Mar 19, 2019

Bitcoin is losing its Wall Street buy-in

Illustration: Rebecca Zisser/Axios

The public markets' cryptocurrency hype is no more and it's losing votes of confidence from Wall Street.

Driving the news: The Chicago Board Options Exchange (Cboe) will no longer support bitcoin futures trading after June, despite being the first exchange to pioneer the bitcoin-futures market in late 2017.

Details: Citi nixed its plan to launch "Citicoin," a bank-backed cryptocurrency, CoinDesk reported on Monday: "Citi concluded that, while the [Citicoin] technology has the potential to live up to its promises, there were other more effective and efficient ways of making improvements in payments."

The big picture: News that Wall Street and traditional banks were buying into the digital currency phenomenon was seen as validation and drove crypto prices higher. However, things look to have turned.

  • Prices barely budged when J.P. Morgan said it was creating its own dollar-backed digital currency, "JPM Coin." (Perhaps because only institutional clients will be able to use it.)
  • But when Goldman Sachs said late last year it was scrapping its plan for a dedicated crypto trading desk, prices of bitcoin and other alt-coins plunged.

Our thought bubble, per Axios' Dion Rabouin: Crypto began as something of a counter-cultural current and Wall Street jumped on the bandwagon when it rose to a pop culture phenomenon, pushing prices higher. Those days are over now.

Crypto will live or die based on whether or not a sustainable use case can be found for it. There are a number of ongoing experiments:

  • Facebook is holding conversations with cryptocurrency exchanges about selling the "Facebook coin" to consumers — as the New York Times reported last month — and the company looks to be setting up a WeChat-like payment system where users can pay one another (or any of Facebook's 2.3 billion users) with the coin.
  • Crypto is also just now starting to make significant inroads in the porn (link suitable for work) and cannabis communities, underground industries with large user bases that have trouble accessing traditional banking services.
  • Venezuelan President Nicolás Maduro even tried to make a cryptocurrency the country's official payment system.

Yes, but: Financial analyst Wolf Richter points out that even without the Cboe, bitcoin futures trading isn't dead yet.

Expand chart
Reproduced from Wolf Street using CoinDesk; Chart: Axios Visuals
  • Bitcoin has managed to hold near the important $4,000 per coin level and CME Group, which still offers bitcoin trading, has seen higher trading volumes than Cboe. CME reps told CoinDesk that it has "no changes to announce re our bitcoin futures contract."

The bottom line: If nothing catches on in a big way soon, crypto may be out of lifelines.

Go deeper: Why Bitcoin's fall gives the planet a breather

Go deeper

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 1:30 p.m. ET: 1,506,936 — Total deaths: 90,057 — Total recoveries: 340,112Map.
  2. U.S.: Total confirmed cases as of 1:30 p.m. ET: 432,596 — Total deaths: 14,831 — Total recoveries: 24,235Map.
  3. Business latest: The Fed will lend up to $2.3 trillion for businesses, state and city governments — Another 6.6 million jobless claims were filed last week.
  4. Federal government latest: President Trump is preparing to launch a second coronavirus task force focused on reviving the U.S. economy.
  5. Public health latest: Dr. Anthony Fauci said social distancing could reduce the U.S. death toll to 60,000.
  6. States latest: New York's coronavirus death toll hits record high for third straight day.
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  8. What should I do? Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
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Trump plans second coronavirus task force focused on the economy

Photo: Mandel Ngan/AFP via Getty Images

President Trump is preparing to launch a second coronavirus task force focused on reviving the U.S. economy, which has been battered by the coronavirus, two administration officials tell Axios.

Why it matters: There is growing energy within the West Wing to start easing people back to work by May 1. But some public health officials, including those on the coronavirus task force, have warned against doing so, raising concerns about reopening America too soon.

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