What's going on?
Israel-based (and London-listed) trading platform Plus500 reported record quarterly revenues and profits on Tuesday and increased its expectations for the year – helping its stock rise +6%!
What does this mean?
Plus500 allows investors to borrow money to bet on the price moves of assets – including cryptocurrencies – without actually owning them. With crypto markets whipsawing in the first quarter of 2018, investors flocked to the platform to bet on the price movement of such luminaries as bitcoin, ether and ripple.
And the presence of almost 220,000 active customers, including a threefold increase in new ones compared to this time last year, led Plus500 to some stonking financial results. Revenues in the first quarter alone were over two thirds of what the company generated in the whole of 2017 – while profits amounted to 90% of last year’s annual total.
Why should I care?
For markets: The crypto craze is alive and well.
2017 was a bumper year for cryptocurrencies, and the selloff that started in late December and continued into 2018 gave investors myriad reasons to trade. One was the April tax deadline in the US, which may have led to investors selling holdings in order to pay the $92 billion in taxes owed on 2017 crypto profits. Meanwhile, signs of mainstream adoption present in a raft of acquisitions and robo-advisers getting involved may have encouraged buying.
The bigger picture: Regulation may make cryptocurrencies more accessible.
Following the approval of bitcoin futures trading in December, further supportive regulation may be in the offing. The boss of Nasdaq said it’d consider becoming a cryptocurrency platform one day, while crypto exchange Coinbase has met with regulators to discuss becoming a certified brokerage. Financial regulators around the world are currently deciding whether to treat all cryptos as “securities” (i.e. like a stock or bond). If that happens, some may take a hit; but the extra oversight may well lead to the market finally opening up to professional investors.