“Forex is like a little lake and crypto is like an ocean,” – was one of the views aired during the “Making Sense of the Crypto Frenzy” panel at Finance Magnates London Summit 2017.
Cryptovest’s Miguel Gomez is attending the live summit and covering major events, such as the CEO Panel earlier. The “Making Sense of the Crypto Frenzy” session goes over the nexus between cryptocurrencies and traditional financial services, with speakers including Zotapay CEO Avner Ziv, OTCXN’s Rosario Ingargiola, veteran trader Alex Nekritin, Carolina May from NewsBTC, Shift’s COO, Matthew Miller and Ibinex founder Simon Grunfeld.
The speakers compared the FX industry to the rising cryptocurrency market and shared their views on how the landscape is evolving, what challenges wait ahead and how things may shape up in the future.
Starting with the current state of the crypto market, OTCXN CEO Rosario Ingargiola attributed the majority of long positions to the market’s immaturity. According to him, once fully-functional exchange technologies will be implemented, market makers will move in and we will see a lot more of long and short action in crypto.
“One of the things we are building is cross-exchange clearing and settlement. Coupling that with true, institutional-grade exchange technology will cater to algorithmic market makers, who are going to come in and need speculators on the other side. We will figure out how to deliver this downstream to brokers, who will have this huge pool of ready willing and able speculators to go both long and short,” he said.
Simon Grunfeld, the founder of Ibinex spoke about cryptocurrency mining, citing the increasing innovation in the market as miners try to reach maximum efficiency and value against resources being spent.
“Mining is becoming extremely innovative. You have entire data centers devoted to mining Bitcoin or Ether (or whatever). These days their biggest concern is how do I power it? How do I make it effective, and how do I manage what I am mining? A lot of the rigs these days are switching between one coin to another depending on the time of the day and how much it is costing them per kilowatt. That’s how innovative they are getting.”
Alex Nekratin, a trader with over a decade of experience, compared the state of crypto today to forex from the past, particularly how info-products sold majorly in the early days of forex, and now the same products are making a killing in the crypto industry:
“...News letters, signal services, courses etc. Forex had that going. Those guys were great marketers, they used to do it with Forex but it died down as a lot of the Forex traders realized those products don’t work so well. Well we found out at this expo [another event] that they are selling the daylights out of anything that has the word crypto in it. All those products that were bought for Forex are going to be bought for cryptos and you guys better believe the amount of retail leads they are getting.”
The crypto markets’ liquidity issues were also discussed, as all speakers agreed that generating liquidity which is sustained, secure and reliable is challenging in the crypto world. Rosario cited the GDAX flash crash due to a large Ether order earlier this year as an example.
Shift’s COO, Matthew Miller came in with some advice, warning crypto investors to not trust any product just because they have a license.
“...in FX we have regulated bodies and you know the money is safe. With crypto, it’s different. It’s not a regulated activity officially, so I am not really sure how it shapes out for the actual security of your money. Don’t just assume because someone has a license, that they have a product that will meet your needs. Really drill down into who the people are and how well they know this space because it’s not the same as FX. It’s a very different industry,” advised Miller.
Answering a question from the audience about Forex brokers stepping into the crypto market, Simon Grunfeld spoke about his company’s turn-key solution for people who wish to start their own cryptocurrency trading platforms:
“We do an exchange out of the box. It comes with full back office, KYC, AML; so if someone is looking to start their own exchange, it’s very turn-key at this point. The challenge is not technology, it’s around the fiduciary side. The challenge is how you structure yourself so that you can take client funds (fiat currency).”
Another member of the audience asked about listing ICO tokens on exchanges and whether it is recommended. Grunfeld replied by stressing on the need for any token to have utility and solve a problem. As long as a token brings value, he said, it should not be a problem.
Grunfeld also shared that his customers are not very particular about the underlying technology when it comes to the top coins right now. What they do care about however, are ICOs and whether they are legitimate and provide a good opportunity for investment.
Overall, the panel acknowledged that crypto markets are overtaking traditional forex trading by a huge margin. However, they also called the market immature, and in need of more sophisticated packages and products that would truly spur growth.
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