The public narrative put forth by Wall Street concerning bitcoin and cryptocurrency is often that of criticism or ambivalence. However, if there is one ethos that folks on Wall Street follow without fail, it is to “always follow the money.” While a number of notable figures on Wall Street are strong critics of bitcoin and cryptos, even goings as far as prohibiting their employees from any form of involvement with cryptocurrency, others are beginning to trade heavily in the cryptos.
Bitcoin in the Mix
According to an article on Business Insider, Jane Street Capital has included bitcoin as part of its catalog of traded assets. In a statement released by the firm, it revealed that Jane Street offers more than 56,000 products worldwide and these products cut across a plethora of tradable asset classes which includes bitcoin. In keeping with the firm’s secretive nature, the profits accrued from its bitcoin trading activities are not made public.
A spokesperson for the firm declared that Jane Street would continue to maintain a keen interest in the cryptocurrency market. According to the spokesperson, the firm prefers to take a more measured approach to evaluating trading opportunities in order to determine their viability. He reiterated the commitment of the firm to continuing with this ethos and that the firm will become involved with any cryptocurrency that seems promising.
Jane Street Capital was established in the year 2000. It began trading bitcoin in 2017. The firm has more than 600 employees. It isn’t exactly clear in what way the firm is involved in bitcoin trading, but there is every possibility that it is placing bets of fiat settled futures like the type offered by the Chicago Mercantile Exchange (CME) or the Chicago Board Options of Exchange (Cboe).
In 2017, Jane Street Capital traded about $5.6 trillion across a wide variety of tradable assets classes. These included Exchange-traded funds (ETFs), Commodities, Bonds, Futures, Options, and Equities. The firm facilitates more than $13 billion in equity trading volumes per day.
Wall Street is Jumping on the Crypto Bandwagon
This move by Jane Street Capital is only one of many examples that show that Wall Street is indeed jumping on the cryptocurrency bandwagon. DV Trading, another trading firm also became a part of the crypto trading ecosystem. The firm focuses on futures and was fined by the CFTC in 2017 for wash trading. Other Wall Street firms that have started trading in cryptocurrency include Jump Trading and Virtu Financial. The former has about 500 employees while the latter trades more than 19,000 securities.
Quite a number of Wall Street firms that have entered the crypto market did so in 2017 during the launch of the bitcoin futures market. The volatile nature of the crypto market ensures large swings as high as 20 percent which means more profits for these firms. There is also the opportunity to make good returns from arbitrage opportunities. One cryptocurrency can sometimes have vastly different prices in two exchange platforms which means that traders can “buy low and sell high” quite easily. According to Toby Allen of Akuna Capital, cryptos can have as much as ten percent trading arbitrage which can ensure considerable profits for any trader.