BITSTAMP:BTCUSD   Bitcoin / Dollar
Bitcoin has long been a favorite for those looking for an alternative to centralized fiat money. Although I always thought bitcoin was promising, the technological aspect always held safety and liquidity concerns. Due to the fact that it is hard to prove peer-to-peer transactions, financial institutions - especially in the U.S. - have strict policies and layers of purchase authenticity that make buyers wait from a few hours or longer to actually receive the bitcoin .

Could the inception of other bitcoin trading products add to liquidity or the general acceptance of bitcoin? Recently, the Commodity Futures Trading Commission (CFTC) has designated that bitcoin is a commodity. By doing so, adding bitcoin derivatives is an attempt to regulate the bitcoin market.

Some find it strange that the CFTC has said that bitcoin , among other digital currencies , has the same properties as physical commodities like gold             or oil             . It is true that there is a defined supply of bitcoin , but it is more than likely that the designation is more of an attempt to regulate than to legitimize bitcoin as a true commodity.

Furthermore, the addition of bitcoin derivatives could simply open up the bitcoin market to more traders. Because let's face it, on a day-to-day period, trading bitcoin can be a snooze-fest. With futures trading being as digital as bitcoin , less than five percent of futures are ever exercised for delivery which may lead to more bitcoin speculation.

One thing is certain: bitcoin could an alternative to traditional safe-haven assets. For the last year, I have been the only one, that I know of, that has noticed that bitcoin has been trading the inverse of the most traditional safe-haven - gold             . Bitcoin's largest movements seem to stem from money flowing in and out of gold             .


Unfortunately, in a crisis situation, I believe gold             would win because it is tangible and that is physiologically comforting. If gold             garners support from another central bank led financial crisis, bitcoin could see dark days.

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2 years ago

trapped in a range since Jan 2015
+1 Reply
IvanLabrie PRO
2 years ago
Interesting take, something to monitor for sure.
2 years ago
all those talk about definitions..))

if you read Soros ahlchemy of finance - he actually allocates all currencies into commodities!
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