Switzerland’s Vontobel Holding AG and Falcon Private Bank, both of which offer their clients ways to speculate on bitcoin, say the cryptocurrency’s best days are ahead of it.
The imminent launch of bitcoin futures will trigger a flurry of new product launches in the digital currency that are likely to push the price even higher, according to the private banks. Cboe Global Markets Inc. debuts the first bitcoin-futures product on Sunday, while CME Group Inc., the world’s largest exchange owner, will start offering a similar product by the end of the year.
Clients’ views are polarized between those that see the new products as bitcoin’s route into the mainstream of financial markets, and those who believe it’s a bubble waiting to burst, said Heiko Geiger, executive director at Vontobel in Frankfurt. Bitcoin touched a record high of more than $17,000 on Friday, having surged about 1,500 percent this year.
“Views are very clear cut,” Geiger said. “Some investors expect more liquidity in the market through the introduction of the future contracts while others are preparing to short crypto. Overall, clients are bullish.”
Switzerland is establishing itself as something of a digital-currency hub. The Ethereum Foundation, which is behind the second-biggest cryptocurrency, is incorporated in the country, while the city of Zug last year piloted a project where users of government services were able to pay in bitcoin.
Vontobel offers what it calls participation certificates, a kind of derivative that allows bets for or against the digital currency, while Falcon offers direct investment in bitcoin.
Already there’s “a lot of turnover” in Vontobel’s bitcoin products, Geiger said.
The entry of Cboe and CME’s futures is widely seen as a game-changer for the industry because many professional investors have been unwilling to do business on the unregulated platforms where bitcoin currently trades. Cboe and CME are regulated, which may assuage some investors’ concerns.
“We are going to double down next year on bitcoin products,” said Ivo Sauter, head of operations and trading at Falcon in Zurich.