CME ready to double monthly bitcoin futures open position limit
The Chicago Mercantile Exchange is ready to allow bitcoin futures traders to hold a greater number of open positions at one time, Coindesk.com reports. The goal is to increase the spot month position limit for its bitcoin futures contracts. The request was transmitted to the U.S. CFTC. If this is accepted, the limit would be doubled from the current 1,000 spot contracts/ month to 2,000 contracts for any single investor. Since each contract is for five bitcoin, the trader’s maximum exposure would be 5,000 BTC (about $50M at current prices) to 2,000 contracts (10,000 BTC, or $100M).The company sees room for this market to grow, and is seeking to increase these limits “based on the significant growth and acceptance of our financially-settled CME Bitcoin futures markets, as well as our analysis of the underlying bitcoin market,” said a spokesperson. If the CFTC will not reject the proposal, the novelty will take effect on September 30 for the October 2019 contract.
Is a new price rally approaching for Bitcoin?
An astonishing price rally could come soon for Bitcoin. A key technical indicator’s bullish turn suggests this. The price action observed over the last eight months looks very similar to that one observed in 2015, according to Bitstamp data. Looking at the data, the bitcoin bear market ended close to $3,100 in mid-December 2018 and prices built a base below $4,000 in the following three months before breaking into a bull market on April 2. Notably, the bear market drop exausted two months before the 50- and 10-week MAs confirmed a bearish crossover, in February 2019. Further, another bull market phase began two months after the confirmation of the bearish crossover. That is not surprising, as bearish crossovers of long duration MAs often signals bear market lows. Another coincidence is that the 2014 bear market phase had also exausted in the run-up to the bearish crossover and the confirmation of the crossover was followed by a bullish breakout.
Tagomi launches a platform for Crypto Shorting
Crypto broker Tagomi released its borrowing and lending platform to the wider public, enabling traders to short bitcoin and ethereum. Tagomi’s COO Kevin Johnson told CoinDesk that the new platform addresses issues that currently thwart institutional crypto shorts. Many big investors could not short cryptocurrencies rapidly because the existing borrowing process for crypto is too complex. “First, you have to either find an exchange that’s able to lend, or talk to one of the centralized lending counterparties, negotiate rates, settle that, borrow, and then you could get to be in the process of actually selling the coin short”, Johnson said, adding that this is the biggest barrier for institutional investors. Co-founder Marc Bharvaga said the service brings Tagomi closer to becoming a full-suite prime brokerage, which is how institutional investors prefer to manage their trading. “Having a full prime brokerage functionality, which we now have through being able to do best execution, being able to custody, being able to lend, being able to short and there’s quite a few other things on the road map as we think about the [crypto] space,” Bharvaga explained.
On the stability of stablecoins’ business model
Stablecoins have been created to achieve more stability. No doubt about it. Nevertheless, Coindesk.com wondered if they have stable business models capable of generating profits for producers. The short answer is that, in many cases, they do. But not always. “Most stablecoin projects are designed to make a profit for their founders, usually from transaction fees,” Glen Goodman, the author of The Crypto Trader, told crypto website Cryptonews.com.There are several companies which charge stablecoin fees. Circle occasionally charges a withdrawal fee for converting its USDC stablecoin into USD, asking users to pay USD 50 in the event of failed wire transfers. Likewise, Tether charges a 0.1% fee for buying USDT and anything from a 0.4% to 3,0% fee for converting USDT back to USD. Digix Global stablecoin – which essentially tokenizes gold – charges a 0.13% transaction fee and also a “Daily Deductible Demurrage Fee” charged annually at 0.6%. Some other stablecoins don’t charge any transaction fee, but there are still costs associated with usage that generate revenue for producers. Paxos doesn’t impose any direct fees for converting or redeeming its Paxos Standard Token, but it charges fees for using its crypto-exchange, so in the longer term users end up paying indirectly for the use of the stablecoin.