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Bitcoin’s Volatility Lures Multi-Trillion Dollar Trader Jane Street Capital

· March 21, 2018 · 9:00 pm

More trading firms are adding Bitcoin to their portfolios, due to Bitcoin’s price volatility. The latest Wall Street newcomer is Jane Street Capital, a firm that trades trillions of US dollars, operating from New York, London, and Hong Kong.

“Secretive” Jane Street Trades Bitcoin

Jane Street Capital specializes in a wide range of financial instruments, such as ETFs, futures, equities, bonds, and currencies. Recently, Jane Street added Bitcoin to its portfolio. According to the company website, the firm traded $5.6 trillion USD in 2017, trading in more than 170 electronic exchanges in more than 45 countries.

Business Insider reports that Jane Street confirmed in a statement that it is trading Bitcoin. According to the report:

Jane Street trades over 56,000 products globally across a wide variety of asset classes, including bitcoin.

Making Money Out of Volatility

Making Money Out of Volatility

Traders find volatility, or sharp price swings, in an asset quite attractive. Indeed, for them, as volatility increases, the potential to make a profit more quickly also increases. Granted, with volatility, the risk factor increases as well.

Bitcoin’s price is highly volatile. And, trading firms using sophisticated trading technology are more likely to benefit from volatility. In this regard, according to the Jane Street Capital’s website, the firm uses its own proprietary models and technology:

Quantitative analysis and insights into related markets enable us to make competitive markets in even the most complicated products. Technology is at the core of how we approach trading, and we consider ourselves as much a technology company as a trading firm.

Trading companies such as Jump Trading, DV Trading, and DRW Holdings LLC have already been exploiting Bitcoin’s price volatility. For example, according to the Financial Times:

DRW of Chicago, one of the world’s largest proprietary trading companies, has led the charge. About a dozen of its more than 800 employees buy and sell bitcoin at a subsidiary named Cumberland Mining, which was established in 2014.

Given its price volatility, Bitcoin will most likely continue to lure Wall Street and high-volume traders. In this regard, according to the Financial Times, Garrett See, CEO of DV Chain, said:

The volatility in asset classes is at all-time historic lows — everywhere except for cryptocurrencies. So there’s obviously a lot of interest in this space.

Do you think Bitcoin’s price volatility good or bad? Let us know in the comments below!

Images courtesy of Pixabay, Twitter, Jane Street

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