A big Wall Street firm, Susquehanna International Group (SIG), has revealed that it has been privately engaging in Bitcoin trading for the past few years.
Surprisingly, many Wall Street companies still do not offer Bitcoins and cryptocurrency to their customers for trading, but it may not be long before they start to do so.
Under the Radar
Cryptocurrencies like Bitcoin are volatile in nature and are naturally appealing to investors. It was only a matter of time that Wall Street started dabbling in Bitcoins. Though Susquehanna Group is more into stocks and ETFs, it has started trading in Bitcoins secretly for the past two years.
According to the company, they are slowly trying to expand the Bitcoin trading operations by involving 500 of their clients in cryptocurrency trading in the coming months. It is to be expected that other major trading companies on Wall Street will also follow suit very soon.
The financial company is located in Bala Cynwyd, Pennsylvania, which is just outside of Philadelphia. It is one of the major players in ETFs and other options and now has around a dozen people trading in Bitcoins and other cryptocurrencies worth millions of dollars.
Joining the Race
The Intercontinental Exchange, which is the parent company of the New York Stock Exchange (NYSE), is also rumored to start another subsidiary for crypto trading. Another major Wall Street firm to join the cryptocurrency trading race is Goldman Sachs.
The wild price fluctuations and the surging value of cryptocurrencies have always captured the imagination of the public, but established institutions had remained out of the trading until now. They have probably been following a “wait and watch” approach.
About two years ago, the Bitcoin market was widely different. It was not so attractive to Wall Street firms as it is now. SIG’s decision to begin Bitcoin trading was a bold one and one that should pay off by putting them a step ahead of the rest of the competition.
The cryptocurrency ecosystem offers excellent arbitrage opportunities as well. The arbitrage strategy means that when something—in this case, Bitcoin and other cryptocurrencies—trades in several places at varying prices, you can buy it from a place where it is cheap and then sell it where it is high.
This is especially attractive to traders, as Bitcoins can have completely different prices in two different exchanges. This means that traders can buy low and then sell it high very easily, which is not so easy in traditional assets.
According to a recent survey by Thomson Reuters, 20 percent of the 400 financial companies in the survey were planning to trade in cryptocurrencies within the next year.
This points to the growing importance of cryptocurrency and Bitcoins in particular. When Wall Street companies have entered the cryptocurrency space, it only goes to further prove that Bitcoins and other cryptocurrencies will soon become mainstream.
However, some analysts disapprove of the trend and state that it will result in more speculation leading to higher volatility in prices.