Over the past two months, Bitcoin has spread to the futures market, with a number of venues adopting the cryptocurrency as its popularity grows. In light of this emergent trend, IG Group has already established itself as one of the largest players in this space, hedging its exposure to Bitcoin.
IG Group offers a wide range of financial services, including traditional brokerage products such as FX, commodities and spread-betting contracts – more recently the group has expanded its offering to include cryptos such as Bitcoin and Ethereum back in 2017.
With the futures marketplace warming quickly to Bitcoin, CME Group and CBOE Markets have both jumped out of the gates as early leaders. For its part, IG Group already holds approximately 20 percent of the Bitcoin positions offered by CME Group, per a Bloomberg report.
“The futures market has a number of open contracts, and if you look at the CME contract, we hold 20 percent of the open interest. We don’t want any more,” noted IG Group’s Chief Executive Officer Peter Hetherington in a recent company briefing.
The share makes IG Group one of the largest holders of Bitcoin futures after nearly one month of being available. CME Group had launched Bitcoin futures on December 18, 2017, with margin requirements set at 35 percent. IG Group does not yet have any position via CBOE as of yet, though it is looking to do so this month.
According to Mr. Hetherington: “We would love to use Cboe as well, we can’t at the moment, because we don’t have a clearer yet. We will have a clearer at the end of the week.” The decision would effectively allow even more individuals to trade Bitcoin and other cryptos on IG Group’s platform.
At the present, IG Group hedges its exposure to Bitcoin as well as five other cryptos via futures. As such, these positions are held from network connections in secure locations to prevent any sort of hack, theft, or abuse. For IG Group, the finite amount of Bitcoin traded on its network represents a key threshold given its hedging.
IG Group is not the only venue that sees a bright future for Bitcoin futures contracts. Mr. Hetherington also sees grounds for banks beginning to utilize Bitcoin contracts on these exchanges as they mature – such a trend would strongly increase the demand for these instruments with both CME Group and CBOE strategically positioned.
Bitcoin’s price has been unable to test new highs since last month, when it nearly made a run for $20,000 during which CME introduced its Bitcoin futures offering. At the time of writing, Bitcoin is trading at $13,861 with a market cap of $232.8 billion.