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Investors start focusing on Cryptocurrency derivatives

Though policymakers around the world are tightening their noose on the cryptocurrencies, investors have started piling on the digital currencies derivatives. The simple reason behind this was the best quarterly results produced by the trading firm, IG Group, due to gains from the virtual currencies. This could tempt a number of firms to shift their focus towards the digital currency rather than invest the surplus money into other type of securities.

Trading Revenue

IG Group reported that it earned £1,482 per client during the three month period ended in February. This was 25 percent more than the year-ago quarterly numbers. The growth came due to the virtual currencies making up about 11 percent of its revenue. In the previous year period, it was just one percent. That reveals the importance of trading in cryptocurrencies and the gains generated from it.

During the last one year or more so in 2017, the digital currencies have reached sky high compared to the preceding year. For instance, Bitcoin was trading less than $1,000 at the start of the year 2017 and managed to hit nearly $20,000 in December enabling clients to make big profits. The company also recorded about 12,500 clients, who were the first time traders in the digital currencies during the same period. However, it would be tough to expect similar kind of returns in the upcoming period due to recent sluggishness.

The recent drop in cryptocurrencies value has had its effect on the trading too. This was evident when the company disclosed that trading in digital currencies has slowed down considerably since January end, reports Telegraph. One of the reasons behind it was the significant drop in the value of Bitcoin, i.e., more than half, as the digital currency leads the table of market capitalization.

There was more than one reason for the significant drop in the value of cryptocurrencies in the current year. Though Asia was claimed to be the biggest place for digital currencies, each and every country has resorted to tightening of the noose to limit the betting or use it as a platform for money laundering. The hackers also played their part in dragging down the digital currencies value as Japan faced over $500 million worth of loss due to hacking.

Strict Measures

Most importantly, every nation was keen to protect their investors, who were not experienced in virtual currency trading. The global crackdown on cryptocurrencies has definitely enabled a number of investors to postpone their investment plan into the digital currencies. Another reason for the clampdown was the spreadbetting practiced by some elements in the industry.

As a result, the European Securities and Markets Authority is planning to come out with strict measures that are aimed at protecting investors. IG Group is also feeling the pinch of new rules, and the company could not predict the impact of the proposed changes in its upcoming fiscal years. This could be interpreted as maintaining the gains seen from cryptocurrencies trading in the recent quarter would be a tough proposition. The regulators around the world are aware that as many as 76 percent of investors have lost their money during the period July 2015 to June 2016.

About the author

Leon Gaban

Leon is a FullStack Developer, Cryptocurrency Investor, Global Citizen who wandered into Blockstream, and is currently trying to produce a prototype and spec for bitcoin lightning. To know more about Leon, follow him on Twitter.

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