including here ether and bitcoin, as well as ether-specific opportunities, challenges, and risks,”
In addition to LedgerX are ErisX and Seed CX which also have Ethereum based derivatives on offer. CBoE Global Markets, which was one of the first to get Bitcoin futures off the ground in late 2017, also has an Ethereum product but is doubtful that regulatory approval will come soon.
Former fintech adviser to the CFTC, Jeff Bandman, said “They understand what a proof of work network is like because that’s how bitcoin works, but proof of stake raises new questions. Specifically, what are the risks?” He added that once the agency has gained more knowledge on the product it could start to deliberate in the first half of 2019 … providing the government shutdown comes to an end.
The Casper update will usher in proof of stake for Ethereum and change the landscape entirely, at least in the eyes of the CFTC. The delayed Constantinople update which was due yesterday is a preliminary step for a shift from PoW to PoS for the network. Crypto attorney Nelson Rosario told The Block;
“There is a lot of uncertainty, regulators see this and they think ‘what exactly are we giving you permission to sell a futures product on’,” with one industry insider adding “Staking mimics a derivative product. If you are holding ether as a stake than you are essentially betting it will go up and if you are not you are effectively betting it will go down, at worst, or at best you don’t want it sitting on the network. If you have a future on top of that then you are adding a level of complexity that developers have not worked through,”
The shift in consensus for Ethereum has been heralded as the biggest progression for the network but from a regulatory perspective it could be another big headache.
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The WSJ Creates Their Own Cryptocurrency to Better Understand the Market

It’s no secret that mainstream media isn’t the biggest fan of cryptocurrency, often releasing sensationalized reports that demand page views more than they do facts. That being said, the Wall Street Journal (WSJ) is now a part of the cryptocurrency market after creating their own crypto – called the WSJCoin.
The U.S.-based news outlet embarked on the journey to create their own cryptocurrency in order to, as they put it, to better “understand what drives the wild cryptocurrency market—the technology, hype and innovation, combined with the hacking, market manipulation and increased regulation…”
The WSJ’s journey first began in Japan, a hotbed for cryptocurrency and blockchain innovation, where the team of journalists found a blockchain startup and hired one of their programmers to write some code constituting the framework of a cryptocurrency, and just like that, the WSJCoin was born.
Despite seeming like an easy process, the difficulty is not in creating a cryptocurrency, but rather in creating one that is practical and marketed well enough to draw the attention of investors and exchanges. Without interest from these two parties, the cryptocurrency is nothing more than wasted code.
In order to add practicality to the newly founded WSJCoin, the team journeyed through the halls of the Japanese crypto community, searching for businesses or services that would accept their virtual currency as a form of payment (although it is unclear as to why anyone would accept an illiquid cryptocurrency as a form of payment).
Despite the fact that no sane person would accept their cryptocurrency as a form of payment due to its lack of value and liquidity, the team of journalists attribute the lack of interest in their coin to declining interest in the industry, saying “the mania has fizzled.”
Decline in Cryptocurrency Interest is Based on Perspective 
Of course, there is no denying that there exists a general disdain for cryptocurrencies amongst neophyte investors who lost a considerable amount of money over the past year due to the bull-run, bear-crash, market cycle. Despite this, evidence suggests that institutional, retail, and corporate interest in cryptocurrency and blockchain is at, or nearing, an all-time high.
One such example of institutional interest can be the opening and success of the cryptocurrency futures market, namely the Cboe Bitcoin Futures market, and the soon-to-be Cboe Ethereum futures market, that is opening through a partnership with Cboe and TD Ameritrade.
The opening and trade volume of futures markets also increase the likelihood of the approval of a Bitcoin ETF, which could alter the trajectory of Bitcoin completely by allowing for an influx of retail and institutional funds.
The Wall Street Journal importantly notes that despite the decreased interest in crypto, people in Japan are still ambitiously testing and pursuing the technology, including a J-pop band called the “Virtual Currency Girls,” and a university professor who is developing a digital currency that can be exclusively used on and around the campus.
Ivan Zasarsky, a Hong Kong-based partner at Deloittes’s financial crimes unit (FCU), optimistically told the WSJ report that crypto is still in its infancy.
“There is still potential for significant disruption. This is only the first centimeter in a kilometer race,” he said.
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Morgan Stanley to Offer Bitcoin Trading, Following Citigroup and Goldman

$83 billion investment bank Morgan Stanley is following the footsteps of Citigroup and Goldman Sachs, and will soon offer Bitcoin swap trading to its clients.
As reported by Alastair Marsh at Bloomberg, the US banking giant has already developed the infrastructure required to offer complex derivatives tied to Bitcoin and will launch Bitcoin swap trading as soon as the bank sees sufficient demand from institutions.
Currently, the bank is said to be undergoing an internal approval process. Depending on the outcome of the internal meeting and the short-term trend of the institutional market of cryptocurrencies, the launch date of Morgan Stanley’s Bitcoin swap trading platform could be delayed or shortened.
Goldman Sachs is Already Clearing Futures
In June, former Goldman Sachs COO David Solomon, who was recently promoted to the CEO of the US-based bank, acknowledged for the first time that the bank has been clearing futures around bitcoin.
At the time, Solomon stated that the bank has been considering the launch of other services in the cryptocurrency market to facilitate growing demands to the emerging asset class, but is approaching the market with caution by evaluating regulatory frameworks and policies around it.
During an interview with Bloomberg TV China, Solomon said:
“We are clearing some futures around Bitcoin, talking about doing some other activities there, but it’s going very cautiously. We’re listening to our clients and trying to help our clients as they’re exploring those things too. Goldman Sachs must evolve its business and adapt to the environment.”
Morgan Stanley is yet to start offering Bitcoin futures and derivatives. But, it is positive that the bank has created a system to clear futures around cryptocurrencies first, prior to publicly releasing its plans to commit to the cryptocurrency market.
Experts believe that the introduction of cryptocurrency-based trading instruments and institutional products will further stabilize the market and allow cryptocurrencies to become more favorable towards large-scale investors.
Previously, Bitcoin Foundation and VISA Executive Jon Matonis stated that the emergence of Bitcoin-related products such as futures offered by strictly regulated financial institutions in the US market will lead to the institutionalization of the market.
With Morgan Stanley, Citigroup, and Goldman Sachs having solidified plans to enter the market, analysts expect the institutionalization of the crypto market to occur relatively soon.
“I think it’s fabulous that they’re getting into it because it brings in new liquidity. They’re going to develop futures markets, options markets, I even think you’re going to start to see interest rate markets around bitcoin. We’re used to hearing things about Libor, the index for bitcoin interest rates is Bibor,” said Matonis.
Massive Progress in 2018
This year, Goldman Sachs have started the trend of offering products around the cryptocurrency market. JPMorgan, Morgan Stanley, Citigroup, and other major banks soon followed, expressing their intent towards facilitating the demand for cryptocurrencies.
For many years, the cryptocurrency market has expected institutional investors to commit to digital assets as an alternative store of value against traditional assets. But, the infrastructure was not ready to handle such demand.
In the upcoming months, as an increasing number of major banks continue to pursue the integration of cryptocurrencies into their existing infrastructures, more capital will be injected to the market, leading the recovery.
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Bitcoin [BTC], XRP, Ethereum [ETH], Litecoin [LTC], and Bitcoin Cash [BCH] perpetual futures contracts launched by Crypto Facilities

Crypto Facilities, a Financial Conduct Authority-regulated trading platform, recently announced that they would be launching new futures contracts for Bitcoin [BTC], Ethereum [ETH], Litecoin [LTC], Bitcoin Cash [BCH] and XRP. These contracts will also be perpetual, they stated.
Their announcement on Twitter said:
“We have just launched Perpetual Futures on XBT/USD. And world’s first Perpetual BCH/USD, ETH/USD, XRP/USD, LTC/USD, and XRP/XBT contracts Use Bitcoin, Ether, Litecoin, XRP & BitcoinCash as collateral to trade 24/7!”
The pairs for the contracts are BTC/USD, ETH/USD, LTC/USD, BCH/USD, XRP/USD and XRP/BTC. All contracts except the XRP/BTC are inverse perpetual futures, with the remaining contract being a vanilla perpetual futures one.
To understand what a perpetual futures contract is, one must understand what a futures contract is. They are a kind of derivative product that are represented by a contract to trade a commodity or asset at a specified time in the future.
However, with perpetual futures contracts, there is no expiry or settlement. Instead, there is a settlement process that occurs every 4 hours on the Crypto Facilities platform. This applies funding to anchor the spot value, that is the price of the collateralized asset according to underlying spot markets, to the Index used to pay out the contract itself.
The rate for the next period of the settlement process is calculated over the current period. The trader needs to terminate his/her position in order to stop receiving revenue from the futures contract. The payouts are continuous, based on the funding rate that was set at the end of the funding interval prior to that.
The positions will send and receive funding while open in the contracts. All the contracts are cash-settled and will not involve the warehousing of the underlying assets. All of the funds are denominated in 1 USD as the contract size, except the XRP contracts, which are denominated in XRP.
As the futures contracts do not require the traders to post 100% of the collateralized assets as a margin, they can trade with a leverage. Leveraged allows traders to only set a percentage of the asset as a margin, and thus trade for 10x or 100x the leveraged amount.
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