Hedge funds mostly took the fence, are now counting on a futures trading floor of the Chicago stock exchange as a new convenient opportunity to play against the cryptocurrency.
Hedge funds are quickly penetrating the market of cryptocurrency in the Wake of the ads CME Group Inc., Cboe Global Markets Inc., and Nasdaq Inc., thereby raising cryptocurrency to the level of a developing asset. For a long period, hedge funds passively watching the development of the cryptocurrency system, followed by a stimulating indicators price fluctuations and stable comparative changes in altcoins and cryptocurrency. Now, this venture may again risk through the introduction of the bitcoin futures on the Chicago Mercantile exchange, aimed at reducing the prices of crypto currencies to maximize returns on investment.
Craig Pirron, Professor of Finance at the University of Houston, believes that
“this tool is to facilitate a short sale, can keep the price of bitcoin is closer to reality because futures reduce the mismatch of the short sale more than acquiring, so this is purely a bearish trend.”
Since its creation in 2009, bitcoin has grown exponentially. Early investors in digital currency has received over 50,000% return on invested capital. For comparison, investing the same amount in the stock index S&P 500, including reinvested dividends, will not give such profit. Such an incredible gap between the two areas of investment shocks.
“This is one of the best opportunities in short sales,” said Lou Kerner, partner at VC Flight, “…is the greatest event that ever happened in the history of mankind.”
Recent price fluctuation of bitcoin showed intermittent growth with a factor of 72% and a steep fall of 20% in November after reaching the mark of $ 11,000 for a 90-minute period. The price took a while to recover, but steadily increased. Now bitcoin is trading over $ 12,000.
Former Manager of the portfolios and co-founder BlockTower Capital Ari Paul argues that “while some traders expect short-selling opportunities of bitcoin and implement it after the launch of the futures, a lot more resources now in anticipation futures for acquisition”.
The rapid growth of bitcoin to over 90% this year provoked a different response from wall street. CEO, JPMorgan Chase & Co. Jamie Dimon once called bitcoin “cheating”; on the other hand, Thomas Lee of Fundstrat Global Advisors and Manager of hedge Fund Michael Novogratz took the bullish side and predicted a further increase in the price of bitcoin. Novogratz, who recently began collecting $ 500 million for the cryptocurrency investment portfolio, said that the short sale can be risky. However, he is considering a short sale of the currency as “an important part of the ecosystem”.
Speculators, playing on the slide, always rely on the fluctuation and instability of prices, especially the lending of securities to bet on falling prices and profit from the difference in the return of funds. CEO of Genesis Global Trading Michael Moreau added that it might be risky because of the difficulties associated with unexpected fluctuations in the price of bitcoin. Moreau noted that “at the moment, the ways short selling bitcoins is limited”, and its cryptocurrency trading platform provided a loan of about $ 20 million to investors for taking bullish positions.
“Under the existing exchanges, it is impossible to correctly calculate and implement the short selling on 1 million dollars,” explained Moreau. “It’s really the little things that you can do today. The guys from CME open new frontiers.”