In a YouTube video posted this week, TD Ameritrade Manager of Trading Strategy Shawn Cruz affirmed to Nasdaq TradeTalks that TDA clients had regained interest in Bitcoin following its dive below $4,000.
He said, “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 intriguing in its juxtaposition to traditional financiers who preach “blockchain, not Bitcoin.” Such commentators often fail to understand that the financial incentive to secure a blockchain is a large part of what makes it truly valuable. TD Ameritrade, however, does seem to suffer from this malady of thought.
Cruz added, “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.”
He further commented that as the December down-swing of the NYSE was underway, TDA investors have become keener on stashing their assets in BTC. This suggests that when regular stock markets take a beating, demand for Bitcoin should rise.
“It’s really interesting as we see 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,” said Cruz.
If one charts the Bitcoin price and the average of all major stock market indices on top of each other, Bitcoin tends to diverge in a significant way. So again it can be ascertained that Bitcoin is “driven by sentiment.”
When people with means discover the mechanics and sheer value of cryptocurrency, they come in heavy. This, in turn, drives the prices of crypto-assets, often causing a sell-off days later. This phenomenon has repeated over and over again, just like in the year 2017. Cruz affirms that the demand from customers drove TD Ameritrade to roll out Bitcoin futures trading in the first place. He mentions several elements 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,” said Cruz.
Though TD Ameritrade investors have expressed interest in other cryptocurrencies, the brokerage company is taking it slow. The major areas of concerns for this pace are liquidity and regulation.
Cruz even spoke that one of the contributing factors to traditional market chaos that occurred in the month of December was the interest rate cycle and also some changes in liquidity for traditional stocks.