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Former J.P. Morgan Trader Launches First Ever Ethereum ETN

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For the first time, an Ethereum-focused investment product is available to traders on the Nasdaq Stockhom exchange, a sign that cryptocurrency is slowly making its way to more conventionalasset circles.

The Launch of CoinShares Ethereum ETN

Beginning Wednesday, investors will be able to access two exchange traded notes (ETNs) with exposure to the Ethereum network. CoinShares, which is headed by former J.P. Morgan trader Daniel Masters, is offering ETNs that track the price of Ether Tracker One (COINETH:SS) and Ether Tracker Euro (COINETHE:SS).

The ETNs will differ from actively traded assets in that they will be completely passive.

The ether-based investments become the second major crypto asset CoinShares has listed on Nasdaq. It also gives Nasdaq Stockholm the distinction of being the only European exchange to offer exposure to two crypto-based assets (bitcoin and Ethereum).

CoinShares has been called the iShares equivalent for cryptocurrency investments, as it now has six professional grade crypto-based investment vehicles. Collectively, these assets are valued at more than $300 million.

CoinShares Issues Statement

Ryan Rudolf, Co-principal to CoinShares, has issued the following statement:

Today is a historical moment for Ethereum and ether as an asset; and for the future of crypto-assets. It was a little over two years ago that the bitcoin ETNs began trading – offering investors exposure to bitcoin via an established exchange for the first time. Today, we are able to bring ether to the market and mark another major first. It is important to remember how far and how fast the space has matured in the less than 8 years since this revolution ban.

Daniel Masters, the other principal at CoinShares, says the new investment vehicles represent a “hassle-free” way to enter the world’s fastest-growing asset class. Whereas bitcoin disrupts the function of analog money and analog gold, Ethereum disrupts the function of the stock market, according to Masters.

Ethereum continues to be the world’s second-largest cryptocurrency when measured in terms of market cap.

Featured image courtesy of Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 695 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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ETFs

SEC Delays Decision on VanEck SolidX Bitcoin ETF Until Next Year

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The U.S. Securities and Exchange Commission (SEC) will delay its ruling on a highly-anticipated bitcoin exchange-traded fund (ETF) until next year, confirming earlier speculation on the matter. While the delay is by no means a confirmation that regulators are warming to the idea of a bitcoin ETF, it does suggest they are taking the matter seriously.

Ruling Delayed

In a notice published on Thursday, the Washington-based regulator said its forthcoming decision on the VanEck SolidX Bitcoin Trust will be pushed back until Feb. 27, 2019.

“The Commission finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider this proposed rule change,” the SEC said.

A decision on the hotly debated ETF was expected by the end of December but the extent of public commentary on the matter has forced the agency to extend its time period until the new year. As of Thursday, the agency had received more than 1,600 comments on the proposed ETF. The delay is consistent with earlier reports by Hacked pointing to February 2019 as a likely timeline for resolution.

What make the VanEck-SolidX proposal so intriguing are the safeguards in place to protect investors against fraud and manipulation. The fund also proposes to hold a repository of physical bitcoin as opposed to futures contracts and other derivatives.

In a series of meetings with the SEC, members of VanEck, SolidX and CBOE have argued that the bitcoin market meets the agency’s definition of liquidity and transparency. Last week, the proponents urged the agency to apply the same definition of “significant markets” to bitcoin as it does to other markets that currently enjoy ETF status.

This isn’t the first time that a ruling on the VanEck-SolidX product has been delayed. The SEC has pushed back the deadline repeatedly since the summer while discarding more than a dozen other applications.

BTC/USD Update

Even with an ETF in play, appetite for bitcoin is the lowest it has been in more than a year. The leading digital currency fell below $3,300 Friday for the first time since September 2017. At the time of writing, the BTC/USD exchange rate was averaging $3,296 on virtual currency exchanges. That represents a daily drop of 9.8%.

Trading volumes have climbed well north of $6 billion, with futures dominating the order books. Bitcoin’s market capitalization has fallen to $57.4 billion but its share of the overall crypto universe has risen to 55.1%.

With the breach of $3,600 on Thursday, the next likely target for the bitcoin price is $3,000. Below that level, $2,800 is the next major downside target.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 695 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Bitcoin

Bitcoin ETF Watch: VanEck, SolidX and CBOE Met With SEC on Monday

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Backers of a highly-touted bitcoin exchange-traded fund (ETF) application met with U.S. regulators last week to present a new case for why their proposed product should be approved. The contents of the meeting, which were published on the Security and Exchange Commission’s (SEC) website Wednesday, gave new reasons why the regulator should approve a specific rule change that would pave the way for the first crypto-backed fund to be listed.

Bitcoin Market Ready for ETF, Proponents Say

According to the SEC’s memorandum, the Office of Market Supervision met with members of VanEck, SolidX and CBOE on Monday. Rather than focus on regulation, the ETF backers argued that the bitcoin market is mature enough to list an ETF. The proponents also listed several examples of similar products that have been launched for commodities like gold and crude oil.

“Similar to commodity futures, the spot and futures prices [of bitcoin] are tightly linked,” the proponents argued, adding that “this is evidence of a well-functioning capital market.”

The proponents also urged the SEC to remain consistent in its definition of “significant markets,” arguing that bitcoin futures “is a significant, regulated market” when compared to the “dry bulk shipping market” that has already received regulatory approval for ETFs. The SEC has stated repeatedly that the bitcoin market lacks the significance and scale to protect investors against manipulation. VanEck and SolidX have long maintained that the bitcoin market is less susceptible to manipulation.

The meeting followed a closed-door gathering in late October that VanEck claimed had resolved issues regulators had identified in their previous disapproval orders. As Hacked reported, dozens of bitcoin ETF applications have been rejected outright by the securities regulator over concerns of market manipulation and investor safety.

Bitcoin ETF Unlikely Anytime Soon

Despite repeated efforts to convince U.S. regulators of the merits of a bitcoin ETF, the road to approval remains undetermined. That view was echoed recently by SEC Chairman Jay Clayton, who said the market must undergo important changes before an ETF becomes likely.

“What investors expect is that trading in the commodity that underlies that ETF makes sense and is free from the risk of manipulation. It’s an issue that needs to be addressed before I would be comfortable,” Clayton said during last week’s annual Consensus Invest conference in New York, according to CNBC.

Clayton said venues like the New York Stock Exchange and Nasdaq have “surveillance” mechanisms that can prevent manipulation on the exchanges. However, “those kinds of safeguards do not exist currently in all the exchange venues where digital currencies trade.”

The SEC has yet to reach a final verdict on the VanEck SolidX Bitcoin Trust. At last check, a decision was expected later this month, though the process could get dragged out until February, according to industry sources.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 695 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Analysis

Bank Sector Likely to Show Steadiness as 2020 Presidential Election Cycle Looms

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About a month ago, we analyzed the financial sector where individual banks were considered for investment. This time, we are back to this sector again, since in the current conditions it cannot be ignored. This time, however, we are going to analyze ETFs that include financial sector papers.

When analyzing the S&P 500, there are doubts about its further growth, unless there’s a correction towards 2,400. But in order for such a correction to take place, some significant event must occur that will scare off investors and force them close their positions for a while, locking in profits. The S&P 500 reacts sensitively to the presidential elections and programs adopted by new US leaders.

For example, Barack Obama took over as president during the mortgage crisis, and he had to solve the problems of growing debt, which later exceeded 100% of GDP, and look for new ways to develop the economy after massive bankruptcies of companies. At that time, the S&P 500 lost 67% in 18 months and reached its 2002 lows, which was the result of the dotcom crisis. Later, however, Obama’s administration managed to find a solution by quantitative easing stimulus. The conditions for regulating the financial market, the crisis driver, were tightened, the financial service users protection was strengthened, and measures to reduce taxes, taken under Bush Jr., were prolonged.

As a result, investors calmed down, unemployment began to gradually decline, and the S&P 500 went up to conquer new highs, which continued throughout the 8 years of Barack Obama’s leadership. The only significant correction occurred a year before the start of Obama’s second term, as investors might have decided to hedge and cash off. Nevertheless, once it became clear that Barack Obama would step in for a second term, the S&P 500 rally continued. Thus, during Obama’s administration, the index went up by 314%.

In early 2015, however, the rise ended with a strong resistance at 2,130, which the S&P 500 was able to overcome only after the presidential elections won by Donald Trump. One of Trump’s campaign promises was a substantial tax cut that would allow the US economy to grow more rapidly. Such a strategy means an increase in companies’ profits through tax cuts in order to ensure the release of money for investment in new developments that make the US businesses more efficient and competitive in the global market. At the moment, we can see its positive results: the unemployment rate in the US has fallen to its 10-year low, the S&P 500 is at its historic highs, while the company earnings reports are breaking their own records.

In 2020, the next presidential elections will be held and, as history shows, a year before the market is usually uncertain until it receives confirmation that everything will stay the same. Thus, it will be difficult for the S&P 500 to break out 3,000 at once without a significant correction. There is a very big temptation to take a long position at current prices, as fundamental analysis does not show any negative sentiment in the markets. The companies’ reports, however, have been issued adjusted since Q2 2018, and, besides, as told above, tax cuts are a great contribution to an increase in profits. In this situation, it is important to pay attention to the rise in sales, and not to profits as such, since the earnings do not show how the companies are truly doing. Earnings and profits are worth taking into account only after Q2 2019 when it will be a year after the new accounting system has been implemented.

Take Facebook for example: the stock price has been down since the Q2 report, while the earnings hit the record high. In the Q3 report, the revenue was even higher, but the stock is still down, just because high profits are no longer a positive indicator. The investors want to see many more new users, while the number is actually decreasing.

Thus, over the next 6 months, the S&P is likely to trade rangebound. Then, the presidential elections will be drawing nearer, adding more pressure to the market because of the uncertainty.

Overall, the financial sector looks less risky, as, with good earnings, it will feel great, but even in case the earnings are not so good, companies will still have to pay their debts to the banks. In addition, the Fed is very likely to continue rate hikes, which will lead to an additional profit flow.

An unexpected crisis may be the only negative factor here, but in this case any investment will be in the red.

Among financial ETFs, one may consider a few funds with over $1M managed money.

iShares US Financial Services ETF (IYF), $1.77B managed, 35% in the banking services sector, 12% in the investment banking sector.

If we break down the banking sector, the top three are JPMorgan Chase (7.13%), Bank of America (5.00%), and Wells Fargo (4.47%).

In the investment banking, 8.32% accounts for the Warren Edward Buffett Berkshire Hathaway Fund.

The next one is iShares US Financial Services ETF (IYG), with $1.7B managed. The banking sector accounts for 52.83% of the fund’s portfolio. The top three are JPMorgan Chase (12.36%), Bank of America (8.66%), and Wells Fargo (7.75%).

Yet another fund one may pay attention to is Fidelity MSCI Financials Index ETF (FNCL), with $1.27B managed. The banking sector accounts for 51.71% of the fund’s portfolio. The top three are again JPMorgan Chase (9.84%), Bank of America (7.05%), and Wells Fargo (6.42%). This fund, as well as the iShares US Financial Services ETF (IYF) has a Berkshire Hathaway investment in its portfolio (7.30%).

By Dmitriy Gurkovsky, Chief Analyst at RoboMarkets

Disclaimer
Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboMarkets shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 20 rated postsHaving majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.




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