Exploring trends in automated crypto trading
Despite the risks, many traders continue to be attracted to cryptocurrency trading due to the earning potential it offers. Sasha Ivanov, CEO of Waves, explains that the crypto market is inefficient, opportunities for arbitrage exist between exchanges, and the market is very volatile and unregulated with a constantly shifting landscape.
Regulation and efficiency
Ivanov believes that the cryptocurrency market will move in the direction of greater regulation and efficiency. Arbitrage opportunities will gradually disappear paving way for high-frequency trading and platforms for trading stocks – similar to existing ones will arise, but on the blockchain. It will also lead to the emergence of ETF like trading funds.
The application of blockchain technology to these markets is currently in its infancy, but there are many opportunities. Markets that have already been established on the blockchain typically do not enable trading with sufficient speed, though they can provide transparency and decentralized trading. Nasdaq’s Linq project is one such example.
Furthermore, distributed registry technology allows the combination of processes of interaction between the exchanges, brokers, depository, clearing systems and clearing houses. Blockchain can save time by speeding up typically lengthy processes, but more important than speed is transparency.
Automated crypto trading: Looking ahead
Ivanov sums up with a series of conclusions and predictions for the sector:
- The cryptocurrency market is currently very inefficient, offering opportunities to earn from it. Arbitrage bots can be particularly effective.
- Securities transactions will be carried on the blockchain. Exchange transactions will be carried out with the help of smart contracts and the need for IPOs will be markedly reduced.
- Blockchain-based settlement and clearing systems will be developed.