Jump to content

Wall Street will find ways to satisfy crypto envy

Recommended Posts



WASHINGTON (Reuters Breakingviews) - Banks are gearing up to get in on the crypto craze in 2022. That sets them up to wrestle with a host of issues that differ from their core business, from murky regulation to a market that operates 24 hours a day, seven days a week. Fights over profit and customers may also obscure other risks.

The value of digital currencies outstanding has tripled to more than $2 trillion since the start of 2020. Traditional U.S. banks currently can’t trade such assets themselves, but their customers do and many bankers want in, despite skepticism from luminaries like JPMorgan boss Jamie Dimon who dismissed bitcoin as "worthless" as recently as October. Dimon's bank, Goldman Sachs, Morgan Stanley and others are helping wealth-management clients gain exposure through crypto derivatives. Those trade on regulated exchanges, one step removed from the underlying digital coins. But that's little more than dabbling.

What would really open the flood gates for the largest banks would be the regulatory nod to get directly involved in the custody and trading of digital assets. Among other things, that would help stop lucrative hedge fund clients from going elsewhere for their crypto needs.

But banks, constrained by regulations, can't predict where watchdogs will end up. While the Federal Deposit Insurance Corp has expressed openness to increased crypto exposure, the Office of the Comptroller of the Currency has sounded skeptical and the Securities and Exchange Commission has essentially promised a crackdown if it ends up in charge of crypto.

Take bitcoin-backed loans, for example, one area that is being explored by several firms including Goldman. Banks need to know if regulators will permit such products. Bankers also have to figure out how to structure them if they can’t own the collateral directly.

The always-open crypto markets add another dimension. Banks are used to fixed hours of trading in equities, say. Many securities transactions take time, sometimes days, to settle, whereas digital currencies operate in seconds. Moreover, the whole point is that trades cannot be unwound, even if there are mistakes. Such features increase the importance of third-party digital custodians to help manage risk, and many of those entities are not, as yet, either regulated or transparent.

These are known unknowns. An even bigger danger could be unknown unknowns. Those range from the reliability of the decentralized confirmation processes attached to cryptocurrencies to the risk of hacks or errors that can't be righted. Wall Street's fear of missing out shouldn't obscure the risks of getting in.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
    • Total Posts
    • Total Members
    • Most Online
      10/06/21 10:53

    Newest Member
    Joined 26/09/23 22:16
  • Posts

    • Here are some general tips that may help you in your crypto trading endeavors: 1. Educate Yourself: Gain a solid understanding of how cryptocurrency markets work, including technical analysis, chart patterns, fundamental analysis, and market indicators. Continuously educate yourself about the latest trends and developments in the cryptocurrency space. 2. Develop a Trading Strategy: Define a clear trading strategy based on your goals, risk tolerance, and time commitment. This strategy should include entry and exit points, stop-loss orders, and profit targets. Stick to your strategy and avoid making impulsive decisions based on emotions. 3. Start with a Demo Account: Many exchanges, including Bitget, offer demo accounts or simulated trading environments. Use these features to practice your trading strategies without risking real money. It allows you to gain experience and assess the effectiveness of your approach. 4. Use Proper Risk Management: Set a risk management plan that includes determining the amount of capital you're willing to risk per trade. Avoid risking too much of your capital on a single trade. Consider using stop-loss orders to limit potential losses. 5. Technical Analysis: Learn how to analyze price charts and identify patterns and trends that can help you make informed trading decisions. Use technical indicators and tools to assist you in your analysis. 6. Stay Informed: Stay updated with news and events that can impact the cryptocurrency markets. Follow reliable sources, join cryptocurrency communities, and pay attention to announcements related to the cryptocurrencies you trade. 7. Start Small and Gradually Increase: It's generally advisable to start with a small amount of capital and gradually increase your position size as you gain experience and confidence in your trading abilities. 8. Control Emotions: Emotions can impact trading decisions. Avoid making impulsive trades based on fear or greed. Stick to your trading plan and remain disciplined. 9. Consider Diversification: Diversify your cryptocurrency portfolio to spread the risk. Investing in a variety of cryptocurrencies can help mitigate potential losses if one particular asset underperforms. 10. Continuous Learning and Adaptation: The cryptocurrency market is highly dynamic, so it's crucial to continuously learn and adapt your trading strategies. Stay open to new ideas and adjust your approach as per market conditions.
    • Analysts have noted a historical correlation between crypto prices and the stock market, particularly in relation to interest rate decisions. Post FOMC decision witness Bitcoin’s price showed little change drop to about 0.17% on the day while other crypto like the Bitget BGB recorded a mild gain. Crypto market analyst TXMC has warned of a potential recession in 2024 due to tight credit conditions, which could influence both stock and Bitcoin prices.
    • If that's the case, then I believe the next step is for the dev team to create an in-app EVM wallet that can process payment natively for PayPal users who wishes to use the stablecoin for transaction on the platform
  • Create New...