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Bitcoin ETFs And CME Futures – Biggest Winners In Retail Investor Inflows

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NEW YORK, NEW YORK – OCTOBER 19: A banner for the newly listed ProShares Bitcoin Strategy ETF hangs … [+] outside the New York Stock Exchange (NYSE) on October 19, 2021 in New York City. Trading under the ticker ‘BITO, the first Bitcoin-linked exchange-traded fund in the U.S rose 3% when trading began and last traded 2.3% higher at $40.94. (Photo by Spencer Platt/Getty Images)
CoinShares reported that investors poured $1,465 million into the top crypto funds, with ProShares capturing $1,237 million of the total and of which $1.45 billion went into bitcoin funds.  Separately, the number of bitcoin futures retail investors hold at the Chicago-based CME Group CME as “open interest” – capital tied up in futures contracts – rose 95% from 2,631 to an all-time high of 5,136 for this particular group, according to the latest Commodity Futures Trading Commission (CFTC) weekly data released on Sunday.
CME futures open interest chart showing contracts held in long and short bitcoin futures positions … [+] by retail investors.
With each of those contracts worth the equivalent of five bitcoin – or about $321,300 as of Tuesday at close – the net capital inflow from retail investors into these contracts rose by $183 million. The CME saw the value of its crypto futures contracts rise $1.58 billion (+38%) across all trader groups. Of that total, $1.31 billion went to bitcoin futures and the remaining $270 million to CME ether futures and CME micro-bitcoin futures. Moreover, CME crypto futures trading volume peaked over $9.2 billion on Thursday, making the CME one of the largest if not the largest derivatives exchange by volume that day. 
CME Crypto futures open interest by futures instrument
Compared to the start of the year, the futures market reflects increases in the level of exposure by commercial traders, which include corporations and bitcoin ETF issuers like ProShares, and retail traders. Hedge funds have roughly bore the brunt of providing sell interest to all bitcoin futures buyers, with a large increase in OI in spread, meaning that an entity is both buying and selling that number of contracts – that is that they are ‘making markets’ through what is known as the carry trade: buying the commodity in the spot or cash market and selling it on the futures market. U.S. banks and even a small portion of retail traders have a higher share selling interest than at the start of year, while hedge funds have paired sharply their long bitcoin positions at the CME.
Data from the CFTC showing CME open interest by major trading group, select dates

While the CFTC’s Sunday data release includes activity through Tuesday October 19, the latest CME data through Friday Oct 22 shows that OI continued to rise by a very large 3,515 contracts above Tuesday’s total – another record high. Next week’s CFTC data will reveal which type of trader group captured the lion’s share of that OI increase but it is safe to assume that commercial traders had a big increase in longs and that hedge funds participated in at least 60% of all sell positions.
CME Bitcoin futures open interest and bitcoin price chart

Analysis
The big takeaway is that the BITO launch made retail investors act opportunistically. Their share of CME BTC futures holdings had been on a seven-month drop, but the BITO launch last week triggered a demand U-turn of CME futures at a record-setting pace. The retail-driven boost in CME BTC OI increase comes in addition to the rise in the roughly 4,000 long BTC contracts that commercial firms snatched up in the past few weeks. 
Why the sudden change? Investors familiar with CME bitcoin futures are savvy enough to figure out that the BITO ETF launch opens the gates for more crypto ETF issuance. This means that there will be demand not just for bitcoin exposure but for CME bitcoin futures contracts. In some ways, these retail investors and institutions participating in last week’s rally simply bought a hot commodity knowing there will be various more buyers – e.g., new ETF issuers – bidding up that commodity’s price.

I write about digital assets trends and am a leading creator of the Forbes Digital Assets tools and functionality our viewers require. I support the generation of

I write about digital assets trends and am a leading creator of the Forbes Digital Assets tools and functionality our viewers require. I support the generation of relevant, curated investor content using a variety of digital assets data. Apart from my responsibilities as Director of Data and Analytics, I write about crypto exchanges, top digital assets, crypto funds, and active trading. I’ve the good (or suspect) fortune of having a Wall Street analyst background, and have written on topics related to wealth management, retail brokerage, and digital assets. I’m also a McGraw-Hill author.

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What To Expect From Intercontinental Exchange Stock In Q3?

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UKRAINE – 2021/10/19: In this photo illustration, Intercontinental Exchange, Inc. (ICE) logo seen … [+] displayed on a smartphone screen and a pc screen. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)
Intercontinental Exchange (NYSE: ICE) is scheduled to report its fiscal Q3 2021 results on Thursday, October 28. We expect Intercontinental Exchange to edge past the revenue estimates, while earnings will likely miss the expectations. The exchange reported strong results in the last quarter, with 22% y-o-y growth in the net revenues (total revenues minus transaction-based expenses) to $1.7 billion. It was primarily because of a 5x rise in mortgage technology revenues, partially offset by a 17% drop in the net revenue from cash equities and equity options. Further, its net income grew 137% y-o-y to $1.3 billion, driven by a one-time gain of $1.23 billion from the divestment of its stake in Coinbase, partially offset by higher operating expenses as a % of revenues. We expect the same trend to continue in the third quarter.
Our forecast indicates that Intercontinental Exchange’s valuation is $137 per share, which is 3% above the current market price of $133. Our interactive dashboard analysis on Intercontinental Exchange’s Earnings Preview has more details.
(1) Revenues expected to beat the consensus estimates
Intercontinental Exchange’s revenues for full-year 2020 were $8.2 billion – 26% above the year-ago period. It translated into a 16% growth in net revenues of $6 billion. While the non-trading income grew 18% y-o-y to $3.6 billion in the year, the growth was offset by a 22% drop in the clearing & transaction net revenues.

Trefis estimates Intercontinental Exchange’s fiscal Q3 2021 net revenues to be around $1.77 billion, marginally above the $1.75 billion consensus estimate. We expect the mortgage technology segment to drive the third-quarter results.
Moving forward, the non-trading revenues are likely to continue their positive growth in the subsequent quarters. Further, the clearing & transaction fee is likely to suffer in FY2021. Our dashboard on Intercontinental Exchange’s revenues offers more details on the company’s operating segments along with our forecast for the next two years.
2) EPS is likely to miss the consensus estimates
Intercontinental Exchange Q3 2021 adjusted earnings per share is expected to be $1.15 per Trefis analysis, almost 6% below the consensus estimate of $1.22. The exchange’s adjusted net income increased 8% y-o-y to $2.1 billion in 2020 mainly driven by higher revenues. Further, the revenue growth continued in the first and second quarters of 2021 – half-yearly net revenues are up 19% y-o-y. However, it translated into a 4% gain in the operating income due to higher operating expenses as a % of revenues. That said, the net income for the first six months of 2021 has improved 62% y-o-y to $1.9 billion due to the divestment of ICE’s stake in Coinbase in Q2. We expect the third-quarter results to follow the same momentum.
Going forward, we expect Intercontinental Exchange’s net income margin to decline from 25.3% to 18.7% in FY2021. It will likely result in a GAAP EPS of $3.11.
(3) Stock price estimate 3% higher than the current market price
We arrive at Intercontinental Exchange’s valuation, using an EPS estimate of around $3.11 and a P/E multiple of close to 44x in fiscal 2021. This translates into a price of $137, which is 3% above the current market price of around $133.
Trefis Price Estimate For ICE Stock
Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year
 What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since 2016.

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See all Trefis Price Estimates

Led by MIT engineers and Wall Street analysts, Trefis (through its dashboards platform dashboards.trefis.com) helps you understand how a company’s products, that you

Led by MIT engineers and Wall Street analysts, Trefis (through its dashboards platform dashboards.trefis.com) helps you understand how a company’s products, that you touch, read, or hear about everyday, impact its stock price. Surprisingly, the founders of Trefis discovered that along with most other people they just did not understand even the seemingly familiar companies around them: Apple, Google, Coca Cola, Walmart, GE, Ford, Gap, and others. This might include you though you may have invested money in these companies, or may have been working with one of them for years as an employee, or have consulted with them as an expert for a long time. You can play with assumptions, or try scenarios, as-well-as ask questions to other users and experts. The platform uses extensive data to show in a single snapshot what drives the value of a company’s business. Trefis is currently used by hundreds of thousands of investors, company employees, and business professionals.

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Bitcoin ETFs Can Help Improve Crypto Accounting

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The launching of the first ever bitcoin exchange traded fund (ETF) in the United States has made headlines, and is indicative of the increasingly mainstream nature of crypto from a legal and regulatory perspective. While this is certainly excellent news for the sector, and should be recognized for the legitimization it brings, it also has the potential to assist in addressing one other lingering issue for crypto advocates; the accounting for crypto.
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Accounting might not always make the buzziest or most exciting headlines, but is absolutely essential for individuals and institutions seeking to fully integrate crypto into everyday transactions. The lack of crypto-specific accounting and reporting rules is not only an obstacle toward wider utilization of crypto, but is also not reflective of the economic reality connected to cryptoassets. Launching tradeable and investable bitcoin and crypto products that are available to be invested in by virtually everyone is a dramatic step in the right direction, but current accounting treatment will remain a significant headwind for the time being.
Let’s take a look at the current treatment, what issues this raises, and other options that – indirectly – the launching of a bitcoin ETF opens up for the marketplace.
The problem. Current consensus around how to account for and report cryptoassets is to treat them as if they were the equivalent to indefinite lived intangible assets. On the surface this looks like a perfectly reasonable approach; cryptoassets are intangible in nature, and even tokenizing physical assets still results in the creation of intangible tokens. Where the issue arises, however, is that by classifying and treating crypto as such means that these assets must also be tested for impairment on a recurring basis.
Without diving into too much accounting minutia the test for impairment is a multi-step process that needs to be performed either 1) an annual basis, and/or 2) when a change in economic conditions necessitates a more frequent test. Given the volatility of bitcoin and other cryptoassets – which have been trending upward recently but has not always been a straight line up – this could lead to organizations having to mark down different crypto holdings. These losses, even if no external transactions take place at these lower price levels – will be shown both on the balance sheet and income statement of these organizations.
The real issue, however, is that these losses are permanent and are not ever able to be reversed, even if the prices of these assets subsequently recover. In other words, the reality of asset valuations might not be shown in the financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP). As organizations across different economic sectors transact in bitcoin, hold some in reserve on balance sheets, or hold them on behalf of clients, this is quickly becoming a common consideration in the marketplace.
A potential solution. Launching a bitcoin ETF might not, at first, seem like a potential solution to the above issues raised around accounting, impairment, and reporting of cryptoassets. Taking a closer look, however, reveals several key takeaways that market participants should notice and incorporate going forward.
Firstly, the launching of a bitcoin ETF signals the approval of this idea – rather obviously – by the Securities and Exchange Commission (SEC). Setting aside the ongoing discourse regarding whether crypto are securities for the moment, there is another angle to this story. Put simply the fact that, in addition the Internal Revenue Service (IRS), the SEC is actively engaging with the sector opens the door to revisit the issues of how crypto is accounted for since policymakers are clearly interested in – and better understanding – the space.
Secondly, and building on this greater acceptance and understanding is the opportunity for market participants to attempt and reorient the regulatory conversation. As increasing numbers of organizations buy, sell, hold, and otherwise utilize crypto as a core component of operations it makes sense that the regulatory – and hopefully accounting – conversations will evolve and mature.
It is too soon to state with any authority how the conversation around crypto accounting will evolve, since depending on the specific cryptoasset in question the accounting treatment could logically vary quite a bit. Treating and classifying crypto as derivatives, commodities, cash equivalents, or inventory might all make sense depending on the facts and circumstances of the situation. With that context, and complications that come with such a multi-faceted sector and space, attempting to address every accounting and reporting issue at once would be foolhardy.
One place to start this process, however, is by incorporating cryptoassets into existing accounting and reporting frameworks and allow organizations to hold these financial instruments at fair market value (current market price). Volatility will never vanish from the crypto sector, nor any other space, but allowing these changes to shown in a transparent, comparable, and consistent matter is essential. The entire point of accounting and reporting rules, after all, is to communicate information and data as they relate to the performance of the organization or asset, and it is time that crypto accounting caught up with market realities.

I am a professor at the City University of New York – Lehman College. I serve on the Advisory Board of the Wall Street Blockchain Alliance, where I chair the Accounting

I am a professor at the City University of New York – Lehman College. I serve on the Advisory Board of the Wall Street Blockchain Alliance, where I chair the Accounting Work Group. I am also the chairperson of the NJCPA’s Emerging Technologies Interest Group (#NJCPATech). I sit on the Advisory Board of Gilded, a TechStars ’19 company and AICPA-CPA.com startup accelerator participant. I was a Visiting Research Fellow at the American Institute for Economic Research during 2019.

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You Do Not Want A Tax Refund. Here’s Why.

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This may come as a shock to you, but you actually don’t want a refund from Uncle Sam.
Tax season is long over (thank god), and that means that if you were supposed to get a tax refund, you should have already received it. A check from Uncle Sam may have been something that you celebrated this year, but here’s a newsflash: you don’t want a tax refund in the first place. 
Your tax refund is not free money.
I’ll let that sink in for a second. I know this may come as a shock to you, because you probably love getting a tax refund. It feels like bonus money from Uncle Sam, right? And what’s better than bonus money? Plus, you probably didn’t know how much money you’d be getting back before you filed, so it’s the most pleasant surprise when you get to add some liquidity back into your spending plan. Maybe that chunk of change from your tax refund will help you get a little closer to something that’s been in your “Endgame” spending category. What’s not to love?
But here’s the thing: this is not free money from the government. Your tax refund is not like a stimulus check. Your tax refund is, and has always been, your money. 
Let’s start at the beginning: what is a tax refund?
Well, you know how paying taxes works in the United States. If you work for a company, you probably get your paycheck on Fridays, look at the numbers and think to yourself: “hmm… this is lower than I thought it would be. Where’d the rest of my money go?” In all likelihood, some of your paycheck went to your healthcare and retirement accounts, but a whole lot of it went to taxes. 
If you got a tax refund, that means that the federal government overcharged you for your income taxes, and is now giving you back the extra funds they took over the course of the year. It’s exactly what it sounds like: a refund. That is not cool! Sure, you get the money back eventually… but that’s money you could have been spending on rent, groceries, or investments. 
Instead, the government basically took out a loan from your paycheck and then paid it back to you without interest. That’s a pretty sweet deal for Uncle Sam. On the other side of the coin, when you take out a loan from the federal government (like a student loan, for example), you definitely have to pay it back with interest. So, why is it that when you owe the government money, they charge you interest, but when the roles are reversed, the government doesn’t play by the same rules? 
It’s one of my biggest pet peeves. And, it’s worth noting: while I think tax refunds are totally wrong, you’re not doing anything wrong. If you’re getting a tax refund, you’re in the same boat as many, many other Americans. But there is one way you might be able to give the government a little more info so that they don’t overcharge you. Or, at least, don’t overcharge you that much. 
Here’s what you can do.
Start by going back and checking your W4. Yeah, remember that old thing? A W4 Form is one of the many pieces of paperwork you had to fill out when your company hired you. No shame if you don’t remember what it looks like, or if you didn’t pay that much attention to it at the time. Essentially your W4 helps the government project how much income tax you should be paying. Then, come tax season, you set the record straight when you file your return. When you look at your W4, see if you’re missing any credits or deductions that you plan on taking. If so, talk to your employer about submitting an updated W4. Having your W4 accurately reflect your deductions will affect how the government projects your taxable income, and should reduce the amount taken from your paycheck every pay day.

I’m the New York Times Bestselling author of Rich Bitch and Boss Bitch and the host of the nationally syndicated business reality competition show, “Hatched.” I’ve been

I’m the New York Times Bestselling author of Rich Bitch and Boss Bitch and the host of the nationally syndicated business reality competition show, “Hatched.” I’ve been an anchor on CNN, CNBC and Bloomberg. My third book, Becoming Super Woman, is out now. Host of “Money Rehab with Nicole Lapin” on iHeartRadio.

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