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CME Proposes Limits To Temper Bitcoin's Volatility

Bitcoin Futures Trading platform Enabled by Trading Technologies

Reading Time: 2 minutes by on January 31, 2018 Bitcoin, Finance, News

Coinbase, one of the most recognized exchange players in the world for cryptocurrency trading, has teamed up with Trading Technologies International Inc. to give corporate traders access to bitcoin and bitcoin futures by March 2018, Reuters reports.

Now institutional traders will have spot prices on bitcoin and bitcoin futures both displayed alongside one another on the screen. Trading the spread between these two products will enable greater profit potential for traders.

However, the full financial terms of the arrangement between Coinbase and Trading Technologies International Inc. (TT) have not yet been disclosed.

An Improved Platform for Institutional players

GDAX general manager, Adam White, confirmed that larger players were finally picking up on the unavoidable sentiment expressed by individual traders. “This is the first time hundreds, if not thousands, of institutional clients will have the ability to trade the cryptocurrency spot market side by side with 45 other markets,” he said. GDAX is Coinbase’s Global Digital Asset Exchange and is one of the largest cryptocurrency exchanges worldwide.

With CBOE Global Markets Inc and CME Group being among the 45 markets Trading Technologies (TT) is now connected to, new avenues are opening up. Speculators can now short bitcoin, which in a nutshell means gambling on the core bitcoin price slumping.

In a time that has seen bitcoin’s price shave thousands of dollars, from $19,000 to around $10,000 at the time of writing, many institutional traders will be taking that route. Both CME Group and CBOE Global Markets commenced cryptocurrency futures trading in December 2017.

TT counts numerous Wall Street banks among its clientele, including JPMorgan Chase and Goldman Sachs. Many other Chicago- and London-based trading companies are also on the books.

While commentary from some high-profile experts remains negative, it appears that as the phenomenon persists, many are softening their stance.

Moreover, the fact that JPMorgan Chase is now on board should go a long way toward mainstreaming cryptocurrency as tradable assets.

Demand and volatility finally push institutional traders into the ring

Rick Lane, TT’s CEO, was quoted as saying:

“… [we] have had a lot of demand from the institutional trading community, everything from the traditional buy-side, hedge funds, managed accounts, the prop community, that I think have been looking for a bridge like this as a way to trade the cryptocurrency markets against the cash markets.”

Based in Chicago but with global ambitions, TT’s new moves also seem to embody the corporate caution towards the concept, as it is introducing improved surveillance to monitor trades over the next few months, Lane added.

In a further development, Coinbase will also be introducing a “custodian” option that boasts very strict financial controls as well as secure storage. Designed for institutional traders, it aims to facilitate the speed, volume and security demands of the large corporate trading concerns, which should further raise the number of institutional players on the bitcoin futures trading floor.

Making Room for the Big Guns

A double-edged sword, corporate hesitation has so far not dampened enthusiasm among individual traders for bitcoin and other cryptocurrencies.

With the new venture between Coinbase and Trading Technologies International Inc, the advent of large-scale entry into the domain by the big guns bodes well. Institutional entry into the world of Bitcoin futures should bring much legitimacy and, it is hoped, a sense of calm to the trading floor.

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