TradeStation: Close to Half of Bitcoin Futures Traded on Platform Are Shorts
Bitcoin futures have come to a handful of online and discount brokerages thanks to Cboe World Markets and as of Monday CME Group Inc. (CME). But when it comes to trading these cryptocurrency futures, many investors seem to be betting against them.
At least that's what discount brokerage TradeStation is seeing. Nick LaMaina, the firm's senior vice president for brokerage services, told CBS last week that around half of the bitcoin futures that are traded on TradeStation are short sales. What's more, CBS pointed out that the Greyscale Bitcoin Investment Trust, the fund that tracks the price of bitcoin, has seen an increase in short interest, which rose to 47,866 as of Nov. 15 from 30,428 as of June 30.
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Ever since the start of the year, cryptocurrency – mainly bitcoin – has been surging in value, drawing more regular investors into the market. Bitcoin began trading the year at around $1,000 and was recently valued at around $18,800. That has drawn out short sellers, or those betting that an investment will decline in value. While governments around the world, including regulators in the U.S., have warned about the risks of trading cryptocurrencies, given they are unregulated and risky, both the CME and Cboe World Markets legitimized the digital coins by announcing the launch of bitcoin futures. Cboe was out of the gate first, with trading starting last week, while trading of CME's bitcoin futures started earlier Monday.
TradeStation has been an early mover when it comes to adopting bitcoin futures. The firm previously said that it would be ready on day one for both products, and it started allowing customers to trade the CME bitcoin futures when they went live earlier Monday. James Putra, director of innovation and strategy at TradeStation, recently said that CME bitcoin futures will help drive "much more" capital into the cryptocurrency markets as well as boost awareness.
Meanwhile, TradeStation President John Bartleman recently said in an interview that the brokerage is looking at additional ways for clients to trade the likes of bitcoin either via a partnership with existing exchanges or by becoming an exchange itself. While Bartleman acknowledged that there are risks to the system as cryptocurrency evolves very quickly, he also thinks that it is here to stay, likening it to the early days of the internet boom of the late 1980s and early 1990s. "There's real value here," said Bartleman. "In the next five years, I think we'll find ourselves in a place where retail customers will be trading in different types of crypto companies."
TradeStation's stance on cryptocurrency differs from Fidelity Investments and Charles Schwab, two online brokerages that won't offer bitcoin futures. Charles Schwab told Investopedia that it is taking a wait-and-see approach, with spokeswoman Kaitlyn Downing saying, "We intend to study the new proposed bitcoin futures contracts and weigh their associated risks with an eye to protecting our clients' interests before we make these products available." Meanwhile, Fidelity told Bloomberg that it has no plans to offer bitcoin futures to its brokerage customers.