Wall Street traders like Trey Griggs are searching for a new lease on life in the $2.4 trillion crypto Wild West. After spending two decades of hard work in energy trading, the 51 year old was lured by a former Goldman Sachs Group Inc. colleague this February into a new world of market-making in digital currencies.
Now he is using his old fighting spirits and reveal his old-school finance tricks to exploit the industry’s prevalent inefficiencies, volatility and pure peculiarity. All the fun that we had 30 years ago in the commodity markets and is no longer fun that fun is now in crypto, says the U.S. chief executive officer at GSR Markets in Houston.
Griggs is among crypto newcomers deploying organized strategies that are being tried and tested in conventional property classes, price arbitrage, futures trading, options writing in a flourishing new corner of finance. As more mainstream investors get behind Bitcoin, boutique firms are joining the likes of Mike Novogratz in an ever broadening crypto rally that keeps breaking records.
For those who can bear the price swings, the threat of exchange hacks and the byzantine market structure, compound fast-money trades are presenting an alternative way to ride the digital fascination. At GSR, the firm’s incom is market-making, where traders pocket the spread between buy and sell orders.
In stocks, that’s a nearly oligarchic business where the likes of Citadel Securities and Virtu Financial function at lightning speed. In virtual currencies, where hundreds of exchanges propose free access at a slower pace, GSR can capitalize on the big volumes without splurging millions on high-frequency foundation.
Part of the tech we have is just here to tell us did we actually trade or not, is this trade good or bad,” says GSR co-founder and former Goldman trader Richard Rosenblum. “We don’t want to be slower than our rivals, but it’s just not quite as much of the driver.
The major difference is how much premium retail investors are willing to pay,” says chief investment officer Daniel Egger. “in another way of course we’ve written calls we wished we hadn’t in those moves up.”
In fact, going long crypto over the past year has proved the easiest and most useful way to tap into the Prosperity. And for those who are choosing the systematic route, competition is rising. For example, in order to get an edge in its market-making strategy, BKCoin has recently installed servers at Asian crypto exchanges, an action known as co-location in the high-frequency world of stocks. It’s a sign the industry is growing up fast.