It is no secret the goals of the growing Bitcoin industry to achieve mainstream adoption for the decentralized non-governmental backed digital currency. To a certain degree, the achievements are very real for Bitcoin in its brief history. 2015 was a year of more adoption and more stability in price after a very volatile 2014, which caused many financial professionals to question Bitcoin’s future as a global payment currency if such parabolic swings will be the norm.
2015 could be seen as another important pivot point for greater adoption and legitimacy in Bitcoin’s quest to be treated as an alternative alongside the established currency order and taken seriously as a liquid tradable commodity instrument. Will the system for using, trading and swapping Bitcoin from industry service providers continue to innovate to make Bitcoin a real viable alternative global currency? Challenges remain and the future is always uncertain, but in the following post we will look back at 2015’s Bitcoin news as it relates to FX and the digital currency industry.
In LeapRate’s 2014 Bitcoin review we marked the influx of VC backed Bitcoin ventures and more mainstream acceptance from establishment finance as Bloomberg started to integrate the digital currency within its financial terminals as well as Google adding the Bitcoin currency code to its exchange search calculator. Moreover, 2014 saw regulatory agencies start to come out with clearer stances towards digital currency law.
All of the aforementioned developments continued into 2015. However, what we did not see was the headline grabbing wild price swings which many assumed would have to be smoothed over before any further serious growth and adoption of the block-chain enabled digital currency would take place. Overall, Bitcoin saw a steady price of around 1 XBT to $250 USD for most of 2015… than in late October the price spiked above $300 peaking at around $475 for the year to now settle at $435 to 1 Bitcoin to begin 2016. See below the Bitcoin 2015 price chart as well as the most popular Bitcoin posts from 2015 covered on LeapRate.
Bitcoin saw a late rise in Q4 to finish 2015, how the currency trades and is correlated is still unpredictable. Many thought it would be treated as a sort of digital gold. However, Bitcoin more closely correlated with the U.S. Dollar’s strength late in 2015. Bitcoin’s value still seems internally based for now with a lot of headline risk.
January started off with Forex brokers cutting leverage on Bitcoin trading the price plunged 33% in the wake of the SNB EUR/CHF shock, brokers took no chances on assets prone to sudden shocks. Moreover in January, New York based Bitcoin platform Coinsetter offering up to $500 no-deposit credit to new users, similar to brokers on traditional assets, Coinsetter, a platform for active Bitcoin trading was making their appeal to retail traders to trade Bitcoin.
Also in January, Coinbase Bitcoin wallet and exchange gained a record $75 million in funding, while becoming the first legal Bitcoin trading exchange recognized in the U.S. Finally noteworthy, Finland based Forex broker FinFX partnered with FinCCX to launch a Finland based Bitcoin exchange. February saw Coinsetter add algo strategies to Bitcoin trading with Tradewave, Australia based Independent Reserve was added to a global Bitcoin benchmark, and MGT Capital Investments merged with Bitcoin SEF and index firm Tera Group. To round out Q1 2015, in March popular Bitcoin payment processor BitPay partnered with NETELLER merchants for Bitcoin integration.
Q2 2015 began in April as Xapo and other Bitcoin industry participants responded to the revised BitLicense proposal. Further in April, we covered a WSJ piece which noted institutional trading firms more open to becoming exposed to “cryptocurrencies,” some of the firms, which trade their own money say they see potential for big profits in trading Bitcoin. It was a welcoming development for Bitcoin as a real tradable currency as some see trading firms can help reduce wild volatility in the Bitcoin market.
April was a busy month as we also reported Australia’s central bank deciding not to regulate Bitcoin, Coinsetter expanding its presence further across North America with its acquisition of Canada’s CAVIRTEX, and Russia’s lukewarm attitude for now towards Bitcoin as Russian courts began to assess appeal on blocking of Bitcoin websites. Finally in April, industry heavyweight Coinbase officially opened for business in the UK and rival exchange CEX.IO opened for business in the U.S.
Q2 continued when in May a Bitcoin domain name BTC.com was acquired for $1 million USD, showing Bitcoin’s potential is no joke with folks willing to pony up $1 million to just acquire a high quality Bitcoin related domain name. Further in May, we covered when the NYSE got into the Bitcoin act as The New York Stock Exchange officially launched a Bitcoin Index to provide additional standardization and benchmarks to the Bitcoin price. Rounding out May, San Francisco based Bitcoin exchange Kraken launched leveraged margin Bitcoin trading up to 3:1, Zurich based ECUREX became the first Bitcoin trading platform fully compliant with Swiss Banking Act and Coinsetter and Shift Forex released Bitbroker, a Bitcoin liquidity solution for the Forex trading industry.
Expansion moves continued with summer beginning as Bitcoin exchange Kraken opened in Canada with the brand Vogogo and Australian based bank Westpac invested in Bitcoin exchange Coinbase. Further headlines in the summer saw Bitcoin exchange trading wars heat up as Bitcoin traders on Coinsetter could now leverage up to 5x, following the move by Kraken in May, also Bitcoin exchange itBit introduced a ‘Global OTC Agency Trading Desk’ focusing on large orders and institutional Bitcoin trading business.
July saw U.S. prosecutors charge Coin.mx executives for operating illegal Bitcoin exchange, showing America’s no-nonsense approach to any sort of Bitcoin grey area or scams. Authorities will be vigilant as they let the digital currency operate legally under traditional investment regulation. In the dog days of summer, we reported in August exclusively that technical problems led to a number of trading outages on some of the more popular Bitcoin exchange platforms which led to a mini flash-crash and recovery in Bitcoin prices within a 36 hours time frame. According to Coinsetter CEO Jaron Lukasiewicz, he stated: “We are seeing a shift in where bitcoin trading takes place towards exchanges with more robust technology.”
A guest post in August courtesy of Marco Streng, CEO and Co-founder of Genesis Mining stated 5 reasons to be bullish on Bitcoin. (while he meant the digital currency industry in general, subsequently his prediction has rang true in the short-term for the Bitcoin price, as it rallied strong to end 2015). One of the five reasons he stated is below is in terms of VC capital:
In 2012, there was only $2 million in venture capital invested into Bitcoin startups. In 2013, there was $95 million. And in 2014 alone there was almost $350 million. To put it into perspective, internet startups had only $250 million in venture capital in 1996. We have already exceeded this as an industry and the grand total of investments is currently at $550 million into Bitcoin startups. All this in just a matter of a few years!
August further saw Cyprus based Forex broker FxNet add Bitcoin CFD to its lineup of trading instruments, is this a trend other retail oriented Forex broker will pick up on? Seems like it will only be a matter of time until most of the best-of-breed brokers get involved with providing a tradable margin instrument on Bitcoin.
In September, we reported as Coinbase again followed in the footsteps of rival exchange Kraken with Coinbase expanding to Canada for Bitcoin trading and exchange services. In a pretty rare move still, we also saw Forex broker FXPRIMUS team up with BitPay to now accept account deposits via Bitcoin. Within the United States regulated trading apparatus we reported when the CFTC issued an order of temporary registration as a SEF to Bitcoin firm LedgerX, who is looking to clear options on Bitcoin. On the other end of the regulation spectrum, The U.S. Commodity Futures Trading Commission (CFTC) in September issued an order filing and simultaneously settling charges against Coinflip, Inc. for illegal operating a facility for the trading of Bitcoin derivatives but not registering the facility as a Swap Execution Facility or Designated Contract Market, as required. Within the case, we have a clearer understanding of the law as financially Bitcoin will be treated as a commodity such as Silver, Gold, Corn, or Oil under current regulation.
Fall continued with Bitcoin agency brokerage and exchange itBit allowing for verified client higher withdrawal limits up-to $300k, showing the increased significant amount of serious trading taking place in 2015. Other headlines saw the New York DFS grant a charter to Bitcoin exchange Gemini under the newly formulated BitLicense regulation, European Court of Justice ruled that Bitcoin exchanges are exempt from VAT, and BTCC, formerly known as BTCChina, officially announced the launch of Pro Exchange, a platform with advanced features for the margin leveraged (up to 20:1) trading of Bitcoin.
We finished 2015 Bitcoin headlines with the following news:
- Volatility pushes Bitcoin into Top 3 traded commodity products at Plus500
- Bitcoin venue Coinbase Exchange introduces volume rebates
- Is Craig Wright the real Satoshi Nakamoto? Australia police raid home of supposed Bitcoin creator
- Bitcoin’s wild weekend: Bitcoin prices rise and then drop more than 10% Saturday after topping $475 (yearly high)
- ASIC and Bitcoin Group (a Bitcoin mining company) continue to go back and forth with another rescheduled planned IPO
2015, while not capturing as much mainstream news as 2014 due to lack of crazy price swings (a good thing), can be viewed as further enhancing the digital currency’s credibility. While VC dollars pouring into the Bitcoin currency sector in 2014 was a major theme, we believe that 2015 can be seen as the turning point for professional venues participating in the business of the active trading of Bitcoin. With many prop groups getting into trading Bitcoin as noted in the review and Bitcoin exchanges doing battle on technology of platforms, fees, rebates and professional liquidity, we are just seeing the beginning of active professional Bitcoin trading, the business which has unique characteristics in its own right. How professional Bitcoin trading institutionally and at the retail level advances in 2016 will be something to watch.
As always, it is interesting as well as to document the continued themes of mainstream payment adoption and the swap and exchange services of Bitcoin. The continued growth, stability, and sophistication of Bitcoin wallets, online transfer platforms from Bitcoin exchanges to traditional currency and continued proliferation of hard cash Bitcoin based ATMs is also noteworthy. While having its own unique niche as a digital currency based commodity, Bitcoin might never get complete mainstream adoption from your average Joe, that may not be a good goal anyways. However, as long as the digital currency is placed as an alternative method of payment, holds a stable value as a currency and the infrastructure around Bitcoin makes it useful as an everyday currency, Bitcoin can still thrive as a preeminent digital based alternative currency and store of value. As noted, 2016 will be quite interesting to see more developments unfold. LeapRate in 2016 will be further covering detailed information on the platforms and venues involved in the active trading of Bitcoin. Be sure to stay tuned to LeapRate in 2016 as the new trading year begins Monday, January 4th!