STOCKHOLM (BLOOMBERG) - Bitcoin futures just became a reality on Wall Street, but Sweden has been offering derivatives on the cryptocurrency for years. That gentrification has driven bitcoin trading in Scandinavia's biggest economy to alarming levels, according to an online brokerage that facilitates the transactions.
"The euphoria is about to get totally out of hand," said Claes Hemberg, a savings adviser at Avanza AB. The firm provides a digital platform for Swedes to trade everything from shares in some of the biggest Nordic companies to more exotic products such as bitcoin exchange-traded notes.
Avanza estimates that about 30,000 Swedes have become bitcoin converts after investing via XBT Provider's Bitcoin trackers, which are traded on Nasdaq Nordic. That is a 50-fold increase from a year ago. In total, Swedes have invested 2.2 billion kronor (S$353.07 million) in bitcoin, with trading on some days even supplanting household names like Hennes & Mauritz AB and Volvo AB.
Opening the door to bitcoin derivatives, as Sweden did in 2015, changed everything.
"In the past three to four years, you were only able to speculate in bitcoin if you were a bit of a geek, as a certain degree of digital competence was needed," Hemberg said by phone. "But today, you can trade using your fund account."
Like many other places, Sweden has seen investor demand for bitcoin explode in recent weeks, as the cryptocurrency moves closer to the mainstream of financial markets. At Avanza, a key worry is that its 15,000 clients speculating in bitcoin are not spreading their risk adequately, given the extreme volatility in pricing.
At XBT Provider by CoinShares, a Stockholm-based platform that enables trade in bitcoin and notes based on the cryptocurrency, managing director Laurent Kssis said "the last 30 days have been exceptional". Trading records have been repeatedly broken "as the mainstream interest in bitcoin has been increasing".
Ryan Radloff, a principal at CoinShares, said he thinks "the next evolution of finance is just beginning and the recent rally in price reflects this".
What is more, he expects prices to continue rising because there is "a large number of investors" racing to get a piece of "this scarce asset". Eric Balchunas, an ETF analyst at Bloomberg Intelligence, said what is going on in Sweden "shows two things".
"It shows the incredible demand to trade bitcoins in an ETN, exchange-traded note. The second thing it does, is it shows why the ETF structure rules." He said: "there's no way this is all money from Sweden".
The average Avanza customer has 82,000 kronor of bitcoin, which on its own doesn ot threaten an individual's financial health, Hemberg said. But every sixth bitcoin owner holds nothing else, and that is a risk. He drew parallels to trading in biometric-sensor maker Fingerprint Cards AB, which soared more than 1,500 per cent in 2015 but has slumped almost 90 per cent since then.
"It's a bit like being part of a sect, where everyone believes in the same instrument and where no one is saying 'no'," Mr Hemberg said.
"They are trading 23 times more in bitcoin than in H&M shares today and I'm getting despondent. As a savings adviser, I want people to save, not speculate."
Total turnover in the Bitcoin Tracker One exchange-traded note was 2.73 billion kronor in November, up from about 177 million kronor in January, according to data from Nasdaq. It has surged further in December, with the average daily turnover at 504 million kronor compared with 124 million in November.
Hemberg said the craze is "absolutely" a bubble. That is because bitcoin's price does not reflect the limited application, with only 17 stores in Stockholm actually accepting it as payment.
"I refuse to call this a currency," Mr Hemberg said. "That would make it sound serious, and it's not, it's just an instrument. You could just as well have people shopping with peanuts."