Bitcoin has taken the world by storm this past year, with gains of more than 700 percent since the beginning of 2017. This, of course, has made both investors and the public sit up and take notice.
When you see these types of gains in under 12 months, people wake up to the fact that there may be an opportunity for them to realize some significant profits.
In recent years, high-speed trading has revolutionized all types of markets, including foreign exchanges, equities, and futures.
High-speed trading is the process of using advanced algorithms to take advantage of price movements that have been caused as a result of larger institutional trades. They rely on ultra-fast decisions making and execution in order to profit.
It seems as if they are now getting involved with the world of bitcoin and cryptocurrencies in general as they obviously see continued potential for profit making.
The five largest electronic trading companies in the world have already gotten involved with trading bitcoin.
The main parties involved being Hudson River Trading, Tower Research Capital and Jump Trading who have recently gotten involved with cryptocurrency trading, as well as DRW Holdings and Susquehanna International Group who have been involved with the trading of digital currencies since 2014.
These two trading companies, in particular, have gotten quite a headstart on the rest of their competition and have no doubt been reaping the benefits to date.
These firms specialize in making trades in a matter of milliseconds, but after some initial success when these algorithms were initially introduced, lower levels of volatility and trading volumes have led to profits falling, which has led them to look for new opportunities.
Bitcoin is well used to large price swings, and it is currently on the crest of a wave, having hit all-time record highs this past week.
The cryptocurrency has managed to maintain above $8,000, and with the likes of CBOE Global Markets and CME Group getting set to offer bitcoin future contracts starting in December, professionals will soon have the chance to make bets on price movements without having to own the digital currency itself.
Digital currencies have been a polarizing topic in Wall Street, with many experts labeling it as a bubble and comparing it to tulip-mania that was seen in the Netherlands in the 17th century. The CEO of JPMorgan even went so far as to warn against any of his employees from trading bitcoin, saying it was ‘stupid.’
However, many others have been actively getting involved in these markets and reaping the rewards.
Cumberland has been focusing on trading bitcoin and ether, but they do dabble in other cryptocurrencies such as bitcoin cash, monero, and zcash. Their process involves over-the-counter trading whereby individuals or institutions are helped to purchase or sell large amounts of cryptocurrency, with a minimum trade size worth $100,000. It also, of course, engages in electronic and algorithmic trading on the digital currency exchanges.
While a lot of firms have been expanding the number of people they have trading in these markets, there is still a note of caution surrounding digital currency trading. This is largely down to the lack of regulation at the moment and a nascent market infrastructure.
It is a space to watch, and the high-speed traders will certainly look to eke out impressive profits from bitcoin and other cryptocurrencies from providing liquidity.