Bitcoin and its crypto brethren have had the year from hell and, if a revival is going to come, it may have to be driven by big institutional players.
They do not come much bigger than NASDAQ which is, reportedly, still keen on crypto and, more specifically, on Bitcoin futures. A Bloomberg report yesterday, citing “people familiar with the matter”, revealed that NASDAQ Inc still plans to list Bitcoin futures, perhaps as soon as Q1 2019.
In order to proceed with this, the stock exchange would have to meet the demands of the Commodity Futures Trading Commission (CFTC).
Last year similar Bitcoin contracts were launched by the CME Group and CBOE Global Markets. Some observers say that these products catalyzed Bitcoin’s surge in price from $5,000 up to almost $20,000 in just three months at the end of 2017. Others also predicted a market crash as and when these contracts expired, due to the fact that it was the first time that traders could effectively short Bitcoin.
This is not the first time NASDAQ has looked into the crypto space. Back in January, when markets were at an all-time high, CEO Adena Friedman said the exchange was determining how to distinguish its plans from contracts already offered by competitors. CME derives its prices from four exchanges while CBOE uses only one.
NASDAQ will be using VanEck Associates to compile market prices from several spot exchanges for Bitcoin for its contracts. VanEck is trying to get approval for its own crypto exchange traded fund from the US Securities Exchange Commission (SEC). New York Stock Exchange (NYSE) owner Intercontinental Exchange Inc. (ICE) also plans to launch its own contracts in January, so the space could get very crowded, very quickly.
This injection of institutional investment could be the catalyst that turns Bitcoin and cryptocurrency markets around. Regulatory hurdles erected by the SEC are currently holding back a number of crypto-based contracts and funds. The regulator has already rejected at least nine Bitcoin exchange-traded fund (ETF) applications, including one submitted by the Winkelvoss twins, who found fame from Facebook’s success.
Although the SEC cited market manipulation and lack of investor protection for previous rejections, this may no longer be the case in current digital currency markets which have shrunk by over 40% this month alone. NASDAQ, ICE and VanEck could be the lifeline for Bitcoin – US regulators permitting.