- Interactive Brokers is set to allow its users to go short on bitcoin in the newly launched futures market.
- It will give investors a vehicle by which they can bet against the future price of the coin, which is up more than 1,600% this year.
One of the largest brokerages is set to allow its clients to short bitcoin, giving folks bearish on the coin a way to bet against it.
A spokeswoman for the firm told Bloomberg the pivot was “in response to client demand.”
The company has allowed users to invest in the new market via long positions, requiring a larger down payment for trades than the standard required by Cboe. It is one of the largest players in the market, so far.
“Interactive Brokers has a few requirements for shorting bitcoin futures: the spread must be one-to-one, and the short leg must have the earlier expiry date so that once it expires the surviving leg will be long,” Bloomberg reported.
Prior to the launch of futures, the firm’s chairman asked the CFTC to prevent exchanges from launching such a market.
Most big Wall Street banks have been more cautious, showing no indication of entering the market in the short term. JPMorgan and Citigroup, two of the largest futures brokers, are not clearing trades for its clients.
A person familiar with JPMorgan’s operations told Business Insider the firm didn’t want to be in the market on day one, citing concerns about liquidity and too much risk being placed on clearing houses if the bitcoin market blows up. When there’s enough volumes, the bank might consider dipping its toes into the market.
The bank’s CEO Jamie Dimon notably called bitcoin “a fraud” in September. Then, the cryptocurrency traded just above $US4,000 a coin.
Cryptocurrency hype has reached peak levels, with coins across the market hitting new highs on a daily basis and cryptocurrency exchanges under immense pressure to meet spiking demand from more and more users. Bitcoin broke through $US17,500 on Tuesday and the entire market for digital coins was close to $US500 billion.
The first bitcoin futures depend on trading at the Winklevoss twins’ tiny exchange – and that’s a problem
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