After years of dipping into cryptocurrency markets, biding their time and preparing strategies, Chicago trading firms are getting serious about trading digital assets, reports the preeminent London-based financial paper the Financial Times (FT).
Several professional Chicago trading firms have entered the crypto-asset fray in a serious way, dedicating whole teams and desks to trading the 10-15 cryptoassets with the most liquidity (higher trading volume). These firms are “proprietary”, meaning they trade with their own funds rather than clients’ funds. Some of the desks have opened multiple locations around the world, adapting to the 24/7 demands of the crypto industry.
This heavy entrance into crypto has been occurring slowly for some time. Not only developing strategies and acclimating to the market, these trading houses had also been scooping up the sort of easy arbitrage opportunities characteristic of a young market: “There was money on the table and you could just pick it up”, but now “[y]ou can tell more professional traders are in the space”, according to a trader a DV Chain.
The firms, enjoying the cozy attitude toward crypto in Chicago, are in it for the long haul when it comes to digital assets. The head of trading for Cumberland avowed that “[t]he bottom line for us is this isn’t a one-year type experience. Even though the environment might be lower volume, we see a bigger picture down the line”. The firms have employed experienced platform and API companies, such as Trading Technologies, to set up their platforms and trading desks.
Not everyone is onboard yet, however, with some big firms still wary of the lack of maturity of asset-handling and liquidity between exchanges, non-problems in the traditional financial world. “Trading isn’t as much the issue with crypto. It’s more security as well as clearing [....] [t]hose two areas are really in their infancy”, explained a partner from HCTech, a forex trading firm.
Several projects in the crypto space are hard at work building exchange-linking liquidity platforms, for both centralized and decentralized -- and even hybrid -- platform models.