Bitcoin trading got a bit easier this week for the average retail investor when Cboe Global Markets Inc CBOE launched bitcoin futures trading for the first time. Trading bitcoin may still not be as simple as trading most stocks, but it has made huge strides toward becoming a mainstream investment in 2017.
Here’s a look at all the ways traders can play bitcoin and what may be coming next.
Coinbase
Coinbase is a cryptocurrency exchange and trading platform that allows customers to trade bitcoin directly. Coinbase even offers margin trading for traders who qualify under the Commodity Exchange Act. These qualifications are geared more toward institutional investors than small retail traders. Requirements include at least $5,000,000 in discretionary investments for individuals.
GDAX, which is owned by Coinbase, is a platform that allows active trading of bitcoin, as well as Litecoin and Ethereum. Other popular exchanges are Bitttrex, Gemini, and Poloniex.
The GBTC ETF
Grayscale Investments’ Bitcoin Investment Trust GBTC, trades on the OTC Market and invests directly in bitcoin. Unfortunately for investors, the GBTC ETF trades at a significant premium to its net asset value. The ETF is currently priced 49.5 percent above NAV, according to Bloomberg.
Bitcoin Options
In May, bitcoin options exchange LedgerX raised $11.4 million in funding to follow-through with its plan to operate a regulated cryptocurrency exchange and clearing house.
In October, the Commodity Futures Trading Commission officially approved LedgerX for derivative clearing, which began later that month. LedgerX reportedly handled more than $1 million in bitcoin derivatives trading in its first week.
Benzinga will bring together some of the Street’s vying voices next week during the PreMarket Prep Bitcoin Special. The free webinar will run Tuesday, Dec. 19, from 8 a.m. to 9:30 a.m. EST. Register for the webinar here!
Bitcoin Stocks
There are a handful of companies that are invested or involved with bitcoin or the cryptocurrency’s blockchain technology. These stocks come with their own risks and will have a looser correlation to bitcoin price movements than trading the cryptocurrency directly. Here are a few:
- Overstock.com Inc OSTK
- Digital Power Corporation DPW
- Riot Blockchain Inc RIOT
- U.S. Global Investors Inc. GROW
- Social Reality Inc SRAX
Several of these companies are small-cap stocks with all the volatility that comes with the territory.
Bitcoin Futures
The closest thing for traders to trading bitcoin in their trading accounts like an actual stock is the new Cboe XBT bitcoin futures contracts. After confirming that the account meets the necessary requirements, buying and selling bitcoin futures is as simple as entering the XBT ticker and clicking “trade.”
CME Group Inc CME is expected to launch bitcoin futures trading Dec. 17, and Nasdaq Inc NDAQ has said it plans to launch bitcoin futures trading sometime in early 2018.
Where To Trade Bitcoin
Several of the most popular online brokers are already allow bitcoin futures trading, and many more have said they will sometime soon:
- Interactive Brokers IBKR allows long and short bets on bitcoin futures.
- TradeStation has said it will support Cboe bitcoin futures.
- Ally Financial has said it will support bitcoin futures trading.
- TD Ameritrade, Charles Schwab, E-Trade and Fidelity are reportedly taking a “wait and see” approach before allowing Bitcoin futures trading on their platforms. (Editor's note: TD Ameritrade announced late Friday it will allow bitcoin futures trading beginning Dec. 18).
A Big-Board Bitcoin Listing
Of course, many investors would only consider investing in bitcoin if they could get access to the currency directly via an ETF listed on either the Nasdaq or the NYSE. The Securities and Exchange Commission has rejected multiple proposals for big-board-listed bitcoin ETFs, including the proposed COIN ETF backed by the Winklevoss twins.
The SEC has concerns over the lack of regulation of the bitcoin market, but has left the door open for additional proposals. There have reportedly been more than a dozen bitcoin ETF filings that for potential SEC approval, meaning a major Bitcoin ETF with all the regulatory protections of a major exchange listing could be on the way in a matter of months.
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