Bitcoin is ready for prime time, many of its supporters say, and the virtual currency will ultimately be as common to consumers, merchants, investors and money managers as dollar bills or debit cards, they say.
Alec Petro, managing partner at Bay Hill Capital Management LLC in Duxbury, Mass., is one such Bitcoin backer. He also runs a small fund-consisting only of capital from partners of Bay Hill’s parent company, Fort Hill Capital-that invests in Bitcoin, and more interestingly, he is a market-maker in Bitcoin options on the Atlas ATS exchange, the only Bitcoin exchange currently offering such options.
Petro sat down with Traders to talk about Bitcoin’s growing acceptance, and whether Wall Street is about to bet on Bitcoin in a big way.
Traders: You run a small fund that invests in Bitcoin, but you don’t involve the clients of Bay Hill Capital in the fund, just the partners of your parent company. Why is that?
Petro: Most of our hedge fund investors don’t want to talk about Bitcoin. We don’t even bring it up with them. We are only trading Fort Hill Capital partner capital in our Bitcoin business.
Traders:Still, you’re seeing some institutional investor interest in this area, aren’t you?
Petro: Institutional investors are coming into this space, some just nosing around, others with interest. But the big liquidity you’re seeing is off-exchange so far. Most institutional investors that are doing bitcoins are doing it off-exchange because they don’t want to leave a trail.
Traders:You’ve also started trading Bitcoin options on the Atlas ATS exchange, how is that going?
Petro: We have gone from making one or two option trades per day to 10 to 15 option trades per day over the past five weeks. This has been especially popular in the last month since we launched as we’ve seen the price of bitcoins in dollars appreciate almost 80% since we started listing Bitcoin options.
We’re betting that the Bitcoin derivatives market is going to be there, maybe not next month, but soon. Institutional investors are going to want to be in this space.
Traders: More merchants, most recently Dish Networks and Expedia.com, are saying they’ll take bitcoins as payment. That’s got to help make the case, right?
Petro:New merchants are coming on board every week-we’re waiting for Amazon, eBay, Target and Walmart to come aboard. More merchants are taking it and that means more liquidity, more stability in price, and ultimately more confidence and consumer use.
How can this not work?
