Latest Ethereum price and analysis (ETH to USD)

Latest Ethereum price and analysis (ETH to USD)

Bloomberg

(Bloomberg) – Stefan Qin was just 19 when he claimed to have the secret to cryptocurrency trading.Buoyed with youthful confidence, Qin, a self-proclaimed math prodigy from Australia, dropped out of college in 2016 to start a hedge fund in New York he called Virgil Capital. He told potential clients he had developed an algorithm called Tenjin to monitor cryptocurrency exchanges around the world to seize on price fluctuations. A little more than a year after it started, he bragged the fund had returned 500%, a claim that produced a flurry of new money from investors.He became so flush with cash, Qin signed a lease in September 2019 for a $23,000-a-month apartment in 50 West, a 64-story luxury condo building in the financial district with expansive views of lower Manhattan as well as a pool, sauna, steam room, hot tub and golf simulator.In reality, federal prosecutors said, the operation was a lie, essentially a Ponzi scheme that stole about $90 million from more than 100 investors to help pay for Qin’s lavish lifestyle and personal investments in such high-risk bets as initial coin offerings. At one point, facing client demands for their money, he variously blamed “poor cash flow management” and “loan sharks in China” for his troubles. Last week, Qin, now 24 and expressing remorse, pleaded guilty in federal court in Manhattan to a single count of securities fraud.“I knew that what I was doing was wrong and illegal,” he told U.S. District Judge Valerie E. Caproni, who could sentence him to more than 15 years in prison. “I deeply regret my actions and will spend the rest of my life atoning for what I did. I am profoundly sorry for the harm my selfish behavior has caused to my investors who trusted in me, my employees and my family.”Eager InvestorsThe case echoes similar cryptocurrency frauds, such as that of BitConnect, promising people double-and triple-digit returns and costing investors billions. Ponzi schemes like that show how investors eager to cash in on a hot market can easily be led astray by promises of large returns. Canadian exchange QuadrigaCX collapsed in 2019 as a result of fraud, causing at least $125 million in losses for 76,000 investors.While regulatory oversight of the cryptocurrency industry is tightening, the sector is littered with inexperienced participants. A number of the 800 or so crypto funds worldwide are run by people with no knowledge of Wall Street or finance, including some college students and recent graduates who launched funds a few years ago.Qin’s path started in college, too. He had been a math whiz who planned on becoming a physicist, he told a website, DigFin, in a profile published in December, just a week before regulators closed in on him. He described himself on his LinkedIn page as a “quant with a deep interest and understanding in blockchain technology.”In 2016, he won acceptance into a program for high-potential entrepreneurs at the University of New South Wales in Sydney with a proposal to use blockchain technology to speed up foreign exchange transactions. He also attended the Minerva Schools, a mostly online college based in San Francisco, from August 2016 through December 2017, the school confirmed.Crypto BugHe got the crypto bug after an internship with a firm in China, he told DigFin. His task had been to build a platform between two venues, one in China and the other in the U.S., to allow the firm to arbitrage cryptocurrencies.Convinced he had happened upon a business, Qin moved to New York to found Virgil Capital. His strategy, he told investors, would be to exploit the tendency of cryptocurrencies to trade at different prices at various exchanges. He would be “market-neutral,” meaning that the firm’s funds wouldn’t be exposed to price movements.And unlike other hedge funds, he told DigFin, Virgil wouldn’t charge management fees, taking only fees based on the firm’s performance. “We never try to make easy money,” Qin said.By his telling, Virgil got off to a fast start, claiming 500% returns in 2017, which brought in more investors eager to participate. A marketing brochure boasted of 10% monthly returns – or 2,811% over a three-year period ending in August 2019, legal filings show.His assets got an extra jolt after the Wall Street Journal profiled him in a February 2018 story that touted his skill at arbitraging cryptocurrency. Virgil “experienced substantial growth as new investors flocked to the fund,” prosecutors said.Missing AssetsThe first cracks appeared last summer. Some investors were becoming “increasingly upset” about missing assets and incomplete transfers, the former head of investor relations, Melissa Fox Murphy, said in a court declaration. (She left the firm in December.) The complaints grew.“It is now MID DECEMBER and my MILLION DOLLARS IS NOWHERE TO BE SEEN,” wrote one investor, whose name was blacked out in court documents. “It’s a disgrace the way you guys are treating one of your earliest and largest investors.”Around the same time, nine investors with $3.5 million in funds asked for redemptions from the firm’s flagship Virgil Sigma Fund LP, according to prosecutors. But there was no money to transfer. Qin had drained the Sigma Fund of its assets. The fund’s balances were fabricated.Instead of trading at 39 exchanges around the world, as he had claimed, Qin spent investor money on personal expenses and to invest in other undisclosed high-risk investments, including initial coin offerings, prosecutors said.So Qin tried to stall. He convinced investors instead to transfer their interests into his VQR Multistrategy Fund, another cryptocurrency fund he started in February 2020 that used a variety of trading strategies – and still had assets.‘Loan Sharks’He also sought to withdraw $1.7 million from the VQR fund, but that aroused suspicions from the head trader, Antonio Hallak. In a phone call Hallak recorded in December, Qin said he needed the money to repay “loan sharks in China” that he had borrowed from to start his business, according to court filings in a lawsuit filed by the Securities and Exchange Commission. He said the loan sharks “might do anything to collect on the debt” and that he had a “liquidity issue” that prevented him from repaying them.“I just had such poor cash flow management to be honest with you,” Qin told Hallak. “I don’t have money right now dude. It’s so sad.”When the trader balked at the withdrawal, Qin attempted to take over the reins of VQR’s accounts. But by now the SEC was involved. It got cryptocurrency exchanges to put a hold on VQR’s remaining assets and, a week later, filed suit.Asset RecoveryBy the end, Qin had drained virtually all of the money that was in the Sigma Fund. A court-appointed receiver who is overseeing the fund is looking to recover assets for investors, said Nicholas Biase, a spokesman for Manhattan U.S. Attorney Audrey Strauss. About $24 million in assets in the VQR fund was frozen and should be available to disperse, he said.“Stefan He Qin drained almost all of the assets from the $90 million cryptocurrency fund he owned, stealing investors’ money, spending it on indulgences and speculative personal investments, and lying to investors about the performance of the fund and what he had done with their money,” Strauss said in a statement.In South Korea when he learned of the probe, Qin agreed to fly back to the U.S., prosecutors said. He surrendered to authorities on Feb. 4, pleaded guilty the same day before Caproni, and was freed on a $50,000 bond pending his sentencing, scheduled for May 20. While the maximum statutory penalty calls for 20 years in prison, as part of a plea deal, prosecutors agreed that he should get 151 to 188 months behind bars under federal sentencing guidelines and a fine of up to $350,000.That fate is a far cry from the career his parents had envisioned for him – a physicist, he had told DigFin. “They weren’t too happy when I told them I had quit uni to do this crypto thing. Who knows, maybe someday I’ll complete my degree. But what I really want to do is trade crypto.”The case is U.S. v Qin, 21-cr-75, U.S. District Court, Southern District of New York (Manhattan)(Updates with comment from prosecutor and case caption)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

CME Ethereum Futures, Explained

Investors can now attempt to profit from the future price movements of Ethereum’s main crypto token, ether (ETH), on the Chicago Mercantile Exchange (CME).

On Feb. 8, ether futures went live on the CME – the world’s largest derivatives exchange – 53 days after the first official plans were announced.

What is futures trading?

A futures contract is where the buyer agrees to purchase – and the seller agrees to sell – the underlying asset at a fixed price at a future date. In the case of the ether futures, that underlying asset is the Ethereum cryptocurrency.

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But rather than having the seller deliver ether to the buyer on the settlement date, ether futures contracts are settled for cash; if the settlement price of ether ends up being higher than the contract price, the seller agrees to pay just the dollar difference between the contract price and the settlement price. Likewise, if the settlement price is lower than the contract price, the buyer pays the seller the difference.

So what price do they use? The contract tracks the price of ether using the CME CF Ether-Dollar Reference Rate (ETHUSD_RR). The system collects price data on ether trades from major crypto exchanges including Kraken, Coinbase, Bitstamp, itBit and Gemini, and works out a volume-weighted average price (VWAP) for ether each day.

Each contract is worth 50 ether and priced in U.S. dollars. There is a maximum order size of 100 contracts on CME Globex, the exchange’s electronic trading platform that runs continuously to accommodate traders from all time zones. Whatever the price of ether is at the point of expiry (when the contract is scheduled to be settled) both the buyer and seller have to uphold their promises to buy and sell the contract, respectively.

Example:

At the start of March, Bob is bullish on ether and thinks the price will rise over the next four weeks. Barbara, however, is bearish on ether and believes the price will drop by the end of April. Bob and Barbara both enter into an ether futures trade on the CME.

Bob agrees to buy 1 ether futures contract with an April expiry (Apr. 30). Ether’s current price is $1,800 so the notional value of the contract equals $90,000 (50 x 1,800). Barbara agrees to sell 1 contract worth of ether on Apr. 30.

Bob is hoping by the end of April, ether’s price will have risen so when the contract reaches settlement he will profit from the difference between the initial contract price and the settlement price. Barbara is hoping ether’s price will have fallen so that she can profit from the difference.

Scenario A: Upon expiry, ether’s price is $2,000 per coin which means the settlement price of the ether futures contract is $100,000 (50 x 2,000). Barbara now has to pay Bob $100,000 as part of the futures contract agreement, which leaves Bob with a $10,000 profit.

Scenario B: Upon expiry, ether’s price is $1,600 per coin which means the settlement price of the ether futures contract is $80,000 (50 x 1,600). As per the agreement, Bob has to pay Barbara $90,000 for a contract that is now worth $80,000, which means Barbara has made a $10,000 profit.

CME Ethereum futures FAQs

What are the pros and cons of trading Ethereum futures?

Pros:

Stand to profit from the future movements of Ethereum’s ether cryptocurrency.

Gain exposure to the digital asset market without having to navigate unregulated crypto exchanges and set up digital wallets.

Ability to use leverage to increase capital efficiency.

Cons:

Not eligible for any Ethereum forked coins. Forked coins are produced from “hard forks” which is when a blockchain splits to create an entirely new chain. This occurs for a variety of reasons, including when a major change to the protocol needs to be implemented that is not backward compatible with the old chain, if someone wants to create a spin off of an existing open-source project like Bitcoin, or when there’s an internal disagreement between miners and/or developers and they decide to part ways. When a new blockchain is created, a new cryptocurrency is also created and distributed to all holders of the original blockchain tokens.

Forked coins are produced from “hard forks” which is when a blockchain splits to create an entirely new chain. This occurs for a variety of reasons, including when a major change to the protocol needs to be implemented that is not backward compatible with the old chain, if someone wants to create a spin off of an existing open-source project like Bitcoin, or when there’s an internal disagreement between miners and/or developers and they decide to part ways. When a new blockchain is created, a new cryptocurrency is also created and distributed to all holders of the original blockchain tokens. No airdrops. Airdrops are where crypto projects distribute free tokens to people for completing certain tasks, being in certain associated communities, or to encourage adoption.

Airdrops are where crypto projects distribute free tokens to people for completing certain tasks, being in certain associated communities, or to encourage adoption. High barrier to entry for regular investors. The minimum purchase amount is 1 contract which costs the USD equivalent of 50 ether – currently $85,000 as of Feb.10, 2021.

The minimum purchase amount is 1 contract which costs the USD equivalent of 50 ether – currently $85,000 as of Feb.10, 2021. Potential to lose more than initially invested. Futures trading carries an “unlimited liability” risk where traders can lose significantly more than just the initial money they invested. In some extreme cases, traders have even gone bankrupt from trading futures contracts. This is because there is no limit on how high or low the price of the underlying asset can move. For example, Barbara enters into another ether futures trade with Bob for one contract with a notional value of $90,000 and a May expiry. Over the course of May, the price of ether rises dramatically to $4,000 per coin. Barbara now has to pay Bob a whopping $200,000 to settle the contract (50 x 4,000).

How easy is it to trade Ethereum futures on the CME?

In order to trade ETH futures on the CME, you’ll need to set up an account with a registered futures broker. A list can be found here. Once you’re set up, you can place an order through your broker and tell them how many contracts you’d like to buy or sell and select an expiry month.

How much are transaction fees?

A full breakdown of all transaction fees associated with ETH futures can be found on the CME website.

What impact could CME futures have on ether’s price?

The launch of ether futures gives institutional investors an opportunity to hedge against spot market positions – a market where assets and securities are traded with immediate delivery, like Coinbase – which makes the Ethereum native cryptocurrency a much more attractive investment. This has the potential to encourage more big money to enter the crypto market and help improve overall maturity.

There are, however, some instances where ether futures may have a detrimental impact on the underlying price of ether. When futures markets close for the day or the weekend during periods of high market volatility, gaps can appear on futures charts. This is where the price closes at a certain point and then reopens for the new day or week at a completely different price point. For reasons unknown, these CME gaps have a tendency to get filled most of the time, where traders drive the asset back to its original price before the gap appeared. Whenever this happens, it also causes the underlying asset’s price on the spot market to move in tandem as arbitrage traders profit from the difference between the different exchanges.

Ethereum Price Prediction: ETH Set to Spark Above $2,000

Ethereum price is wavering near its all-time high as interest from institutional investors rise. ETH price is also soaring as the Decentralized Finance (DeFi) industry continues to experience substantial inflows. It is trading at $1,745, which is slightly below its all-time high of $1,820.

Ethereum news: ETH has been on an upward trend in the past few months mostly because of the ongoing phase of irrational exuberance. This trend has pushed the currency’s market cap to more than $200 billion. As the second-biggest cryptocurrency, analysts believe that many institutions will buy it to diversify their BTC holdings.

Another reason for the current rally is the huge demand for DeFi projects. The total value locked in the DeFi ecosystem has surged to more than $38 billion. This value was less than $1 billion a year before. This is notable because most of the leading DeFi projects are built using the ETH ecosystem.

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Meanwhile, Ethereum price has risen because of the recent launch of ETH futures by the CME. Analysts believe that this will boost demand for the currency. However, it could also lead to more rising pressure from short-sellers.

Ethereum price prediction

On the daily chart, we see that the ETH price has been rising. And recently, it seems to be forming an ascending triangle pattern. It is also above the 25-day and 15-day moving averages while the MACD has continued rising. Therefore, while the price will see some selling pressure, there is a likelihood that it will resume the uptrend as bulls target the next resistance at $2,000. However, a move below $1,400 will invalidate this trend.

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