When it comes to bitcoin, E*TRADE is now all in, adding CME Group Inc. (CME) bitcoin futures to the investment products its customers can trade. On its website, the New York-based online brokerage disclosed that, as of Tuesday, Jan. 2, customers can trade both CME and CBOE World Markets bitcoin futures. The firm began letting customers trade CBOE bitcoin futures in December.
The move on the part of E*TRADE Financial Corporation (ETFC) comes at a time when there is intense interest in bitcoin and other cryptocurrencies – and not just among savvy investors. With the price of bitcoin surging for most of 2017, regular investors have been expressing interest in digital currency. The launch of bitcoin futures by CME and Cboe served to create more legitimacy for a market that is unregulated and is prone to wild swings in prices. In late December, for example, bitcoin was trading at more than $18,000, but it has plummeted since then, starting the year down. As of Wednesday trading (Jan. 3), bitcoin was valued at $14,950.
E*TRADE joins TradeStation and TD Ameritrade as the only other leading online brokerages to offer customers access to the bitcoin futures. Fidelity Investments, Charles Schwab and Ally Invest have all signaled they are taking a wait-and-see-approach. Ally Invest had previously said that it would offer the bitcoin futures but pulled away from that statement after observing the volatility in the first week of bitcoin futures trading. It is now doing more research before wading in.
For E*TRADE, offering bitcoin futures means more than just giving customers greater choice. With the heightened focus on cryptocurrency, some Wall Street watchers have predicted that the online brokerages that offer related products early stand to win over their more conservative peers. According to Morgan Stanley, one of the big benefits of offering DIY investors access to new cryptocurrency products is the potential to cross-sell. An important practice on Wall Street, cross-selling happens when a trading firm lands a new client for one service and then gets the client into other products at the brokerage firm.
Furthermore, Morgan Stanley said that offering the new products could build brand awareness among regular investors given the attention that bitcoin and the bitcoin futures are receiving in the marketplace and from the mainstream media. "Brokers that offer bitcoin futures trading may appear more cutting edge than competitors without it, attracting more clients," Morgan Stanley said. "If it were 20 years ago, when the discount brokers were insurgents, we wouldn't be surprised to see them as first movers in providing access to newly regulated areas of cryptocurrency trading. Over time, they may well move beyond bitcoin futures."