TD Ameritrade announced it would start trading bitcoin futures on its own platform next week, joining Cboe and CME. The company, with its much larger futures platform, hopes to capture a share of bitcoin’s mainstream momentum.
The entry of larger players will have mainstream and cryptocurrency speculators watching closely, once again. Of note, Coinbase’s newly-announced president Asiff Hirji was previously a senior executive at TD Ameritrade.
CME, which announced its intentions first, will also start trading this week. Cboe launched its “Bitcoin Futures” product almost a week ago. So far it has been neither the disaster nor moon rocket some predicted — BTC jolted out of its days-old “decline” and went back above $17,000 USD, with some modest gains since then.
CNBC appeared a little underwhelmed by the response to Cboe bitcoin futures trading this week, calling it “a slow but respectable start”. However it predicted the entry of TD Ameritrade, along with CME next week, would boost trade volumes and total dollar value.
It credited the start of futures trading with reducing bitcoin’s volatility somewhat. However Cboe’s volumes represented only $60 million USD in value, compared to markets trading actual bitcoins — which turned over $8.5 billion.
What Impact Will Bitcoin Futures Trading Have?
While the entry of mainstream brokerages has gained bitcoin a lot of press recently, not everyone is convinced they’ll have much of a real impact.
For starters, the mainstream platforms’ futures products are cash-settled contracts, meaning no actual bitcoin changes hands either during or at the end of the period. That’s designed to attract those wishing to speculate on the price without getting involved in the technology — and the size of that audience is unknown.
Also, as a recent Deutsche Bank report noted, most existing bitcoin and cryptocurrency traders aren’t American — in fact a large percentage of them are Japanese. Bitcoin miners also represent a significant trading bloc.
CNBC quoted trader Bobby Cho as saying most large brokerages also don’t allow their customers to trade. Those interested in bitcoin are also aware of its notorious volatility and need a way to enter and exit positions quickly, if necessary.
Not everyone was enthusiastic about large players joining the cryptocurrency fray:
I think you're confusing Bitcoin with banks.
— Erik Voorhees (@ErikVoorhees) December 15, 2017
While Voorhees made a valid point, it’s important to remember the futures contracts don’t involve actual bitcoin. Such trading, if it gets out of hand, could have implications for the mainstream financial world that carry the bitcoin name but, ironically, remain completely separate from it.
What’s your prediction for the entry of new, larger players on the bitcoin futures scene? Let’s hear your thoughts.
Images via TD Ameritrade, Sheraton Omaha