World’s Savviest Traders Join In On Bitcoin Action
$BTCUSD, $CME, $CBOE
Electronic-trading firms that have already transformed markets from stocks to Fx (foreign exchange) to futures are diving into Bitcoin and other cryptocurrencies.
To date 5 of the biggest electronic traders in the world are already trading Bitcoin.
- Jump Trading LLC
- Tower Research Capital LLC
- Hudson River Trading
- Susquehanna International Group LLP
- DRW Holdings LLC has been trading digital currencies since Y 2014, giving it a head start on competitors.
High-speed firms have remade virtually every other electronic market, turning transactions over to algorithms and measuring market moves in millisecs.
But low volatility and trading volumes have eroded profits, pushing them to look for new opportunities.
Bitcoin, which has huge price swings, rose to a new highs on the week, and with CME Group Inc. (NASDAQ:CME), and Cboe Global Markets Inc. (NASDAQ:CBOE) set to offer Bitcoin futures contracts, it will get easier for pros to place bets, either on gains or losses.
What is surprising to us here at HeffCap is how polarizing Bitcoin is. Everyone has a viewpoint on Bitcoin, whereas with other asset classes you either care or you do not care.
The crypto arm of Chicago-based DRW, #5 above, is extending its reach, it has counterparties in more than 35 different countries.
It opened a desk in Singapore this week, adding to its locations in Chicago and London, and has about 15 employees in total, with more hiring on the way.
Jump, #1 above, has a team of more than 10 people focused on Bitcoin trading, Susquehanna, #4 above, called itself an “active participant” in Spot Bitcoin trading, in a letter to regulators advocating an ETF (exchange-traded fund) based on Bitcoin.
DV Trading LLC, a Chicago-based proprietary firm, trades about 12 cryptocurrencies on exchanges, and trades Bitcoin and monero over-the-counter. About 10 people work in the 1-year-old division, known as DV Chain.
GTS Securities LLC, Virtu Financial Inc. and HC Technologies are among the electronic traders sizing up opportunities, without jumping into the market just yet, according to people familiar with the matter.
Virtu is considering making markets in Bitcoin futures on CME and Cboe, according to a person familiar with the firm’s plans.
Representatives for those firms, as well as Jump and Hudson River Trading, declined to comment.
Tower did not respond to requests for comment.
The cryptocurrency field requires a new playbook. Certain strategies that are commonplace in financial markets do not work when trading cryptocurrencies.
In futures and equities, for instance, traders try to locate their systems near an exchange’s servers to get the fastest possible access to the market.
Digital currency exchanges that exist mainly online, so that not as doable.
This is a game place where sophisticated players can come in and get a return adding liquidity.There are not a lot of those places around any more.
Have a Happy Thanksgiving