• 7 hours The Next Fashion Frontier
  • 1 day What Is Africa’s Role In The New Silk Road?
  • 2 days Trump Was Right About The Dollar
  • 2 days Is Silver Gearing Up For A Rally?
  • 2 days World’s Largest Hedge Fund Turns Bullish On Gold
  • 2 days It’s Time To Spend More On Clean Energy R&D
  • 3 days Contrarian Investors Are Beating The Stock Market
  • 3 days Bulgaria’s Revenue Agency Falls Victim To Biggest Cyber Heist In History
  • 3 days Amazon Faces European Union Anti-Trust Probe
  • 3 days Commodities Are Having A Stellar Year
  • 4 days Bezos’ Next Big Project Could Be Worth $100 Billion Per Year
  • 4 days 3,600 Years Later, Climate Change Turns Mammoths Into $40M Market
  • 4 days Tesla, Apple Claim China Is Stealing Intellectual Property
  • 4 days EV Giants Duke It Out For Battery Dominance
  • 5 days Tech Billionaire Takes Aim At Google
  • 5 days Chinese Police Bust Largest Ever Illicit Crypto Mining Operation
  • 5 days Expect A Pullback Before Gold's Next Major Rally
  • 5 days Why Interest On Gold Matters
  • 6 days Ten Extravagant Food Items For The Wealthy Only
  • 6 days Why Saudi Arabia Won't Give Up On The Aramco IPO
Facebook’s Libra Faces Political Backlash

Facebook’s Libra Faces Political Backlash

Facebook wants to challenge Bitcoin…

$32 Million Crypto Heist Halts Tokyo Exchange

$32 Million Crypto Heist Halts Tokyo Exchange

Tokyo’s Bitpoint Japan Exchange has…

Jan Bauer

Jan Bauer

Staff Writer, Safehaven.com

Jan is a writer for Safehaven.com She has 15+ years experience in FX trading and focuses on crypto currencies, FX, gold and silver investments

Contact Author

  1. Home
  2. Cryptocurrencies
  3. Other

The Secretive Wall Street Firm Betting On Bitcoin

Cash

A little-known Wall Street firm facilitating $13 billion in equity trading a day is embracing cryptocurrency trades, though no one knows exactly how much Bitcoin is passing through the trading giant’s hands.

Multiple reports have emerged over the past few days of a “secretive” Wall Street company called Jane Street Capital, that’s been braving bitcoin since 2017, and loves the volatility.

According to Business Insider, Jane Street was founded in 2000 and began trading cryptocurrencies last year, reporting a total of $5.6 trillion traded across all products in 2017.

Jane Street confirmed the news this week, explaining that it “trades over 56,000 products globally across a wide variety of asset classes, including bitcoin.”

The New York Times calls Jane Street traders “coders with Ph.Ds.” for their focus on high-tech stocks.

It’s all about is arbitrage trades, and this is where Jane Street excels.

And it’s also where cryptocurrencies are attracting major attention.

The spreads in cryptocurrencies on different trading platforms can be huge—and much as 10 percent--and so can the arbitrage opportunities.  

"There is sometimes 10% exchange arbitrage," Toby Allen of trading firm Akuna Capital previously told Business Insider. "As a trader it is such an amazingly fun space to be in compared to traditional assets because of the spreads and technology gaps."

Related: Tesla Tumbles As Investors Lose Patience

Crypto arbitrage even has its own dedicated page:

(Click to enlarge)

But in some cases the spread can be even bigger. Bitcoin prices in South Korea, for instance, can be over 40 percent higher than in the U.S. thanks to the “Kimchi Premium”, providing a major opportunity to profit on the spread, but this kind of cross-country arbitrage is tough to play due to a fragmented crypto ecosystem and uncertainty over regulations.

Bloomberg described one trader’s strategy as “buying ether in Korea, transferring it to an offshore venue, exchanging it for bitcoin, transferring the bitcoin back to Korea, and cashing out.”

So who else is doing hitting up the arbitrage opportunities? A handful of high-frequency traders who thrive on volatility, including Chicago-based DRW’s Cumberland, DV Trading, Hehmeyer Trading, Virtu Financial and Jump Trading, according to Business Insider.

Earlier this year, Goldman Sachs’ Lloyd Blankfein said the broker was “clearing futures in bitcoins” for some of its clients.

CMC Markets Plc (LON:CMCX) also just announced it will launch CFD and spread betting on the original bitcoin and ethereum cryptocurrencies paired against the U.S. dollar—but only to ‘professional clients’.

Playing the spread and the volatility is enough to spark major interest in cryptos that goes far beyond the individual, and works to keep crypto alive while some take their time to get used to the idea that it’s here to stay.

In the meantime, trillion-dollar funds are going to be making a lot of money, and they’ll be ready to jump on any new crypto opportunities that offer the right set-up.

By Jan Bauer for Safehaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment