DEUTSCHE BANK: Correlation between bitcoin and Wall Street's 'Fear Index' is increasing 'dramatically'

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 24, 2016. REUTERS/Brendan McDermid

Cryptocurrencies are increasingly correlated with the CBOE Volatility Index, better known as Wall Street's "Fear Index."
That's according to a note from global financial strategist Masao Muraki and his team at Deutsche Bank.
The correlation relates to the fact that a low volatility environment encourages investors to move into riskier assets, like cryptocurrencies, to achieve decent returns on their investments.

LONDON - There's a growing relationship between the price of bitcoin and the VIX, the volatility index colloquially known as Wall Street's "Fear Index," according to analysts at Deutsche Bank.

Writing in a note circulated to clients on Friday, Deutsche Bank global financial strategist Masao Muraki, alongside his colleagues Hiroshi Torii and Tao Xu, said that in the three weeks of 2018 so far "correlation between Bitcoin and VIX has increased dramatically."

Right now, market volatility is close to record lows, as measured by t he CBOE Volatility Index, the most widely followed barometer of expected near-term stock market volatility. Simply put, markets are pretty dull, with little to no major fluctuations going on. Stocks simply keep rising.

That, in turn, is leading investors to look for more and more risky ways of making money, which Deutsche Bank believes is part of the reason for the huge rise seen in the cryptocurrency markets in recent months.

"The current 'triple-low environment' of low interest rates, low spreads, and low volatility has given birth to new asset classes like implied volatility (ETFs selling volatility), and cryptocurrencies," the reports authors write.

But where does the correlation between volatility and bitcoin come in? Here's the explanation from Muraki, Torii, and Xu (emphasis ours):

"Cryptocurrencies are closely watched by retail investors, affecting their risk preferences for stocks and other risk assets. Although institutional investors recognize that stocks and other asset valuations may have entered bubble territory (US equities' average P/E is around 20x), they cannot help but continue their risk-taking. Now, a growing number of institutional investors are watching cryptocurrencies as the frontier of risk-taking to evaluate the sustainability of asset prices.

"The result is that institutional investors, who are supposed to value assets using their sophisticated financial literacy, analysis, and information-gathering strengths, are actually seeking feedback about the market from cryptocurrency prices (which are mainly formed by retail investors)."

Basically, Muraki argues, as volatility in traditional assets drops, the price of bitcoin and other reasonably mainstream cryptocurrencies rises, as investors look for a way to make money. Here's the chart from Deutsche Bank showing just that:

Deutsche Bank

While traditional market volatility remains close to rock bottom, the same is certainly not true of bitcoin and cryptocurrencies in general. Cryptocurrencies this week rode a rollercoaster, with bitcoin dropping as much as 25% in a single day early in the week, before rebounding aggressively.

At one point the market had lost $340 billion of value with the sell-off at its most severe on Tuesday and Wednesday.

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Deutsche Bank strategist tells investors to avoid bitcoin

FRANKFURT (Reuters) - Deutsche Bank ( DBKGn.DE ) has joined the ranks of those warning about the virtual currency bitcoin as an investment.

“I would simply not recommend this to the everyday investor,” Ulrich Stephan, chief strategist at Germany’s largest lender, said on Wednesday.

Stephan said that fluctuations are too great and regulation too scant. He noted that German investors were reluctant to invest in stocks, but were generating hype about bitcoin.

Bitcoin smashed through the $8,000 level for the first time over the weekend and traded at $8,216 at 1523 GMT on Wednesday, with many experts saying $10,000 is possible.

An eightfold increase in the value of the volatile cryptocurrency this year has led to multiple warnings of a bubble, and institutional investors are broadly staying away.

Retail investors, however, as well as some hedge funds and family offices, are piling in despite JPMorgan Chase & Co ( JPM.N ) Chief Executive Officer Jamie Dimon earlier this year calling bitcoin a “fraud”.

Although UBS ( UBSG.S ) Chairman Axel Weber urged caution on bitcoin last week, he also said there was potential for the technology underpinning it.

“At this point, I’m very cautious about bitcoin as an entity. I’m much more optimistic about the underlying technology,” Weber added.

Sweden’s central bank is one organization which is investigating the potential for digital currencies.

“An e-krona would have the potential to counteract some of the problems that could arise on the payment market in the future when the use of cash is rapidly declining,” the Riksbank said in a report in September.

Reporting by Patricia Uhlig and Tom Sims; editing by Alexander Smith

Deutsche Bank Economist Says a Bitcoin Crash Would Endanger Global Markets

An economist at Deutsche Bank thinks a crash in the price of bitcoin will be among the top risks to broader markets in 2018.

Torsten Slok, Deutsche’s Bank’s Chief International Economist, recently sent clients a list of 30 market risks which could impact growth next year. The list, shared with outlets including Bloomberg, ranks a bitcoin crash as the 13th-highest risk, behind various central banking challenges and overvaluation of U.S. equities.

It’s not hard to argue bitcoin is in a hype-fueled bubble, but Deutsche’s concern that it could impact the global economy still seems at least slightly overblown. According to Coinmarketcap, the total market value of all cryptocurrencies — including not just bitcoin, but Ethereum, Litecoin, and all the rest — is now swinging around $400 billion. For comparison, the total value of the U.S. housing market, which lay at the heart of the 2008 financial crisis, was estimated at $29.6 trillion in 2016 — or more than 70 times higher than cryptocurrencies’ current total value.

That doesn’t mean a bitcoin bust couldn’t contribute to a broader meltdown, but it’s hard to see it as a systemic risk in itself. Aside from pure size considerations, bitcoin owners are spread across the entire globe, which would also spread any crash’s impact.

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Deutsche Bank warns investors from Bitcoin

As Bitcoin continues to inch towards the $10,000 mark, there are still some parties that believe it’s not a good investment option.

Harsh Stance Against Bitcoin

Bitcoin and cryptocurrencies are currently among the hottest topics in the finance and technology world. The main reason behind the recent hype is the astronomical rise of the cryptocurrency market cap. At the start of 2017, the total cryptocurrency market cap was barely worth $20 billion. The cryptocurrency market now worth almost $300 billion, an impressive market growth of over 1000%.

One of the most notable gainers was the most popular cryptocurrency Bitcoin, which managed to grow from $963 to today’s all-time high price of $9457. Even though Bitcoin’s value has risen by more than 880% this year, there are still some skeptics in the finance community that believe its a bubble.

Jamie Dimon, CEO of financial giant JPMorgan Chase, is one of Bitcoin’s most vocal and tenacious detractors, having previously called the digital currency a “fraud” and “tulip mania 2.0”. And now, according to a recent article by Reuters, a chief strategist at the Deutsche Bank, Ulrich Stephan, has joined Dimon’s Bitcoin haters club, advising investors to stay away from the decentralized cryptocurrency. Stephan claims that the main reasons behind his advice are Bitcoin’s extreme volatility and its lack of regulation.

Could Bitcoin Actually Be Undervalued?

There might be some people that still don’t believe in Bitcoin and cryptocurrencies, but there many people that see a huge potential for them. The famous serial investor, Mike Novogratz, predicted a couple of days ago that Bitcoin would reach $10,000 and Ethereum $500 by year’s end. Novogratz’s predictions might just come true, as Bitcoin is currently worth $9457 and Ethereum $460.

Most analysts believe that Bitcoin may go higher than $10,000, because of the upcoming launch of Bitcoin futures by the CME Group. Bitcoin futures would allow more institutional investors to get into the Bitcoin boom and further diversify their portfolios and investments.

What are your thoughts on the advice of Deutsche Bank’s strategist? Do you think that people should refrain from investing in Bitcoin? Let us know in the comments below!

Deutsche Bank: Banks Must Partner with Fintech and Digital Currency Businesses or Risk Disappearing Altogether

The number of banks experimenting with blockchain technology and looking at their own digital currencies is growing by leaps and bounds, so it’s no surprise that Deutsche Bank is well on its way to having its own blockchain technology.

In a recent statement, the bank was quoted as saying: “Banks must partner with fintech and digital currency businesses or risk disappearing altogether.”

Although Deutsche Bank is a member of the R3CEV consortium of 42 banks that is developing a protocol for blockchain technology for the banking sector, the bank has been quietly running its own blockchain experiments.

Recently, Bank of America JPMorgan, UBS and Bank of England have also said that their respective banks are looking at ways to adapt blockchain technology for their own use.

But unlike some banks, such as Japan’s Bank of Tokyo-Mitsubishi, Citibank and BNY Mellon, Deutsche Bank is not looking at developing its own digital currency. It believes customers are looking for more digitalization and convenience, not necessarily a new currency.

In a forthcoming white paper called FinTech 2.0, Deutsche Bank signals to investors and clients that it is looking at partnering with new fintech startups to accelerate the transition to digital banking, including blockchain technology.

Deutsche Bank’s report is a wake-up call for the banking sector, warning that unless banks learn to partner with fintechs and “digital disruptors” they will begin to disappear altogether from the financial services landscape.

Coming on the heels of Deutsche Bank’s reported record loss for 2015 and a drop in Deutsche Bank’s share price, the report notes that it’s time for the bank to adopt a new business model that recognizes the importance of digital disruption in financial services.

In a wide-ranging interview with Bitcoin Magazine , Deutsche Bank Managing Director Rhomaios Ram said that the bank is more than ready to adopt new payment innovations and considers the adoption of blockchain technology inevitable.

“As the white paper notes, the biggest hurdles to adoption of new technologies and partnerships are regulatory and legal requirements in different jurisdictions around the world,” said Ram.

“Fintechs, and huge digital ecosystems in particular, have entered the market with a bang,” he said, noting that the report calls for a “mindset” adjustment to understand the major change in the marketplace and “that digitalization can become the new differentiator for banks.”

The white paper calls on the banking sector to “modernize the entire financial system infrastructure” andpartner with new digital market forces. including cryptocurrency startups, saying, “Banks must change their attitude to fintech companies in order to survive.”

Fintech startups happy to partner with Deutsche Bank

Ram told Bitcoin Magazine he had met with many fintech startups and was pleasantly surprised that they were more than happy to partner with the bank.

“I’ve discussed the possibility of partnerships with tens of different fintech startups, and they all seem very keen to partner with us,” Ram said. “It’s great that they see the benefits that we can bring to a potential partnership, including a client base, security and regulatory certainty.”

The report lists the following projects as examples of “payment innovators”: PayPal, M-Pesa, Bitcoin, Alipay, Stripe, Payoneer, Samsung Pay, Apple Pay, Square and Google Wallet.

In the spirit of cooperation, JPMorgan Chase already has teamed up with Digital Asset Holdings on a trial blockchain initiative that aims to make the trading process more efficient and cost-effective.

What’s in it for the new fintech company? The white paper notes:

“In order to maintain their position, they must find a way to meet their regulatory, investment and risk needs in order to focus on their core competencies. They may find partnering with a global banking provider to be the most strategic approach in this regard, and many of the developments of coming years will likely evolve within such alliances. Several market leaders have realised that bank alliances are the way forwards.”

Deutsche Bank experiments with three blockchain labs

According to Ram, Deutsche Bank currently operates three innovation labs in Berlin, London and one soon to be launched in Silicon Valley.

Calling blockchain technology “genius,” Ram said they haven’t settled on one version yet of the various technologies being developed.

“We’re blockchain ‘agnostics’ – we’re interested in and studying the benefits of all the various blockchain technologies including Bitcoin, Ethereum, Stellar and others – to ensure we’re adopting the best possible version for our use,” he said.

In early December 2015, Deutsche Bank announced it had successfully tested a corporate bond platform that was based on blockchain technology. Blockchain technology “smart contracts” were used to issue and redeem bonds that paid out coupons automatically.

On bitcoin as a currency, Ram isn’t sure what the future holds for the digital currency, saying:

“As far as bitcoin as a future currency, I’m not sure whether universal adoption is a sure thing. The public seem most interested in the digitalization and convenience of new faster payment methods more than a change in the currency itself.”

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Question on a link

In the search for Anaïs Nin, one of the first few links shows a picture of a man. Why? Since Nin is a woman, I can’t figure out why. Can you show some reason for this? Who is he? If you click on the picture a group of pictures of Nin and no mention of that man. Is it an error?

Repair the Yahoo Search App.

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I also had At&t try to help me because I have UVERSE for my internet service. My internet was working perfectly. Their Technical Support team member checked the Yahoo Search App and it wouldn't work for him either.

We can go to www.yahoo.com and search for any topic or website. It's just the Yahoo Search App that won't allow anyone to do web searches at all.

I let Google know that the Yahoo Search App installed from their Google Play Store had completely stopped working on May 18, 2018.

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No matter what I search for or website thru the Yahoo Search App it says the following after I searched for
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WEBPAGE NOT AVAILABLE
This webpage at gttp://r.search.yahoo.com/_ylt=A0geJGq8BbkrgALEMMITE5jylu=X3oDMTEzcTjdWsyBGNvbG8DYmyxBHBvcwMxBHZ0aWQDTkFQUEMwxzEEc2VjA3NylRo=10/Ru=https%3a%2f%2fwww.att.att.com%2f/Rk=2/Es=plkGNRAB61_XKqFjTEN7J8cXA-
could not be loaded because:
net::ERR_CLEARTEXT_NOT_PERMITTED

I tried to search for things like www.homedepot.com. The same thing happened. It would say WEBPAGE NOT AVAILABLE. The only thing that changed were all the upper and lower case letters, numbers and symbols.
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net::ERR_CLEARTEXT_NOT_PERMITTED

This is the same thing that happened when Samsung and At&t tried to do any kind of searches thru the Yahoo Search App.

Yahoo needs to fix the problem with their app.

Yahoo Search App from the Google Play Store on my Samsung Galaxy S8+ phone stopped working on May 18, 2018.

I went to the Yahoo Troubleshooting page but the article that said to do a certain 8 steps to fix the problem with Yahoo Services not working and how to fix the problem. Of course they didn't work.

Deutsche Bank Research: Bitcoin Isn't Eliminating Intermediaries

A new Deutsche Bank Research report suggests the bitcoin network is in some ways failing to live up to its original vision.

Released on 9th December, the Deutsche Bank paper notes that the bitcoin ecosystem now includes "a number of financial intermediaries" despite the fact that it was created to be a decentralized peer-to-peer (P2P) cash system without such entities.

Intermediaries, according to the report, include bitcoin exchanges and hosted wallets, which author Heike Mai indicated have highly centralized liquidity within the alternative financial system.

"The original idea of bitcoin – to create a peer-to-peer scheme that is independent of intermediaries and central agents – is to some degree being overhauled by real life. The bitcoin ecosystem now includes a number of financial intermediaries, like wallet providers and exchanges, and these show a trend towards concentration."

Overall, the report seeks to examine the role of cryptocurrencies and distributed ledgers in the broader shift toward real-time payments, with Mai stating that the emerging technology offers a "novel" design proposal for such a system.

"Although still in its infancy, blockchain technology might revolutionise the financial industry which is characterised by tiered, centralised networks in many markets," the report reads.

Elsewhere, the report analyzes how different closed- and open-loop payment systems can achieve real-time global payments, offering an outlook for how it believes each can achieve this larger goal.

The findings suggest that Deutsche Bank, which joined the R3 distributed ledger consortium this September, is optimistic about the potential of decentralized cryptographic technologies, even if their future outlook isn't certain:

"Given the early stage of development, it is still unclear if blockchain technology is suited to underpinning significant instant retail payment traffic in the future."

Instant processing

Notably, cryptographic ledger systems, the paper states, have to some extent already succeeded in bringing real-time payments to a relatively small market.

The report notes that while bitcoin transactions can take 10 minutes to confirm, consensus systems such as the permissioned Ripple protocol offer transfers "within seconds". Still, the biggest open question toward the use of these systems, the author reasons, is that the technology has only been tested on a small scale to date.

Should the scale of these networks be increased, Mai also speculates that new pressures may reshape how public blockchains like bitcoin operate.

"Sceptics expect that distributed (ie decentralised) payment systems will not be able to compete with centralised transfer systems on cost, unless they concentrate processing in fewer miners," he writes.

In addition, Mai says that blockchain systems still face many unanswered legal questions, such as how laws can be enforced in such networks without centralizing agents.

Read the full research report below:

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Binance is more profitable than the Deutsche Bank

In these days, many of the listed companies are returning their financial figures for the first quarter of 2018. A comparison is particularly impressive, namely the comparison between Binance and Deutsche Bank.

Binance is currently the world’s largest crypto exchange, with a daily trading volume of over 2 billion US dollars and that although the company has been offering cryptocurrencies trading for just 8 months. Those who compare the financial figures with those of Deutsche Bank see how profitable the crypto trading can be at present.

Deutsche Bank
Branches: 2,434
Staff: 98,720
Age: 148 Years
Quarterly profit: 146 million USD

Binance
Branches: 0
Staff: 200
Age: 1 year
Quarterly profit: 200 million USD

It is already impressive how successful Binance is in the first year of existence. The company has, of course, benefited primarily from the crypto boom in 2017. At times, Binance even had to suspend registration for new members to handle the onslaught. Even if it is not made public, Binance deserves not only the trading fees, but will also demand Listungsgebühren of the individual coins. According to insiders, these are several million US dollars.

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