Bitcoin and the US stock market

Bitcoin recently surged to yet another record high on November 3rd, peaking at around $7,400. The cryptocurrency has seen ever-increasing popularity as investors and operators slowly begin to give it more of a place in the financial sphere.

Its price clamed steadily higher throughout the week after US exchange operator CME Group said they were going to introduce a Bitcoin futures contract. CME is going to base the future contract on their CME CF Bitcoin Reference Rate that was launched last year.

The move by CME Group is due to close competition with CBOE Holdings Inc. to be the first financial marketplace to offer Bitcoin trading.

Besides the latest announcement from CME, Bitcoin has made its impact on Wall Street in a variety of other ways. The market cap of the cryptocurrency is around US$ 98 billion, up by over 500% this year alone. This puts it well above storied Dow Jones Industrial Average components like The Travelers Companies, Caterpillar, and American Express.

AngelList co-founder Naval Ravikant pledged his support to a new passively managed index fund of top cryptocurrencies. The fund, called HOLD 10, was launched by Bitwise Asset Management in early October. They are intending to have low management fees and have the fund offered as part of some tax-advantaged accounts in order to attract investors who want to invest in virtual currency, but without a lot of the risk associated with ICOs and lesser-known coins.

Bitcoin is also represented through several ETFs, most notably the Bitcoin Investment Trust and First Bitcoin Capital Corp. The Bitcoin Investment Trust was launched by Grayscale Investments in late 2013 to serve as another private fund for accredited investors, and opened to the public in late 2014.

It now has about a billion dollar in assets, compared to just $40 million when it was opened to the public. A number of mutual funds and ETFs, like Kinetics Internet Fund and the ARK Innovation ETF made bets into the Bitcoin Investment Trust and saw their decision pay off handsomely.

Several hedge funds have also jumped on the Bitcoin bandwagon. BlockTower Capital, Cryptocurrency Fund L.P., and Protos Cryptocurrency Asset Management were all formed thanks to the cryptocurrency market.

An increasing amount of micro-cap stocks are also taking advantage of piqued interest in cryptocurrency by changing their names to attract more attention. One biotechnology company in Colorado said in early October that they planned to change their name from Bioptix to Riot Blockchain. The share price jumped up around 125% after the announcement.

As Bitcoin continues to climb in value and attract attention from world governments and even more investors, its impact on the US stock market is going to be more pronounced as it moves from the margins of the financial world right to the center.

Still, there’s a good amount of skepticism about the cryptocurrency. One of the first Wall Street strategists to embrace Bitcoin, and the only with an official price forecast, began to show signs of caution once it crossed the $7,000 mark.

 

 

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