Bank of America Bullish on Bitcoin ETFs

Bank of America Merrill Lynch (BAML) reported how bitcoin has the potential of reaching over one and a half billion dollars as a market for exchanges, suggesting Cboe Global Markets, Inc. (Cboe), due to its out-front attitude on cryptocurrencies, will be an early winner in such an exchange-traded fund (ETF) environment. 

Also read: The Bitcoin ETF Holy Grail — Another Firm Attempts the Odds Against SEC

Bank of America Runs with Crypto Bulls

With a few baked-in assumptions, BAML pegs foreign currency exchange market (FX) volume to around 1.65 trillion USD. FX currency markets cast a huge shadow, and their decentralized and around-the-clock trading seems match-made for bitcoin. If, BAML projects, the world’s most popular cryptocurrency can grab ten percent of that trillion dollar volume, then the 1.6 billion USD number is arrived at rather easily.

As quoted by Frank Chaparro of Business Insider, BAML explains, “If these volumes were to materialize, with the same relationship between spot market and futures, and the same revenue per contract, the revenue pool would be about $1.6bn.”

One US company stands to gain almost immediately from such an environment of “significant revenue stream,” according to the bank, and that’s Cboe.

Cboe Early Moves into Bitcoin Might Pay Handsomely

Cboe, readers might recall, first embraced cryptocurrencies when it gobbled up Bats Global Markets, at least partially in an effort to help Cameron and Tyler Winklevoss gain a mainstream exchange trading seat. The Securities and Exchange Commission (SEC) squashed the deal, however. Later, former Chairman Arthur Levitt remarkedhow the SEC doesn’t “want to take on something as complex from a regulatory point of view as bitcoin is.”

Such first-in activity seems to have encouraged Cboe to stick with Gemini Trust Company, LLC (the Winklevoss endeavor), especially as bitcoin’s value continues to rise and its relative share of crypto markets remains above half of all competitors.

Cboe also owns the Chicago Board Options Exchange (CBOE), the US’s biggest options exchange, which in turn should also help in plans for it and Gemini to create “bitcoin futures by this year or early next,” Mr. Chaparro notes. In addition, they’re “also looking to list a bitcoin exchange-traded fund.”

Per-day bitcoin trading volumes are north of 600 million USD. Beating all expectations, crypto markets are routinely above 150 billion USD since the beginning of this year. Bitcoin’s USD price, despite seemingly every world government pronouncing it evil, has reached four digit bottoms and is widely expected ever-higher in the months to come.

Bitcoin “has now evolved to a point that its utility as both a payment vehicle and a store of value is clear, while the overall popularity of digital assets has proven to be pretty resilient,” Cboe’s Chief Strategy Officer John Deters told Business Insider.

Mr. Chaparro also explains how “the exchange is exploring a broader family of cryptocurrency products in addition to the bitcoin futures product.”