Attendance is 'Off the Charts' at Bitcoin Education Events: TD Ameritrade VP

Steven Quirk, the Executive VP of Trading and Education at TD Ameritrade, an Omaha, Nebraska-based broker that manages one of the world’s largest online trading platforms, has revealed that institutional interest in cryptoassets has increased significantly.

"When You Open The Door," A Lot Of People Will Want To Trade Crypto

Quirk argued that recent fluctuations in the bitcoin (BTC) price have not impacted the level of interest in BTC futures trading.

While speaking at Coindesk’s panel at the Consensus 2019 conference, Quirk said:

We get calls, emails, 60,000 clients have traded something in this complex. As soon as you open the door, you’re going to get a lot of people [who want to trade or invest in digital assets.]

The former Index Market Performance Committee member at the Chicago Board Options Exchange (Cboe) mentioned that attendance has recently been “off the charts” at major Bitcoin events which focus on educating newcomers about cryptoassets. These events have reportedly been facilitated by the management at TD Ameritrade.

Although there have been several reports indicating that mostly millennials are interested in investing in cryptocurrencies, Quirk said that older retail investors have increasingly been asking questions and showing more interest in digital asset-based investments.

Institutions Are Gradually Entering The Crypto Market

Moreover, the management TD Ameritrade, which oversees over $37 billion in assets while recording over $5.4 billion in revenue for FY 2018, has revealed that investment advisors (RIAs) have begun to take more interest in bitcoin futures contracts.

While attending the Consensus 2019 conference, Thomas Chippas, the CEO of the ErisX exchange (which has received investments recently from TD Ameritrade), noted that institutional clients have, in the past year, made substantial investments in cryptoassets.

Chippas also remarked: 

Apologies it’s not happening faster...It’s happening, it’s never going to be fast enough for the people who write headlines.

Strong Demand For Physically Settled Bitcoin Futures

Meanwhile, Quirk confirmed that there are many institutional investors who’re “waiting on the sidelines” as they seem to be interested mainly in a Bitcoin exchange-traded-fund (ETF).

The US Securities and Exchange Commission (SEC) has not yet approved a cryptocurrency-based ETF application and the federal regulator again postponed its decision regarding Bitwise Asset Management’s ETF.

According to Chippas and Quirk, there is also strong demand currently for physically settled bitcoin futures contracts, as investment managers believe these would allow traders to minimize risk by using conventional risk management tools.

CME Looks to Double Bitcoin Futures Limit, but Is This Wise?

The Chicago Mercantile Exchange (CME) has a new request for its regulator, as it looks to double open position limits on bitcoin futures contracts in the face of significant interest.

Nasdaq reports that the CME has already petitioned its regulatory body, the Commodity Futures Trading Commission (CTFC), asking for an increase from 1000 contracts per spot month to 2000 per investor. Each contract represents five BTC, so essentially, at its peak,  a single investor's total position may edge towards a monumental 10,000 BTC.

This is in direct response to the contract's recent growth which is currently depicting record levels of activity, citing $370 million being traded per day. A spokesperson for the CME noted that the idea to increase limits was proposed on the continued maturity of the market:

Based on the significant growth and acceptance of our financially-settled CME Bitcoin futures markets, as well as our analysis of the underlying bitcoin market.

However, as Nasdaq writes the increase in the upper limit of positions is somewhat superfluous. As of July, the number of open interest contracts reached an all-time high of just 6100; given this, it seems the CME may be future-proofing.

Open to Manipulation?

However, concerns remain about the limit increase, as without them, the potential for manipulation rises; often to the detriment to the underlying asset. Although, as per the CTFC website, the threat of manipulation from bitcoin futures contracts is "low":

In general, position limits are not needed for markets where the threat of market manipulation is non-existent or very low.

Instead, Nasdaq posited that this might point to a lessening on the CTFC's strict rule of bitcoin; as well as a maturing of the market in general.

Nevertheless, some believe the CME's bitcoin futures contracts do pose a significant threat to the price of BTC; with some suggesting that blatant manipulation continues unchecked within the market.

As reported, there seems to be a correlation between the expiry dates of CME bitcoin futures contracts and a lull in the price point of BTC. In several instances, a significant drop in bitcoin's price has coincided with a closure from the CME. The most recent example of this occurred on Labor Day, September 2, when bitcoin rose an extraordinary 8% shortly after the CME shut.

Crypto analyst, Alex Kruger, highlighted this, noting the large gaps which formed on the CME chart, from the price discrepancy before and after closing.

This has become a pretty accepted practice within the market. Kruger has even gone to the lengths of compiling statistics each time this phenomenon transpired:

On these occasions, bitcoin cited an average 4.6% price discrepancy following the close of the CME.

Whether this is a coincidence or the market is indeed being actively manipulated is as yet unclear. Either way, with the increase of these limits it might be only a matter of time until we know for sure.

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