Bitcoin Bears Unleashed? Interactive Brokers Folds, Will Allow Clients To Short Futures
Content adapted from this Zerohedge.com article : Source
A week after Thomas Peterrfy, the founder, Chairman and CEO of Interactive Brokers and one of the 'giants' of electronic trading in US financial markets warned that:
"the introduction of bitcoin futures into a clearing house could increase systemic risk."
And just days after the firm said its
"clients would be unable to short the bitcoin futures market because of the extreme volatility of bitcoin."
Interactive Brokers has reportedly flip-flopped and as Bloomberg reports, plans to let bitcoin bears bet against the digital currency's recently debuted futures contracts.
Starting this week, the brokerage will allow its users to take short positions on bitcoin futures under certain conditions, according to company spokeswoman Kalen Holliday, who said** the decision was made "in response to client demand."**
Interactive Brokers has accepted long positions with a margin requirement of at least 50 percent since the contracts debuted Sunday on Cboe Global Markets Inc.
That is great news for the arbs who can now actively compress the $1000 Bitcoin futures premium...
Of course, as Bloomberg notes, shorting bitcoin futures, or betting that their price will fall, is potentially an even riskier strategy.
It's possible to lose an unlimited amount of money on a short position, particularly if the cost of the digital currency and its derivatives continues to climb.
Bloomberg reports that Interactive Brokers has a few requirements for shorting bitcoin futures, which seem to suggest this is not quite as cut and dried a short futures position as 'bitcoin bears' would hope.
- 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...
- Trading won't be offered in retirement accounts or to Japanese residents.
Sounds more like IB is allowing traders to short the front-month against the back-month - not exactly what most were hoping for, but it's progress perhaps. For now,** the news has prompted some selling pressure across the complex.**
So prepare for the pending short squeeze as all 'the smartest people in the room' pile in short on this no-brainer bubble...
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.
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.
what if the bitcoin bubble, isn't really a bubble??? Nobody has a crystal ball here.
Tank you for posting! Interesting article. But pay attention @zer0hedge when you say:
Short squeeze is when an asset grows and so short traders have to close positions and buy, triggering another price increase.
What you are thinking to is a long squeeze, that will lead to close long positions triggering price drop.
Ayway, many operators aren't giving theyr customers the possibility of margin trading on the future or are offering very small leverage, because of high risk and low liquiditi for borrowing futures.
So, at the moment in my opinion there aren't the elements for a really big sqeeze of any kind
perhaps i'm reading it wrong, but seems to me he's being sarcastic when saying"the smartest people will short"... that if the rest of the world keeps pushing the price higher, these "smart people" in their short positions will get squeezed...
the potential upside seems unlimited, the potential downside is only 100% but if you leverage short, your potential losses are seemingly unlimited... risky position to take perhaps
I am not so sure. Great investors usually drive the market, they have great money and they usually have the best timing. If they short-sell, trend follower can increase price spike and trigger a great drop
Largest Exchange CME Group (NASDAQ: CME) will begin initial lists of bitcoin futures on December 18.
Bitcoin enthusiasts hope that the launch of bitcoin derivatives will allow institutional investors to invest in the digital currency trend, helping to make bitcoin a legitimate asset class and pave the way for an exchange-traded fund .
Elsewhere in the cryptocurrency business, Bitcoin Cash was at $ 1557, while Bitcoin Gold was at $ 274.11.
Ethereum, the second-largest market-cap currency cryptocurrency after bitcoin, was $ 664.93.
BITCOIN & FED Today!
I guess it worths to mention that, after the Cboe's bitcoin futures showed up, there are real chances that -for the first time- Bitcoin actually MIGHT (is not a fact but a higher realistic possibility) react to the FED decision today.
Regards.
Alberto Alvarado
Being on the long side of a short squeeze really is a fun ride. I hope we see it with bitcoin.
This is an instrument unlike any other that Wall Street has ever seen. They are treating it like just another financial tool for them to play around with yet it is more than that. This could lead to them getting destroyed by taking the same approach as always.
Bitcoin keeps going up for a reason....it is a new model of how business is going to be conducted in the world. While it might not be the "winning" blockchain, it is the one that gets the publicity.
This is the investing equivalent of sticking your head in the lion's mouth. Regardless of the analogy, it's all a giant circus!
@zer0hedge
Good post bro.keep it up
Thanks For The News Of Cryptocurrency @zer0hedge 💌💌
bitcoin is a very volatile asset, falls are unavoidable ... but nevertheless, many people who have not previously heard about it will be squeezing their money in bitcoin, thereby raising its price ... surely the crypto currency will surprise us
Nice concept bro.