Merrill Lynch ban crypto trading for both clients and traders

CFTC end of 2017 reporting noted Chicago Board Options Exchange (Cboe) bitcoin futures broke for short contracts, up by nearly 300 in the final week of last year. Analysts believe bubble talk consumed traders, triggering a selloff.

A raised net short position wasn’t expected by most bulls heading into the history market. It isn’t clear what the trend means longer term, but a thirty percent spot price correction was already in the works during 2017’s final weeks which certainly didn’t help matters. Overall, the world’s most popular cryptocurrency finished the year up well-over one thousand percent.

Peter Tchir details how Cboe open interest lagging at the end of the year has “barely risen from where it ended its first week (1,730 contracts). The CME’s contract has finished its first two weeks with open interest of only 498 contracts (the CME contract does represent 5 bitcoins so is 5 times as large as the Cboe contract),” he writes in Forbes. Underlining the feelings of a lot of bitcoin bulls, he explains “given the amount of hype surrounding bitcoin and how this product would promote new access – the numbers seem very low. I cannot remember a futures contract that launched with more awareness than these contracts,” he lamented.

Volume for contracts is also low, even considering the holidays. Bitcoin was supposed to defy those conventions anyway. And when contract volume was at its highest on December 22, 2017 – a day was later renamed Freaky Friday, Flash Friday, and FUD Friday. Prices nose-dived thousands and are still in the process are trying to recover. If this is a sign, it’s not a good one.

The loss of bitcoin market share, while at times a poor indicator of overall health (the number can be manipulated), it tells veteran analysts investors are less interested in bitcoin proper and are more apt to search for the next discounted big thing. Mr. Tchir ends his thought with what he terms “the rush to buy ‘the cheapest’ cryptocurrencies. Who wants to buy X Bitcoins when you can buy a multiple of X of another cryptocurrency?”

Again it is still very early, but institutional investment firms are also starting to overtly and openly pull back from bitcoin. The Wall Street Journal learned Bank of America’s brokerage division, Merrill Lynch, issued an all-out ban. Neither clients nor its over fifteen thousand advisers can use its platform for bitcoin.

Source: news.bitcoin.com

Trader Bozhidar Arabadzhiev

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