When Wall Street will finally jump in?

[bbeagle]

most people are so ignorant, that even when opportunity slaps them in the face multiple times they still think it's a pigeon shitting on them or something

Gee whiz, a scheme where the people at the top bring in lower-tier investors with big promises of wealth, only to pocket all the real money and run off at some point, leaving the lower level investors with nothing. Huh, where have I heard of such a scheme before?

[johnvm]

I'm what most of you would consider a wall street person: I'm a high frequency trader, have been for the past decade, and make my income solely from trading.

I own ~4 bitcoins that I mined myself a couple years back just because I thought/think the bitcoin project is cool.

I'd like to buy many, many more bitcoins (to buy and hold, not to HFT). Putting a few hundred thousand dollars into an investment like bitcoin would be something I'd be happy to do - the risk adjusted returns are within my risk profile. I haven't. The reason is I don't trust any of the exchanges. Even the 'reputable' ones are still small/unproven startups. Coming from the wall street world, there's a lot to be said for the security that larger battle-tested financial institutions offer. When you're talking about putting hundreds of thousands to millions of dollars at risk, counterparty risk is a very real concern. At this point in time, no exchange has given me enough faith to trust them with my money, even if it was only for a single hour where I wired it to them and then bought the BTC and transferred the BTC out immediately. While I never would have used gox, just as an example: What if the company happens to blow up in that hour, and I never get my BTC and my USD are stuck in some sketchy small company that is in a foreign bankruptcy proceeding for the next three years?

Wall street types are happy to accept financial risk, but aren't very fond of counterparty risk, especially if we can't hedge it off onto someone else. At the moment that's not particularly possible. If you got even a single reputable financial institution (bank, equity/commodity exchange, something of that nature) to operate a BTC exchange, we'd come flocking.

All of the "fear of the unknown" type comments aren't particularly accurate about why wall street isn't investing bigtime in BTC yet. Wall Street will invest in pretty much any asset as long as the asset provides appropriate levels of risk adjusted returns -- certain assets are clearly far more risky, however, if the returns are sufficient for that level of risk, and that type of investor is able to stomach that risk, they'll happily invest. Imho, BTC has a track record long enough at this point with returns high enough to make it an interesting risky investment for many many institutional investors -- aka, the returns aren't the problem. For example, ask anyone who trades long-dated far-out-of-the-money options how they feel about risky investments. In my opinion, the reliable, safe infrastructure simply isn't there yet to get institutional investors to feel comfortable trading BTC -- it's too much the wild west, with small fly-by-night companies (gox, btc-e, etc) having large market share in the exchange markets.

Just my $0.02.

[designfail]

Why does Wall Street have to want to jump in? Its like USPS to jump in to electronic mailing back in late 80ies and then extinct since no one is gonna use snail mail for everyday communication?

[jbreher]

Putting a few hundred thousand dollars into an investment like bitcoin would be something I'd be happy to do - the risk adjusted returns are within my risk profile. I haven't. The reason is I don't trust any of the exchanges.

Thanks for your input. But I don't think I understand your position. If you would be happy to buy and hodl (as per your statement), rather than HFT, why wold you not: transfer whatever amount you are comfortable to an exchange (e.g. $5000?); buy XBT with the USD; withdraw the XBT to your personal wallet on your computer; rinse and repeat until you've exchanged your hundreds of thousands?  You exposure to counterparty risk can be limited to whatever figure you keep on the exchange at any one time.

Alternately, if you really want to take a position of hundreds of thousands, I would imagine you might be interesting to someone like BitPay, whose biz model requires a regular source of $ for which they would provide XBT. You might contact them directly and ask.

[surfer43]

The US is not a democracy. Never was.

Actually, the US is exactly what a Democracy really is.

It's spelled "R e p u b l i c"

[pungopete468]

Wall street types are happy to accept financial risk, but aren't very fond of counterparty risk, especially if we can't hedge it off onto someone else. At the moment that's not particularly possible. If you got even a single reputable financial institution (bank, equity/commodity exchange, something of that nature) to operate a BTC exchange, we'd come flocking.

You could always buy from SecondMarket... Check them out.

[tokeweed]

How come communist country like China massivelly jumped in on the bitcoin wagon already and modern and democratic country like US is still (mostly) taking their sweet time?
Where is Wall Street, where are the big money? Right now China is driving the price up for second time and we see little to no action from US capitals.
Kinda can't figure it out?

wall street you say?  they will eat btc, chew it up and spit it out. rinse and repeat until they get the bitcoin community's money all in their pocket leaving btc at 1 usd per btc.

^ all that while they're laughing about it.

[Bit_Happy]

Is China really trending higher again, our media is still saying they "restricted BTC" and Russia banned it.
Are the China exchanges doing good again?....sorry I don't know.

[giletto]

I'm what most of you would consider a wall street person: I'm a high frequency trader, have been for the past decade, and make my income solely from trading.

I own ~4 bitcoins that I mined myself a couple years back just because I thought/think the bitcoin project is cool.

I'd like to buy many, many more bitcoins (to buy and hold, not to HFT). Putting a few hundred thousand dollars into an investment like bitcoin would be something I'd be happy to do - the risk adjusted returns are within my risk profile. I haven't. The reason is I don't trust any of the exchanges. Even the 'reputable' ones are still small/unproven startups. Coming from the wall street world, there's a lot to be said for the security that larger battle-tested financial institutions offer. When you're talking about putting hundreds of thousands to millions of dollars at risk, counterparty risk is a very real concern. At this point in time, no exchange has given me enough faith to trust them with my money, even if it was only for a single hour where I wired it to them and then bought the BTC and transferred the BTC out immediately. While I never would have used gox, just as an example: What if the company happens to blow up in that hour, and I never get my BTC and my USD are stuck in some sketchy small company that is in a foreign bankruptcy proceeding for the next three years?

Wall street types are happy to accept financial risk, but aren't very fond of counterparty risk, especially if we can't hedge it off onto someone else. At the moment that's not particularly possible. If you got even a single reputable financial institution (bank, equity/commodity exchange, something of that nature) to operate a BTC exchange, we'd come flocking.

All of the "fear of the unknown" type comments aren't particularly accurate about why wall street isn't investing bigtime in BTC yet. Wall Street will invest in pretty much any asset as long as the asset provides appropriate levels of risk adjusted returns -- certain assets are clearly far more risky, however, if the returns are sufficient for that level of risk, and that type of investor is able to stomach that risk, they'll happily invest. Imho, BTC has a track record long enough at this point with returns high enough to make it an interesting risky investment for many many institutional investors -- aka, the returns aren't the problem. For example, ask anyone who trades long-dated far-out-of-the-money options how they feel about risky investments. In my opinion, the reliable, safe infrastructure simply isn't there yet to get institutional investors to feel comfortable trading BTC -- it's too much the wild west, with small fly-by-night companies (gox, btc-e, etc) having large market share in the exchange markets.

Just my $0.02.

Don't understand your point? If you want buy and hold you don't must leave your coins/money at any untrustful exchange. Buy few coins and send the coins to you wallet and keep the coins safe. Or buy at local Bitcoin seller, or buy in many steps small amounts at any exchanger (even to avoid to affect the price with your hundreds or millions of $$  )...or or or... Many many possible and safe ways to do...Easy as that...

If you are that big stockmarket trader as you say (doubts are allowed) you might be able to handle risk of small amounts. You gonna lose same or more at stock market trades everyday.

[MrPiggles]

That's total bullshit, counterparty risk is the only reason you won't get into btc lol.

Find some miners who will sell you blocks, go on localbitcoins, there are people offering up to $100,000 trades actually located on Wall street.

You're basically just shilling for secondmarket, or you'll announce soon that wannabe investors no longer need worry about counterparty risk because.....some company you're involved with has sorted out this issue you have created.

[TPN]

Sooner or later they will jump in

[Beliathon]

Wall Street?

Ye gods, I hope never. They don't deserve the wealth.

[giletto]

Wall Street?

Ye gods, I hope never. They don't deserve the wealth.

They will, sooner or later. When they see with how  less money you can manipulate the market in XX% they will smell the blood.

[johnvm]

Thanks for the feedback on my post guys. As a few people responded to it, I'll try to address all follow-up comments in this post:

Putting a few hundred thousand dollars into an investment like bitcoin would be something I'd be happy to do - the risk adjusted returns are within my risk profile. I haven't. The reason is I don't trust any of the exchanges.

Thanks for your input. But I don't think I understand your position. If you would be happy to buy and hodl (as per your statement), rather than HFT, why wold you not: transfer whatever amount you are comfortable to an exchange (e.g. $5000?); buy XBT with the USD; withdraw the XBT to your personal wallet on your computer; rinse and repeat until you've exchanged your hundreds of thousands?  You exposure to counterparty risk can be limited to whatever figure you keep on the exchange at any one time.

Alternately, if you really want to take a position of hundreds of thousands, I would imagine you might be interesting to someone like BitPay, whose biz model requires a regular source of $ for which they would provide XBT. You might contact them directly and ask.

This definitely would make me feel comfortable with the amount of risk, but it's a lot of work, even for someone like me who I'd only consider a small investor in comparison to general Wall Street types you guys are after. For example, a typical position size in any particular given stock for me on any given day may be ~mid six-figures. To acquire that $ amount of bitcoins by the method you mentioned, I'd have to "rinse and repeat" 100+ times. If each time even took only a single day, that's still 3+ months to enter a position. And that's for someone like me who is pretty small potatoes in the Wall Street world. Let alone the fact that Wall Street people tend to make a decent amount of money, so dealing with that every day has a high real-dollar opportunity cost in terms of their time. And that's just for a small/mid-sized investor like myself. Large funds are the type you'd really want, and they'd come in and pick up 10, 20, 30 million dollars of BTC at a time. That'd never work for them. You need a way that an investor can come safely and buy up BTC all in one go.

Wall street types are happy to accept financial risk, but aren't very fond of counterparty risk, especially if we can't hedge it off onto someone else. At the moment that's not particularly possible. If you got even a single reputable financial institution (bank, equity/commodity exchange, something of that nature) to operate a BTC exchange, we'd come flocking.

You could always buy from SecondMarket... Check them out.

SecondMarket is actually probably a good option - I wasn't aware of them being an option at all in fact, didn't know their exchange had launched yet. They're a known quantity nowadays in the private-company-shares market, as many large institutional investors have conducted business with them for the past couple of years in trading private shares. They have a track record of not just running away with your money, and also of not getting hacked (thus far, heh). Their involvement in BTC will be very positive for the bitcoin community, imho.

Don't understand your point? If you want buy and hold you don't must leave your coins/money at any untrustful exchange. Buy few coins and send the coins to you wallet and keep the coins safe. Or buy at local Bitcoin seller, or buy in many steps small amounts at any exchanger (even to avoid to affect the price with your hundreds or millions of $$  )...or or or... Many many possible and safe ways to do...Easy as that...

If you are that big stockmarket trader as you say (doubts are allowed) you might be able to handle risk of small amounts. You gonna lose same or more at stock market trades everyday.

Same as above, that's just not realistic for the type of investment you guys want to get from Wall Street -- you want to make it easy for people to acquire large quantities of bitcoins all at once (millions of dollars). Local isn't a realistic option for both that reason, and hassle, and probably legal reasons. As far as not "leaving the BTC on the exchange" -- I agree with you 100% there, and never was advocating leaving any assets at the exchange for an extended period of time at all. But even a couple hours of having Mt Gox have any large quantity of my money for instance would be too much and deter me from trading it.

Well I guess he wants to do it at once as he is used to with more established financial institutions.

I kinda can see why an Wall Street investor will have problems wiring money to Japan to the company of a fat 29 year old jerk.
Even in $50k increments.

Very well said

That's total bullshit, counterparty risk is the only reason you won't get into btc lol.

Find some miners who will sell you blocks, go on localbitcoins, there are people offering up to $100,000 trades actually located on Wall street.

You're basically just shilling for secondmarket, or you'll announce soon that wannabe investors no longer need worry about counterparty risk because.....some company you're involved with has sorted out this issue you have created.

I wasn't even aware the SecondMarket exchange had launched, and I have no companies involved in BTC at all atm, nor do I plan on launching any at the moment, so no worries there hah. I have no agenda here, I've never even conducted a single trade on any exchange with bitcoin. Just trying to give some insight into how people who work in my world think about things like this, thats all. Localbitcoins is an absurd option to me for a wall street type trade.

tl;dr: You want to make it as safe and easy as possible for large institutional investors to come and buy bitcoins. Not $5k at a time, not $50k at a time, not even $100k at a time. You want the guy who runs a $2 billion dollar fund and wants to allocate $20 million of it to bitcoin to come in and be able to deposit $20 mil at the exchange and run a TWAP buy algorithm over the following few days and get his whole position in one swoop from one exchange. That's how you get real wall street money involved, and that real wall street money would probably crank the BTC price wayyyy up.

[bassclef]

Wall Street?

Ye gods, I hope never. They don't deserve the wealth.

They will, sooner or later. When they see with how  less money you can manipulate the market in XX% they will smell the blood.

Some things to keep in mind if, in fact, groups of large investors attempt this.

• The required investment would push prices sky high, making existing holders extraordinary wealthy. There are only ~12 million bitcoins in existence, and most of them are not for sale.
• Bitcoin traders are resistant to wild price swings, are thick-skinned against fraud and can spot market manipulation. Blockchain analysis and the open source nature of the community would help to hold any naughty whales accountable.
• Bitcoiners are generally highly intelligent and understand how the underlying protocol works. Wall Street and their friends in the media do not.
• Crypto traders already program highly sophisticated trading bots (see cryptotrader.org) that rival or will simply copy what Wall Street brings in. If Wall Street money is imminent, traders will be ready to profit.
• There is no regulated financial industry surrounding cryptocurrencies. There are no laws that will protect them or favor them.

I say bring it on. Let's see what these traders can do on a level playing field without a central bank and their buddies in Congress to bail them out.

[Beliathon]

There is no regulated financial industry surrounding cryptocurrencies. There are no laws that will protect them or favor them.

I say bring it on. Let's see what these traders can do on a level playing field without a central bank and their buddies in Congress to bail them out.

My hero.

http://www.youtube.com/watch?v=7f_HsjpSVaI

[marcus_of_augustus]

I say bring it on. Let's see what these traders can do on a level playing field without a central bank and their buddies in Congress to bail them out.

Bring it!

let's see what ya got wall st.... men or mice

I think they are afraid of real free markets after having their own little corrupt racket for decades, coddling them, making them fat, dim-witted and slow.

[bassclef]

There is no regulated financial industry surrounding cryptocurrencies. There are no laws that will protect them or favor them.

I say bring it on. Let's see what these traders can do on a level playing field without a central bank and their buddies in Congress to bail them out.

My hero.

http://www.youtube.com/watch?v=7f_HsjpSVaI

Somewhere after midnight
In my wildest fantasies
Somewhere just beyond my reach
There's someone reaching back for me
Racing on the thunder and rising with the heat
Isn't there a superman to sweep me off my feet?

 

I think they are afraid of real free markets after having their own little corrupt racket for decades, coddling them, making them fat, dim-witted and slow.

No heroes left on Wall Street, that's for sure.

[Lauda]

Is China really trending higher again, our media is still saying they "restricted BTC" and Russia banned it.
Are the China exchanges doing good again?....sorry I don't know.

They are doing better than they did after those recent events.

[HappyFunnyFoo]

The best investors on Wall Street will continue going long on U.S. businesses and likely won't buy bitcoin.  A 3x leveraged NASDAQ ETF is less risky than bitcoin.