Institutional Cryptocurrency Adoption Grows as CME Bitcoin Futures See Record Growth.

CME Group Inc, the world’s largest futures exchange, continues to see record growth in Bitcoin Futures.

According to the recently released CME Report, greater Bitcoin market adoption led to robust volume of 5,534 contracts traded per day in Q3, +10% vs. Q3 2018 and higher than all previous quarters except Q2 2019.

Importantly, the report noted, institutional flow remained strong with 454 new accounts added, compared with 231 added in Q3 2018 (+97% growth).

CME noted that this means Bitcoin futures can provide right-sized liquidity when your need it, allowing market participants globally to efficiently hedge bitcoin risk on a trusted platform.

These were some of the notable highlights from CME’s report:

  • Average daily volume (ADV) was 27,670 equivalent bitcoin or ~$289M notional value
  • Record OI of 6,128 contracts (30,640 equivalent bitcoin) achieved on July 1
  • Record number of LOIH, or entities that hold 25+ BTC, hit a record high of 56 on July 9
  • ~50% of BTC volume was traded outside the U.S., with ~26% coming from APAC and ~21% from EMEA.
  • 3,400+ unique, active accounts have traded since launch
    • CME Reports that’s data is accurate as of 09/30/2019.

These New IRS Tax Guidelines Are a Must-Read for Cryptocurrency Investors

The Internal Revenue Service continued its discovery and adoption of cryptocurrencies and digital assets into the United States financial system by issuing long awaited updates on the treatment of “hard forks” and “air drops.”

With the release of IRS Ruling 2019-4, the agency provides guidance on how cryptocurrency holders can account for their digital asset holdings.

Read the full IRS Guidance (Rul. 2019-4) here.

Cryptocurrency Market Outlook – Q4 2019

To the investment community,

After an exciting and profitable second quarter, cryptocurrency prices spent the summer months headed lower, with selling pressure culminating in late September with the lackluster debut of Intercontinental Group‘s crypto-futures-experiment Baakt. After reaching a high price of over $14,000 in June, Bitcoinand other cryptocurrencies proceeded to fall for three consecutive months, with Bitcoin’s price finally stabilizing around $8,150. Bitcoin’s peak-to-trough correction of just over 40% comes following a stellar second quarter for cryptocurrencies with many, including Bitcoin, rallying 300% or more. Despite these negative short-term price trends, we believe prices are headed higher and that many blockchains will see their token prices reaching new all-time highs in the not-too-distant-future.

While volatility remains an ever-present factor in these early stages of digital asset investing, we are confident that the Bitcoin investment thesis remains very much intact. We believe this because we are still noticing an accelerating pace of growth for cryptocurrency networks both in the United States and around the world. The markets for alternative cryptocurrencies (aka “alt-coins”) have shown a high level of correlation to Bitcoin during the 2019 recovery and we expect that to continue for the foreseeable future.

At Sarson Funds, we feel the correction that the market just experienced was normal for an over-excited market within the confines of a broader uptrend. We share the opinion of Standpoint Research’s Ronnie Moas in his most recent note on crypto. (Thank you, Jim F. for sharing.)

For people in the stock market, 40% corrections are not normal … but in crypto… where volatility is 2 to 3 times what it is in the stock market … this is actually a normal correction.” – Ronnie Moas

Our analysts measure the value of Bitcoin and other cryptocurrencies by measuring the growth of their networks (Metcalfe Value) and by the pace of institutional adoption. We see both metrics accelerating on a year-over-year basis. It must be noted, that these important metrics are also ahead of where they were when Bitcoin last made headlines in late 2017.

We remain confident in previously shared forecasts and continue to see constructive industry regulations being implemented in the US and in other G20 countries (excluding Saudi Arabia). Bitcoin seems to be on its way to being normalized into existing financial frameworks.  We don’t think it will be very long before Bitcoin and other cryptocurrencies see their prices rise to reflect the increasingly digital future of finance and the world.

Warm regards,

John Sarson
Managing Partner & CIO

Sarson Funds

Sarson Funds is a provider of blockchain technology and cryptocurrency marketing and educational services that focuses on serving the financial professional community. At Sarson Funds, we believe that disruptive innovation deserves thoughtful unbiased education and user-friendly investment products. In collaboration with our investment manager partners, we work to bring Wall Street caliber standards for research, risk management and transparency to digital asset investing. Please join us as we watch blockchain technology powered companies and innovations bring real solutions to some of the world’s most challenging problems

TREND SPOTTING: Tokenized Investment Funds

Cointelegraph recently reported the proposed launch of a $25 Million ‘tokenized’ movie venture fund led by iconic American actor Wesley Snipes. This is the first blockchain project launched by Snipes, who is best known for his roles in Demolition Man, The Blade Trilogy, Passenger 57 and other lauded high-budget action films. The development fund focuses on projects produced directly by Snipes and his production studio, Maandi House, so we classify this as a rare yet appropriate use of celebrity endorsement.

This is not the first venture fund to be tokenized. Boston-based CosimoX holds the bragging rights for the first tokenized venture fund.

Tokenization reduces the administrative costs associated with on-boarding many small individual investors. It also streamlines the distribution of fund proceeds. Tokenized funds can appeal to large groups of people that share a specific common trait (in this example fans of Mr. Snipes), but may not be sufficiently affluent to stroke the six-figure checks traditionally associated with movie venture funds.

Once tokenized on a blockchain, unlimited number of investors can participate in the funding of the world’s next great action movie….

Wait there is more: Tokenized funds, depending on the regulations of the country in which they are domiciled, can offer investors immediately open secondary markets – creating a nice liquidity feature for investors where one previously did not exist.

At Sarson Funds, we predict that tokenization of investment funds will continue to grow in popularity, because of the cost-savings and investor base expanding benefits offered to fund sponsors.

Sadly, US-based operators (and investors) stand poised to lose out on the growth of the Tokenization industry as funds like Mr. Snipes’ select countries like Liechtenstein for their progressive blockchain regulations.

New Libra Competitor, Venus: Ecosystem of Stablecoins to emerge?

On August 19th, Binance, the world’s leading crypto exchange, announced that it will be releasing a new blockchain project: Venus. Venus is Binance’s initiative to build a compatible ecosystem of stablecoins that will place the currencies of both developed and developing countries on an equal playing field.

Aimed to rival Facebook’s Libra coin, Venus is a progressive cryptocurrency call-to-action. Venus has the power to unify the digital currency world through its objective to “build a new alliance and sustainable community” on one local platform by partnering governments with powerful corporations, tech giants, and top crypto firms, according to a Cointelegraph article on the project.

Venus attempts to solve value variances and inflation throughout world economies through its stablecoin platform. As an ecosystem of stablecoins, the public chain technology that supports Venus allows for cross-border transactions that will allow for the implementation and development of new stablecoins that can be used anywhere the Venus project is supported.

Venus has the potential to unify the world and its economies as we know it. Although there is a disparity between the world’s richest and least developed countries, the development and implementation of stablecoin cryptocurrencies is actually beneficial for empowering the poorest among us. There are millions throughout the world that have limited to no access to modern technology, but equipping a poor population with assets of any kind provides them the opportunity to develop a financial identity, even if it is through their paper wallets. While there are several hurdles to address before total technological and financial equality becomes a reality, the Venus project provides a first step and a further call-to-action to lessen the global tech disparity.

The announcement of Venus is exactly what the objective behind the blockchain movement is all about: financial freedom and equality. “Financial inclusion is important for reducing poverty, by allowing people to manage savings, receive loans, and build credit,” claims Angela Rastegar of Hackernoon. This blockchain initiative gives the least technologically advanced a new hope for economic and financial freedom.