TradeStation, the online investing firm that expects to offer its customers the ability to trade bitcoin futures as soon as they are tradable, is already seeing demand for the new investment products.
According to James Putra, director of innovation and strategy at TradeStation, the company has been actively working with the exchanges to become a day-one provider and has been preparing customers for the launch. He said that clients are already interested in accessing some of these products and that CME bitcoin futures will help drive "much more" capital into the cryptocurrency markets as well as boost awareness.
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"If you think about a pension fund or a hedge fund, they're not used to putting a billion dollars into a market that they can't liquate very easily," said Putra, noting that institutional investors also aren't keen on worrying if those cryptocurrency tokens disappear because the market is unregulated. "Using something like the futures or eventually other exchange products that might come up like ETFs and options, they are going to have a lot more of those protections and comforts that they are used to."
CME, the nation's largest futures exchange, announced earlier this month that it will likely offer bitcoin futures contracts by the end of the year. TradeStation, which is among the few online brokerages embracing cryptocurrencies, namely bitcoin, has already added support for real-time market data for CME's two bitcoin indices – the CME CF Bitcoin Reference Rate and the CME CF Bitcoin Real Time Index. Once they become available, the bitcoin contracts can be traded by current and newly funded TradeStation futures accounts. Over the summer, the Chicago Board Options Exchange, or CBOE, the largest U.S. options exchange, said that it will launch bitcoin derivatives trading products in the early part of 2018, which TradeStation will also offer.
Cryptocurrencies have been wildly volatile all year long, particularly for the leading digital currency bitcoin. In the beginning of 2017, bitcoin was trading around $1,000, and as of Thursday, it was valued at around $9,500. Bitcoin is known for wild swings based on regulatory actions and moves by the financial industry either to embrace or rail against the digital currency. Earlier in the year, bitcoin was under pressure after regulators from all sorts of countries, including the U.S., U.K. and China, warned about the risks associated with investing in cryptocurrencies. China has banned bitcoin exchanges and initial coin offerings altogether.
Despite these concerns, the price has surged on news that bitcoin is gaining legitimacy, which was the case when CME recently announced the impending bitcoin futures contracts. Japan has also embraced the currency, setting rules and boosting its legitimacy. As for where the price of bitcoin is heading, Putra said that it should continue moving higher just because of the new capital joining the marketplace.