Crypto trading has gone mainstream. But how reliable are the connections that make trading possible?
Cryptocurrencys impact on global finance remains a question of close scrutiny, from U.S. regulators, investors and the worlds leading investment banks. But while the issue remains under debate, plenty of market participants are cashing in on the crypto craze, despite uncertainty and skepticism surrounding the trading of cryptocurrencies. Myriad others are eyeing the sector and still even more are just talking crypto at parties.
While Goldman Sachs, Barclays and even Fidelity make initial forays into crypto trading, smaller players are making aggressive moves on new crypto exchanges. The speed of technology development needed to support these early efforts – which may help U.S. giants make their own cases for expanding – is at a crucial stage, said Gaspard Coudurier of BSO, a leading provider of networks to this nascent market.
He said applying legacy arbitrage and order book scalping strategies to the crypto market faces a chicken-and-egg problem: volumes are still so small, relative to conventional exchanges, that traders remain especially vulnerable to connectivity issues with these new exchanges.
If the connection cuts off for just a few seconds, a market makers profits could suddenly turn to loss, he said. And no institution wants to have their algos trading crypto if they cant guarantee connectivity to the venues.
As market participants and regulators survey the scene, awaiting regulatory rulings and evidence of a bold, pioneering effort by an institution, Coudurier remains closely attuned to market changes, both large and small, with obvious and also unexpected impact.
