SHAKEOUT OF LEFT-OVER LONGS FROM LAST YEAR, UK EXPERT NUNN SEES "MASSIVE" INSTITUTIONAL INTEREST IN NEXT 12 MOSThursday, 16 August 2018
- Selloff also represents a market waking up to the fact "you don't need 1,000" different currencies
- Bitcoin acting as a safe-haven within crypto market
- Market awaiting US regulatory word on bitcoin ETFs, plus launch of NYSE owner's Bakkt platform
The recent selloff in cryptocurrencies is largely due to the growing presence of professional traders and speculators in this alternative market, said UK expert Phillip Nunn, who is predicting “massive institutional interest” in the next 12 months.
Nunn, CEO of Wealth Chain Capital, noted that compared against other market manias, it was the crowd who first entered into the crypto universe followed by the ‘Big Boys’, who are now flushing out a lot of these man-on-the-street investors, who had “held and held” since late last year after bitcoin fell towards $6,000 from its all-time high around $20,000.
“When the Big Boys, these experienced traders, entered, the market was more vulnerable,” Nunn said to LiveSquawk News. “That’s just how these things go, the smaller investor can suffer.”
In December, coincidental to the fever-pitch state of the cash crypto market, Cboe Global Markets Inc. was the first to launch bitcoin futures, with a floor pit dedicated to the currency. The CME Group followed suit with its own bitcoin futures contract. All of which attracted more professional interest in both the underlying currency as well as derivatives, Nunn said.
Bitcoin futures volumes at both exchanges are still relatively light less than a year after their launch dates, but growing. CME bitcoin futures' average daily volume is 3,408 contracts, but in July more than doubled from June to 6,671 contracts or an equivalent of more than 33,000 bitcoins (notional $230 million), said Tim McCourt, CME Global Head of Equity Products and Alternative Investments. Average daily volume in August is already up 8pct over July, he said.
"CME is a price-agnostic, neutral marketplace, here to help market participants manage risk in the bitcoin market - regardless of whether the price goes up or down," said a CME spokesperson. "Many factors influence price, and it is worth noting that the futures market is still trading a fraction of the cash bitcoin market each day."
The cash price for a bitcoin is currently down more than 55pct year to date and down 63pct from its 2018 high of $17,221, having hit $6,080 earlier in the week, according to CoinMarketCap. Other sources have quoted a bitcoin fall below the key $6,000 on 14th August, but without a retest of the yearly low.
“There have been years when crypto has been down a lot more than this,” Nunn said. “In this latest correction, bitcoin is being treated as a safe haven within cryptos, and has held onto market dominance of about 50pct, which is a positive.”
According to CoinMarket Cap, bitcoin currently has a 53.2pct market share in the $205 billion crypto market (v a market cap of about $1 trillion a year ago).
“The market is waking up to the fact that you don’t need 1,000 cryptocurrencies,” he said.
Nunn doesn’t seem to be shying away his “bold” prediction earlier this year that bitcoin could rise to $60,000, noting that in 2017 bitcoin rose from $6,000 to $20,000 “in 14 days.”
“In the next 12 months, there will be massive institutional interest,” he said.
The market is awaiting US regulatory word on the approval of exchange-traded funds (ETFs) on bitcoin, while the owner of the New York Stock Exchange, the Intercontinental Exchange (ICE), is launching a federally-regulated bitcoin trading platform called Bakkt to enhance the role of bitcoin as a genuine currency. Microsoft, Starbucks and Boston Consultancy Group are also backers.
“Bakkt is designed to serve as a scalable on-ramp for institutional, merchant, and consumer participation in digital assets by promoting greater efficiency, security, and utility,” Kelly Loeffler, Bakkt CEO said in ICE's 3rd August 2018 press release announcing the launch. “We are collaborating to build an open platform that helps unlock the transformative potential of digital assets across global markets and commerce.”
Stephanie Sprague, Princeton, NJ - LiveSquawk News
