BTSE launches Gold Futures priced in Bitcoin

BTSE is a crypto exchange and financial technology company leveraging Bitcoin and cryptocurrency technologies to develop new financial products and services for traders, exchanges, and businesses in the blockchain ecosystem. The company is based in the British Virgin Islands and offers a suite of products including spot and derivatives trading, and lending services.

The new BTSE gold futures product allows traders to speculate on whether the price of a troy ounce of gold goes up or down in relation to the price of Bitcoin (BTC), rather than against any fiat currency like the U.S. Dollar (USD). BTSE traders do not get access, or a claim, to physical gold. Instead, the futures product is tied to the price movement of Tether Gold, an ERC20 token, which tracks the price of London fine gold as its price source.

“Bitcoin is evolving into a mature store of value,” explained Jonathan Leong, CEO of BTSE. “The performance of gold versus Bitcoin fascinates both institutions and retail users, so we are excited to help traders directly trade and speculate on the performance of both assets in comparison with each other by launching a gold index that is priced in BTC.”

Brian Wong, co-founder of BTSE said that the response to the product announcement has been positive. “We see stronger interest in the Tether Gold futures priced in Bitcoin, which signals traders are interested in speculating on the relative spread of the two instruments. If the two assets are positively correlated, then the price volatility of this new instrument is, by right, even lower than Gold/USD. That’s because the price of gold and Bitcoin will likely fall by an equivalent ratio, so the contract remains, more or less, stable.”

Prominent macro investor Paul Tudor Jones has said that Bitcoin in 2020 reminds him of the role gold played in the 1970s. In a note titled The Great Monetary Inflation, he said that his Tudor BVI fund now has between 1 and 2% of its assets in Bitcoin futures contracts. He explained that he also has a portion of the portfolio allocated to gold and said the precious metal could go “substantially higher” if inflation continues.

“COVID-19 is a one-of-a-kind virus that has triggered a one-of-a-kind policy response globally,” Paul Tudor Jones said. “It has happened with such speed that even a market veteran like myself was left speechless. Just since February, a global total of$3.9 trillion (6.6% of global GDP) has been magically created through quantitative easing. We are witnessing the Great Monetary Inflation (GMI)—an unprecedented expansion of every form of money unlike anything the developed world has ever seen.”

Satoshi Nakamoto appears to have designed Bitcoin as a possible solution to this scenario. In 2009, shortly after the release of the Bitcoin white paper, the pseudonymous creator of Bitcoin posted to an internet forum. He stated, “The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.”

Real Vision CEO Raoul Pal says that as central banks adopt quantitative easing, the stage is set for hard assets such as Bitcoin and gold to perform well. “Huge quantitative easing of fiat meets the hardest money that automatically quantitatively tightens. Bitcoin wins. This is one of the best set ups in any asset class I’ve ever witnessed… technical, fundamental, flow of funds, and plumbing.”