Bitcoin Futures Allow Investors to Play ‘Both Sides’ of the Market, Ally Invest Says

EXCLUSIVE—Bitcoin futures are the perfect medium for investors curious about cryptocurrency, as they allow customers to play “both sides” of the market, Rich Hagen, president of Ally Invest, told Bank Innovation.

“What’s interesting about bitcoin futures is that you’ll have the ability to take both sides of bitcoin—it’s a two-sided market, you can go long or you can go short,” Hagen said.

Ally Invest is one of several brokerages planning to support bitcoin futures on its platform when exchange operator CME Group opens them this coming December 18. For Ally, this is about continuing to offer investors “choice,” Hagen said.

While others have already opened bitcoin futures, Ally is focused specifically on the CME offering, Hagen said.

Others, notably Fidelity, have declined to comment on whether they would be offering support for the CME futures, possibly due to wariness over bitcoin’s traditional volatility (as well as its place as an outsider to traditional investment assets).

However, as futures will allow investors to straddle both sides of the cryptocurrency market, according to Hagen, they “could have an impact on volatility,” possibly decreasing it, Hagen said.

This could also be due to the CME initiating price stops on the futures, Hagen noted, with two soft limits of 7% or 13% respectively, according to the CME Group.

The decision of the CME to open bitcoin futures was first announced before the currency hit its much-anticipated high (now surpassed, as of today at least) of $10,000.

While as of now the CME is only offering bitcoin futures, should it expand to include other currencies, such as ether, Ally would also support those additions, Hagen said.

The decision to trade cryptocurrency futures might signal that these currencies are taking a more mainstream place in finance.

“I think it does [signal that shift],” Hagen said, when asked if the CME’s decision is part of bitcoin moving to become a more mainstream financial asset. “There’s also an interest in bitcoin ETFs—the ETF market will watch this closely to see how bitcoin’s volatility and performance is affected.”

Ally Invest’s support of bitcoin futures is slated to go live on its platform on December 18.

To learn more about the latest developments in cryptocurrency and blockchain, join us on March 5-6, 2018 at the Parc 55 in San Francisco for Bank Innovation 2018. Click here to register.