Exclusive: CFDs Brokers Shed Millions on Bitcoin Cash Flash Action
- The carnage across Bitcoin and Bitcoin Cash markets late last week delivered massive arbitrage opportunities.
Last week, Finance Magnates extensively reported about the temporary blip in confidence in Bitcoin as the SegWit2x fork got canceled. Bitcoin Cash was the principal beneficiary of the resulting uncertainty in the aftermath of the announcement, increasing more than five-fold over the span of about 48 hours.
While prices have been fluctuating wildly, brokers that have been offering CFDs on the product have been hit pretty hard by Bitcoin punters. Speaking to Finance Magnates off the record, several brokers that provide Bitcoin cash CFDs shared that the day after the fork got canceled was a mini-Black Thursday. The event highlights the big risks associated with offering leverage on Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term.
[gptAdvertisement]
The firms have had to credit the accounts of their clients with additional funds while losing a lot due to arbitrage opportunities. Total losses on Bitcoin Cash for the CFD brokerage industry were probably as high as several million. Due to the confidentiality of the matter, we cannot share the names of the brokers, but they are not amongst the smallest in the industry.
Existing Safeguards Not Enough for Cryptocurrencies
Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term settings used by brokers have failed to provide adequate protection to firms. While the market has been widely fluctuating, to the tune of several dozen percent in less than a minute, trading systems are not well prepared for the volatility.
The CEO of Interactive Brokers, Thomas Petterfy, made a point yesterday, stating that the inherent risks from cryptos to the real economy become substantial with the launch of Bitcoin futures. If retail brokers that provide CFDs are any point of reference, their exposure to cryptocurrencies already costs some dearly.
Not to be a moralist here, but it seems that brokers that decide to offer exotic cryptos better prepare for unprecedented moves. Even low leverage proves to be quite dangerous for brokers, let alone their clients.
As Bitcoin is currently trading around all-time highs, uncertainty around the SegWit2x fork may cause additional volatility in the coming hours, and perhaps days.
Last week, Finance Magnates extensively reported about the temporary blip in confidence in Bitcoin as the SegWit2x fork got canceled. Bitcoin Cash was the principal beneficiary of the resulting uncertainty in the aftermath of the announcement, increasing more than five-fold over the span of about 48 hours.
While prices have been fluctuating wildly, brokers that have been offering CFDs on the product have been hit pretty hard by Bitcoin punters. Speaking to Finance Magnates off the record, several brokers that provide Bitcoin cash CFDs shared that the day after the fork got canceled was a mini-Black Thursday. The event highlights the big risks associated with offering leverage on Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term.
[gptAdvertisement]
The firms have had to credit the accounts of their clients with additional funds while losing a lot due to arbitrage opportunities. Total losses on Bitcoin Cash for the CFD brokerage industry were probably as high as several million. Due to the confidentiality of the matter, we cannot share the names of the brokers, but they are not amongst the smallest in the industry.
Existing Safeguards Not Enough for Cryptocurrencies
Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term settings used by brokers have failed to provide adequate protection to firms. While the market has been widely fluctuating, to the tune of several dozen percent in less than a minute, trading systems are not well prepared for the volatility.
The CEO of Interactive Brokers, Thomas Petterfy, made a point yesterday, stating that the inherent risks from cryptos to the real economy become substantial with the launch of Bitcoin futures. If retail brokers that provide CFDs are any point of reference, their exposure to cryptocurrencies already costs some dearly.
Not to be a moralist here, but it seems that brokers that decide to offer exotic cryptos better prepare for unprecedented moves. Even low leverage proves to be quite dangerous for brokers, let alone their clients.
As Bitcoin is currently trading around all-time highs, uncertainty around the SegWit2x fork may cause additional volatility in the coming hours, and perhaps days.