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The two types of bitcoin investors, according to top US stock broker exec

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
TD Ameritrade is one of the biggest retail brokers on Wall Street. Photo: AP Photo/Richard Drew

People investing in bitcoin (BTC-USD) are either die-hard believers in the transformational promise of the technology or short-term traders who love the asset’s volatility.

That’s according to Steve Quirk, the executive vice president of trading at TD Ameritrade, one of the biggest stock brokers in the US.

“There are two type of clients,” Quirk told Yahoo Finance UK. “One that firmly believe this is the future and so they’re going to put [their money] over here and just leave it alone.

“Then there’s another type of client that likes to play around with it, that likes volatility, that embraces volatility, and they’re going to go back and forth with it.”

Quirk spoke to Yahoo Finance UK at the Consensus cryptocurrency and blockchain conference in New York this week. During the event he said that around 60,000 of TD Ameritrade’s 11 million customers have traded some sort of bitcoin instrument since the company first launched bitcoin futures in December 2017.

“Right now, there are probably more people trading the volatility,” Quirk told Yahoo Finance UK. “But over time, as it becomes more mature, if I look at any other asset class, it’s probably going to become 60/40, 65/35.

“If and when successful, the ecosystem will look a lot like every other asset class.”

Rumours have been circulating that TD Ameritrade is considering launching full bitcoin trading on its platform, rather than just derivatives. The company has downplayed the rumours and Quirk didn’t comment on the reports.

Attendance at TD Ameritrade events to educate clients about bitcoin was “off the charts,” Quirk told the Consensus audience. He told Yahoo Finance UK that TD Ameritrade advises clients interested in crypto to hold it as part of a diversified portfolio.

“If this is something they have interest in, and they clearly have interest in it because they’re investing, we teach them basically the same thing regardless of what we’re talking about, which is: This is not where you put 95% of your money,” Quirk said.

“The most valuable thing we can teach people is, what is the worst case scenario? So that when that scenario unfolds they don’t make an emotional decision that’s a poor one. By understanding that, they’re much better off.”

Bitcoin is built using blockchain, a type of distributed ledger technology that many industries are looking at building into their own businesses. The tech allows people to transfer value securely, transact securely and safely with strangers, and secure information.

Quirk said TD Ameritrade is looking at using blockchain in things like settling trades.

“I think everyone sees where it could go,” he said. “Can you imagine real-time settlement for a brokerage firm? That would magical for us. From a risk management standpoint, from an availability of currency to transact again instead of having that elongated period for settlement, and then the risk management aspect of it. It would be game changing. It’s coming.”

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Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at @OscarWGrut.

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