In a late December video that was just posted on YouTube this week, TD Ameritrade Manager of Trading Strategy Shawn Cruz told Nasdaq TradeTalks that TDA clients had regained interest in Bitcoin following its dive below $4,000.
I’d say that whole space is really in its infancy right now. It makes sense you’re going to see a lot of volatility there. It’s really driven by sentiment. […] There’s a lot of players coming into this space experimenting with different use cases. But right now I think Bitcoin has been something that has been center stage.
The comment is interesting in its juxtaposition to many traditional financiers who still preach “blockchain, not Bitcoin.” Such commentators rarely understand that the financial incentive to secure a blockchain is a large part of what makes it truly valuable. Shawn Cruz and TD Ameritrade don’t seem to suffer from this malady of thought.
At TD Ameritrade, we offer Bitcoin futures trading for our clients. We saw them get very interested when we volume spiked when it was around $10,000. On this pullback lower, there really wasn’t much activity from our client base. But now that we’re getting down to this 3 or $4,000 price level on Bitcoin, we’re starting to see our clients become more interested in trading Bitcoin again. So I think it’s going to be interesting to see what Bitcoin does from here.
Cruz also commented that as the December down-swing of the NYSE was underway, people became more interested in stashing their assets in BTC. The sentiment suggests that when regular stock markets take a beating, demand for Bitcoin should increase.
It’s really interesting as we’re seeing this volatility in the market. Watching the ebb and flows of money. Watching where it’s flowing out of and where it’s flowing into is something that if you are a market spectator, someone who really likes to pay attention to these rotations in and out of asset classes. Right now I think you are getting a really enormous amount of data.
However, if one charts the Bitcoin price and the average of all major stock market indices on top of each other, Bitcoin frequently diverges in a significant way. Again, Bitcoin is “driven by sentiment.”
Often, when people with means discover the mechanics and importance of cryptocurrency, they come in heavy. This drives the prices of crypto-assets, often causing a sell-off days later. We’ve seen this phenomenon over and over again. A macro version of it presented itself in the form of the year 2017.
Cruz says that demand from customers drove TD Ameritrade to offer Bitcoin futures trading in the first place. He said there are several elements that will propel it forward.
We want to make sure it’s liquid. Also want to make sure it’s regulated on some sort of exchange. We offered the Bitcoin futures on those principals. We’ve actually an investment in the ErisX exchange. That’s another way for us to one, give our clients access to this asset class on a regulated exchange. And it’s also going to bring them more products that are cash and future related products.
TD Ameritrade clients have expressed interest in other cryptocurrencies, but the brokerage company is taking the new world of blockchain finance one step at a time. Liquidity and regulation are chief among the concerns with other cryptocurrencies. The vast majority of crypto assets find liquidity only in other cryptos. The closest thing to fiat exchange for many cryptos is a stablecoin market, usually Tether.
Cruz further spoke to the fact that one of the contributing factors to traditional market chaos back in December was the interest rate cycle and some changes in liquidity for traditional stocks.
Featured Image from Shutterstock. Price Charts from TradingView.