""/
Market & Analysis

A 20-year-old crypto market-maker who skipped college breaks down his Reddit-inspired approach to trading – and outlines why he sees ether displacing bitcoin as the ‘king cryptocurrency’

[ad_1]

Matthew Tweed
Matthew Tweed is a 20-year-old crypto market maker.

  • Matthew Tweed runs his crypto firm from his parents’ house in the suburbs outside London.
  • 20-year old Tweed told Insider “around 90%” of the conversations he has about crypto take place on Reddit.
  • He backed ether to eventually displace bitcoin due to its technological advantages.
  • See more stories on Insider’s business page.

Matthew Tweed learnt his first valuable lesson about cryptocurrency six years ago, when he was just 14 years old.

“I got into investing in crypto because I found an interesting token that was meant to be for online marketplaces, and I moved from that to bitcoin,” Tweed told Insider. “I can’t remember what the project was called – it didn’t go anywhere, but that showed me that there’s a lot of cool projects, but a lot of projects won’t end up working out.”

Tweed now runs his low-latency trading firm, Pine Financial, from his family home in Woking, a medium-sized commuter town, 25 minutes from London. He believes 100% annualized gains are possible in that area of cryptocurrency trading.

Low-latency, or market-making, trading refers to the use of algorithmic trading to increase profitability. Tweed’s bots execute trades on crypto exchanges like Deribit.

“I managed to get into the market-making space without eight figures behind me, but it’s not very accessible,” Tweed said. “You have to put in a lot of time to become competitive.”

Tweed has spent a significant amount of that time on Reddit. He said his first break in market-making trading came from an interaction with another user on the social networking site.

“At the very end of 2018, I got into low-latency trading,” he said. “That came from someone I met on Reddit – to be honest, 90% of what I’ve done and the people that I’ve met has come from the various sub-reddits on algo-trading.”

“I frequent r/algotrading for a lot of my work,” Tweed added, referring to a Reddit forum with 1.2 million users that focuses on quantitative trading and automated strategies. “The specific subreddits are good, but places like r/cryptocurrency don’t have much good content, so I barely look at it.”

Tweed embarked on a career in algorithmic trading just as his classmates were beginning to apply to college. For him, a formal education had limited appeal, given his success with cryptocurrency trading.

In terms of which cryptos he likes the most, Tweed said he believes the ethereum network’s superior technological capabilities will enable its ether token to surpass bitcoin.

“Ethereum will be far more scalable – that should lead the way for being able to make much better applications, so you can have a proper smart contract based decentralized system,” he said. “You’d never be able to build smart exchanges on top of bitcoin – there’s not a platform for it.”

“Long-term, I think there’s a good chance ethereum will become the king cryptocurrency,” Tweed added.

Ether has been volatile this year, surging from $730 to a peak of almost $4,000, before collapsing to under $2,000 weeks later. The token has risen by around 10% to $3,140 since last week’s implementation of the so-called “London hard fork” upgrade, which initially burned around $8,900 worth of coins per minute.

“I think Ethereum 2.0 is going to be great for scalability in the crypto space,” Tweed said. “Many smart contract platforms claim better scaling than Ethereum, but they’re often extremely centralized, or make other fundamental trade-offs, which defeats the purpose of crypto.”

However, despite his own success as a relative outsider, Tweed said investors need to be careful before throwing themselves into the cryptocurrency space.

“Cryptocurrency is fairly small and specialist – I wouldn’t recommend people just throw money at it,” he said. “There’s a lot of ways that retail investors can lose money.”

“There’s a need for regulators to have knowledge of the industry, but in general, I’m in favor of exchange regulation, risk disclosures, and education to protect retail investors,” he added.

Tweed pointed to ‘sh*tcoins’, such as the highly volatile dogecoin, as an example of an area where retail investors could potentially lose money without tighter regulation.

“[Sh*tcoins] are amusing, and I enjoy watching them, but I wouldn’t invest in them or hold them,” he said. “The price may go up in the short-term, but there’s no reason it would in the long-term. In the short-term it’s just supply and demand – people jumping on the meme-coin.”

[ad_2]

Source link

""/
Market & Analysis

What comes next in crypto market resurgence

[ad_1]

Cryptocurrency market has finally up momentum to push higher mostly across the board recovering billions of dollars for patient hodlers on the back of an uptick in dip-buying and renewed risk-on sentiment.

Despite slight drift from near US $45,000 in the past day, the most popular cryptocurrency, bitcoin is still holding strong around the US $43,500 mark, with all altcoins at levels not since May.

As of press time, Bitcoin (BTC) is changing virtual hands at US $43,600, Ether (ETH) at US $2,950, ripple (XRP) at US $0.79, Binance Coin (BNB) US $341, cardano (ADA) at US $1.42, Dogecoin (DOGE) at US $0.24, ChainLink (Link) at US $22.75, UniSwap (UNI) at US $26.35, Polkadot (DOT) at US $19.42 and Stellar (XML) at US $0.28.

Much of the trade volume , as seen in the small size of transactions, is being driven by retail traders and speculators who are continuing the high level of engagement that began since early 2021, and new entrants who may be looking to jump in and ride the explosive uptrend seen in some of the cryptocurrencies recently.

The crypto price resurgence led by Top Ten coins by value has so far recovered almost $250 billion to the market over the past week, defying concerns that the U.S. could be about to pass far-reaching bitcoin and cryptocurrency tax reporting legislation.

It is not rules out that the most popular crypto asset could continue its upward push to US $50,000 although there are early signs of the stiff resistance. From technical aspect, managing to hold above the US $40,000 psychological level  in the coming days is vital as bulls will have to maintain above the 100-day moving average to sustain any upside traction.

On the flip side, the pullback will pull bitcoin back to its previous stronghold range of between US $30,000 and US $40,000.

Risk Warning: Cryptocurrency is a unregulated virtual notoriously volatile asset with a high level of risk.  Any news, opinions, research, data, or other information contained within this website is provided for news reporting purposes as general market commentary and does not constitute investment or trading advice. 

[ad_2]

Source link

""/
Ethereum

cryptocurrency: Crypto week at a glance: Digital tokens rally, Ethereum goes through London Hard Fork

[ad_1]

Cryptocurrency enthusiasts were waiting for such a fantastic rally for quite some time. It was a fabulous week, where we saw Bitcoin finally managing to break out from a prolonged consolidation phase. However, despite Bitcoin’s stellar performance, it was Ethereum that was the talk of the town.

One of the most significant upgrades to the Ethereum network happened this week. The ‘London Hard Fork’ went live as block number 12,965,000 got added to the blockchain network.

This upgrade is a major step towards making Ethereum deflationary. It promises to make the network more scalable. The London Hard Fork also acts as a prelude to ‘Serenity’ or ETH 2.0, which will likely be live by the end of the year.

The anticipation of the upgrade kept ETH investors on their toes. However, a rally that lasted twelve successive days indicated that the upgrade was well received by the Ethereum community.

The crypto market cap stood at a massive $1.8 trillion as of August 7, 2021, translating into a more than $400 billion jump for the week. The massive rise in trading volumes signaled that the momentum is bullish. Markets have finally managed to reach the highs touched in June.

Crypto adoption into mainstream finance has picked up pace. Even the bearish markets during the past month did not hinder this. Germany has been progressing towards crypto adoption for some time now. They are coming up with ‘Spezialfonds’ that are accessible to institutional investors.

German regulations have allowed these hedge funds to hold 20 per cent of their assets in cryptos. Spezialfonds manage €1.8 trillion worth of assets. If these funds flow into the crypto markets, there is a much larger bull run to come.

The company Ripple, which issues the token XRP, has been engaged in a lawsuit with SEC. This has been taking a toll on the price of XRP for a prolonged time. However, some recent developments indicate that the judgment might be in favor of Ripple. The price of XRP also shot up after investors’ sensed victory.

The crypto markets rose almost linearly over the past week. This will halt at some point. The next week could likely be a period of consolidation for the markets. However, the markets have managed to come out of the grip of the bears and that is a good sign for both the short and long-term investors.

Among the top 10 cryptocurrencies, the best performer for the week has been Uniswap, followed by Polkadot and Ethereum.

Top 5 crypto gainers during the week:

  • Voyager token (VGX): 49 per cent up
  • Ravencoin (RVN): 46 per cent up
  • Internet Computer (ICP): 41 per cent up
  • Qtum (QTUM): 40 per cent up
  • Elrond (EGLD): 35 per cent up

Top 5 crypto losers this week:

  • Amp (AMP): 14 per cent down
  • Theta Fuel (TFUEL): 8 per cent down
  • Siacoin (SC): 8 per cent down
  • Decred (DCR): 8 per cent down
  • IOTA (MIOTA): 5 per cent down

(Edul Patel is CEO & Co-founder of Mudrex)

[ad_2]

Source link

""/
Bitcoin

The biggest challenge for crypto exchanges is global price fragmentation

[ad_1]

It’s no secret that Coinbase has played an instrumental role in bringing new users into the crypto space. Coinbase’s friendly onboarding process and status as a publicly traded company allow it to appear as a more traditional investment platform to non-crypto savvy investors, leading to greater trust.

However, it seems almost weekly that another article hits the internet about Coinbase and its excessive fees for retail and professional traders and investors. The gripe generally unfolds with a comparison of pricing between a couple of different exchanges. With increased competition, the pressure for Coinbase and exchanges around the world to lower fees is mounting. Nevertheless, the biggest pricing issue facing Coinbase and other exchanges is far greater than simply fee structures.

Commoditization and price

Commodities are goods that are fungible. In other words, the market treats goods in their various appearances as effectively equal. When a good or service is commoditized, there is no further differentiation between sellers, and all negotiation is based exclusively on price.

Discussion about trading fees is rooted in a belief that the price of cryptocurrencies is static across all exchanges — a commodity. If Bitcoin (BTC) were a true commodity, trading fees would be the only issue at play and the discussion around Coinbase’s fee structure would be valid.

Related: Crypto needs a decentralized daily reference rate

However, this view of Bitcoin belies an underlying problem within the market. The price of Bitcoin is not a static number and can often vary across exchanges. Because of market fragmentation, consumers are often over or underpaying without even knowing it.

Fragmentation and true price

Market fragmentation occurs when contact and interaction between exchanges are poor. This results in differences in pricing between exchanges and a dearth of liquidity in the market at large.

When these price variances are large, they rapidly subsume any variance in fees between exchanges. Investors and traders have been trained to only see the price on a single exchange. But this fragmentation means that the true price of any cryptocurrency is its price on a single exchange plus the fees on that exchange, compared with the same calculation on another exchange.

Related: Trust is still a must in the trustless world of cryptocurrency

If the price of Bitcoin is relatively low on one exchange, it matters very little if that exchange has zero fees. Why?

If the price of Bitcoin is $60,000 and the fee is 0.50% on one exchange, one could pay for a Bitcoin on another exchange at $60,120 with a 0.30% fee. Yes, with hundreds of exchanges in the market, the price gap can get this big at times. This variance has led to a proliferation of arbitrage investing — buying Bitcoin on one exchange at a lower rate, and then reselling the same coins after a transfer to another exchange for a higher price.

The biggest issue this causes, however, is that Bitcoin is no longer a commodity. With too many pricing variances, Bitcoin becomes nonfungible, and the market stagnates. This motion away from commoditization will eventually cause a potential market implosion. But there is hope for change.

Market stabilization

This type of market chaos is not new nor isolated to the cryptocurrency market. The same issues have occurred in bonds and equities markets, but have been solved over time through regulation. For example, the United States Securities and Exchange Commission has a policy called National Best Bid and Offer, or NBBO. This regulation requires all brokers to execute trades at the best available ask price nationally when an investor wants to buy a security, and the best available bid price nationally when an investor wants to sell.

In this way, the regulation stabilizes the market and protects consumers from overpaying on any given exchange. Brokers are held in check, and market forces work cooperatively rather than unilaterally.

The cryptocurrency market, however, because it remains in its infancy, does not have this time of normalization in place. Exchanges function with relative autonomy, and the market’s current state of fragmentation means that retail and institutional investors often pay different prices based on these exchanges.

The problems with implementation of this system in the cryptocurrency market are manifold — lack of communication, restrictive regulatory compliance and dry liquidity pools holding back any meaningful change.

Building a truly unified global crypto market

The root cause of the issue in the market is a lack of communication or interoperability between exchanges, resulting in a high degree of market fragmentation. However, the current digital infrastructure is substantial enough to support constant exchange interaction. But for markets to scale globally, this interoperability between exchanges must be seamless.

Related: Trustless bridges may be the key to blockchain interoperability

Bitcoin is a global asset, arguably even more so than Apple or Tesla stock. So it’s unfair that traders cannot get the best bid and offer at any given time, as the NBBO provides for traditional equities. More enterprise-grade technologies and liquidity will also help mature digital asset trading. All of this could eventually allow for one unified global trading market in a similar way that traditional stocks are traded on exchanges like the Nasdaq or the NYSE.

Without these solutions to reduce fragmentation, trading fee arguments and debates are misdirected and do not tell the complete story. It’s time to level the playing field of fairness with the right regulation and technology in place. Ultimately, it’s not a race for lower trading fees, it’s a race for something similar to the NBBO in crypto — a truly global best bid and offer.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Haohan Xu is CEO of Apifiny, a global liquidity and financial value transfer network. Prior to Apifiny, Haohan was an active investor in equities markets and a trader in digital asset markets. Haohan holds a Bachelor of Science in operations research with a minor in computer science from Columbia University.