"We’ve found that customers are interested in using the Cash App to buy Bitcoin,” the company said in a statement.
“We're exploring how Square can make this experience faster and easier, and have rolled out this feature to a small number of Cash App customers. We believe cryptocurrency can greatly impact the ability of individuals to participate in the global financial system and we're excited to learn more here.”
Banks and Hedge Funds Are Getting Ready for Bitcoin Adventures
In addition to JPMorgan's entrance in October into the Blockchain realm with Quorum, in September there was chatter about Goldman Sachs launching a trading desk to facilitate liquidity and hedging for their institutional clients. They probably knew that CME was researching a Bitcoin futures contract.
Well on Monday, Reuters talked to Mike Novogratz, the former macro hedge fund manager at Fortress Investment Group who now runs Galaxy Investment Partners, a firm that bets on cryptocurrencies and related businesses. He believes that mainstream institutional investors are about six to eight months from adopting bitcoin.
In the article Big money is coming to bitcoin, Novogratz is quoted talking about a "turning-point product" from a big financial firm that could make buying Bitcoin as easy as picking up the phone. There is also a video interview in that link.
“When it’s that easy, the price of bitcoin or ethereum is going to go much higher. And that is a lot closer than people think,” said Novogratz, who spoke at the Reuters Global 2018 Investment Outlook Summit in New York.
Novogratz also told Reuters that he bought $15 to $20 million worth of Bitcoin over the weekend in that recent pullback.
And on Tuesday, Reuters spoke with Luke Ellis, CEO of hedge fund firm Man Group, with $100 billion AUM. Ellis said the firm will add Bitcoin to its 'investment universe' if CME launches a futures contract as planned. So there is a case of an established trading institution like CME attracting other entrants.
But maybe the Square news is what Novogratz was talking about. He did tweet this on Wednesday: "Big news -- looks like Square is adding a function to buy and sell BTC... the herd is coming #bitcoin."
Note: in the podcast, I mistakenly referred to Novogratz as the CEO of Man Group.
CME Group to Provide Regulated Price Discovery… and Arbitrage
While there has been concern about CME entering the Bitcoin market, I am a firm believer that it's a fantastic move for all participants. I used to work for the exchange and came to understand its economic functions of risk transfer and price discovery quite well across all asset classes.
The CME Bitcoin futures will bring a new level of transparency and access to big institutions, small hedgers, and private speculators. And obviously, a new ability to "go short" Bitcoin will provide its own brand of fun to those who believe that the cryptocurrency is a bubble waiting to burst.
In the podcast, Dave said he's getting the popcorn ready for mid-December when the contract launches. We also discuss the pros and cons of the newest CME initiative. You can learn more about the CME contract here.
On the pro side, I really like the fact that exchange officials and quants did their homework for the past year to track and create reliable Bitcoin cash market price information. This is extremely important since the futures contract will be cash-settled in some rule-based relationship to these prices.
This brings in a vital market function that links various related cash markets and their derivatives: arbitrage. In short, if a price isn’t “fair” in one location, a bank or large trading institution should be able to buy the cheaper version and sell the pricier one.
According to the CME website, "CME CF Bitcoin Reference Rate (BRR) and CME CF Bitcoin Real Time Index (BRTI), a standardized reference rate and spot price index with independent oversight are accelerating the professionalization of bitcoin trading and further establishing digital assets as a new asset class."
The BRR and BRTI launched November 14, 2016 and CME notes that "Several bitcoin exchanges and trading platforms will provide pricing data, including Bitstamp, GDAX, itBit and Kraken.
I'm really looking forward to the launch of this futures contract and all the other financial, trading, and payment institutions that will step out before year's end with their own Bitcoin initiatives.
This week's past news and research has really opened my eyes and I now have a "sure thing" prediction of my own: Bitcoin will reach $20,000 sometime in the next year, well before it ever fails and collapses to zero as the naysayers believe.
What's a Teraflop and Why Does the New Xbox Have 6?
Dave is also a "gamer" and so while I had him on the show, I had to ask about the exciting new launch of the Xbox OneX. I heard that sales in the UK were trouncing the new PS4 Pro and that it is now the fastest console on the planet with 6 teraflops of processing power.
A teraflop is the capability to handle one trillion "floating point operations per second" (FLOP).
Dave explained that the One X also has the capability to be upgraded, thus eliminating hesitation and preventing buyer's remorse over obsolescent consoles.
Check out the full podcast for his views on the console wars between Sony and Microsoft (MSFT) and the GPU chip wars between Advanced Micro Devices (AMD) and NVIDIA (NVDA) -- both of who also make the chips that power cryptocurrency mining.
Finally, I asked Dave -- a car fanatic like none I've ever met -- what we should expect from Tesla's big announcement Thursday about their new electric truck. While we can be pretty sure one reveal will be that the truck is autonomous too, Musk usually has more surprises too.
And a tweet on Sunday was already prepping the hype...
“Tesla Semi Truck unveil to be webcast live on Thursday at 8pm! This will blow your mind clear out of your skull and into an alternate dimension. Just need to find my portal gun.”
Be sure to tune into the Mind Over Money podcast to hear my favorite car expert's wild prediction about what Elon could have in store for us.
The one burning question I forgot to ask Dave was this: "Why didn't you tell me to buy Ethereum at $10 earlier this year?"
Disclosure: I own shares of NVDA and AMD for the Zacks TAZR Trader portfolio.
Kevin Cook is a Senior Stock Strategist for Zacks Investment Research where he runs the TAZR Trader service.
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