By CCN.com: The crypto market continues to attract former Wall Street traders, and now we know why. Nelson Minier, who is the head of OTC at cryptocurrency exchange Kraken, was featured on Nasdaq TradeTalks as a guest. Minier, who hails from the trading desks at firms such as JPMorgan and Credit Suisse, explained how the trading dynamic has shifted. For instance, Kraken’s workforce has expanded 4x from less than 200 to more than 800. There’s a reason for that.
“Wall Street ain’t what it used to be. The first 15 years I was on Wall Street, it was fun. I was very fortunate, I started in the CDS market which feels a lot like crypto. Here you have a lot of financial innovation, a lot of trading…It feels very much like that, there’s a lot of energy and enthusiasm about this progress and where it’s going.”
Another example is Morgan Stanley alum Marcus Swanepoel, who these days is at the helm of crypto startup Luno. Swanepoel told the Financial Times:
“Over the past two years we have seen evidence building that bitcoin is an uncorrelated asset class so it makes sense to add it to portfolios.”
Portfolio Managers Are Drawn to Crypto
The trend is toward “more portfolio managers coming in,” including what Minier describes as “mavericks and savvy hedge funds” entering the crypto space. Indeed, digital currency investment firm Grayscale Investments has seen its assets under management balloon to $2.5 billion, most of which originates from big investors including hedge funds.
“I think it’s going to be one of those things in a blink that everybody is going to start chasing it,” said Kraken’s Minier.
With the upcoming launch of bitcoin futures exchange Bakkt, more traders could begin to feel the way that Minier does. In fact, Kraken has been experiencing an uptick in institutional demand for crypto, but he admits that “it’s slow.” Meanwhile, rival crypto exchange Coinbase, both of which are based in San Francisco, recently revealed that hundreds of millions of dollars in institutional capital is coming off the sidelines and into cryptocurrency weekly.
They sure can’t find these types of returns in any other asset class currently, with interest rates at rock-bottom levels and the equities mimicking bond yields. Bitcoin, meanwhile, has generated returns of more than 150 percent year to date.
“I think it’s still one of the most volatile assets on the planet. We just dropped from $10,800 to $10,000 in a few blinks,” said Minier.
Bitcoin may never be considered a safe-haven asset, but it’s risk/return profile along with the opportunity to create wealth is like nothing else the financial markets have to offer.
Last modified: March 4, 2021 2:39 PM