apparement ca fait au moins 6 mois que les hedge funds and HFT sont de la partie..
avec notamment DRW (pote et collabo de blythe masters et sa startup Digital asset holding) qui fait du HFT et
Up until now the Bitcoin markets & trading-sphere have largely been an outworld where legacy HFT firms could not dare enter -- they were instead left sidelined to peer through the murky ether at an untapped virgin goddess with her large bid/ask spreads and fragmentation. These aligning characteristics has caused a growing restlessness and salivating for the potential profits of "tapping that".
Enter the recent AlphaPoint integration into BitFinex's backend and one of the final pieces for institutional order flow to enter the Bitcoin trading ecosystem is near complete -- although this may not be in the form of hopium bitcoin believers perceive as "Wall Street getting in" -- more on that later
Here is the latest release:
http://globenewswire.com/news-release/2015/04/28/729278/0/en/Bitfinex-Completes-AlphaPoint-Integration.html TLDR: The most significant point I took away from this is the ability to interact with BFX through the FIX protocol -- "FIX has become the de facto messaging standard for pre-trade and trade communication in the global equity markets, and is expanding into the post-trade space to support straight through as well as continuing to expand into FX, fixed income and derivatives markets." FIX is essentially the backbone of modern financial interactions between broker-dealer and hedge fund communications to the exchanges. OKCoin has had FIX enabled for some time now and it was announced on our very own Google Hangout that a EURO based hedge fund was utilizing their platform -- enter the well known 20x OKC "woodchipper" and I will allow you to draw your own conclusions on that matter. (
http://www.reddit.com/r/Bitcoin/comments/2m04s4/okcoin_rep_says_a_new_hedge_fund_controlling_3/)
It has also become public that the specific HFT firms DRW Trading Group and Citadel have taken steps to enter the crypto space(
http://www.wsj.com/articles/big-investor-involvement-could-boost-bitcoin-1428259814 ). This is not only apparent in DRW's presence at the latest Inside Bitcoins NYC conference speaking privately to both OKCoin and BFX but also their large winning of the DPR coins at the last auction via their subsidiary Cumberland Mining -- all signs pointing toward a large and active presence for DRW in the BTC markets.
Benjamin's Big Short & the DRW Connection
Another page out of the BTC trading folklore is the larger than life character known by the handle Benjamin(
http://tradingview.com/u/Benjamin%20/ ) on TradingView and sporting his Uncle Ben's Rice avatar -- many await his appearance like a Lock Ness Monster sighting in TradingView Chat or TeamSpeak. In early January his 3 person team borrowed 50,000 BTC to short bitcoin sub $200 -- he announced on TeamSpeak that his team was originally planning on borrowing these coins from a chinese connection but ended up going through a London hedge fund -- I give you DRW Trading Group's London office.
Many of the myoptic minded bitcoiners quibbled that why would a hedge fund allow someone to borrow coins for the purpose of shorting -- only to return them with significantly less value at a future date. Regardless if DRW was hedging off the risk before hand they would be charging a fair amount of interest fees on that amount of borrowed coins but the MOST interesting "coincidence" was the backdrop of the looming DPR auction. An auction in which Cumberland Mining scooped up an additional 27,000 BTC adding to their inventory and reducing their cost basis. The question remains if they are still looking to acquire in the next auction and I will stop short of speculating whether they are.
[I was actually debating whether to exclude this portion entirely as I thought it would distract from the real substance of what I was getting at knowing well that /r/bitcoinmarkets likes to devolve into /r/conspiracytheory very quickly. It is just really something to ponder of all the pieces involving DRW/Cumberland Mining]
The Changing Retail Trader Landscape
I do not want to go into the minutia of the Auction details itself and the Cumberland Mining mystery as I think the Coindesk article(
http://www.coindesk.com/secretive-mining-firm-revealed-as-possible-us-marshals-auction-winner/ ) does a great job of divining into topic for those interested. What I do want to focus on is the consequences to bitcoin retail trading going forward with these new players stepping in.
What these funds are doing is engaging in is mainly market making and advanced algorithmic trading where they simply see BTC as part of their asset inventory to feed off of the supple virgin order flow that has been inaccessible until now. BTC is a new speculative asset class and they see the price of BTC only as a cost basis and are not necessarily interested in its direct appreciation as an investment vehicle. With that said active retail traders may find that their strategies stop working and can & will be used against them. As Sang Lucci says pertaining to the listed space any retail strategy that can be algorithm-itised has been and will be soon enough into Bitcoin as well.
Largely, I believe that this is a necessarily step towards seeing the institutional (portfolio style) money come in that the bitcoin believers have been ranting about for so long. But to be perfectly clear these HFT/algo hedge funds make their money on the order flow not the fundamental appreciation of the underlying security -- however -- they may not be mutually exclusive but it is important to make this distinction as I believe it is often conflated and misrepresented as overtly bullish.tldr/lispasanglais: les requins sont lachés depuis au moins 6 mois.