Source : financemagnate, Monday, 22/7/2024
Tom Higgins, founder and CEO of Gold-i, noted Finance Magnates at iFX EXPO International 2024: “The liquidity of cryptocurrencies and the liquidity of foreign currencies are somewhat close.” “When you have a traditional retail forex broker, and they want to access cryptocurrency liquidity, how can they achieve that? It’s different liquidity providers; it’s different ways to access it. The technology is similar, but you need different angles.”
Headquartered in United Kingdom, Gold-i offers broker technology to access liquidity. Although the company does not provide liquidity, it connects trading platforms to multiple liquidity providers..
“The ETF has changed everything“
“Bitcoin and Ethereum are where there is a huge amount of liquidity,” he said, highlighting the cryptocurrency liquidity landscape, adding: “Alternate currencies contain very little. So, you need to be able to get the right sources of liquidity if you want to trade them. They’re like small stocks, so you can do well or lose some, of course, but they’re much more volatile if you like volatility..”
In recent years, the demand for cryptocurrency liquidity has skyrocketed. Events such as the Bitcoin Spot Trading Fund (ETF) in the United States and political endorsement of cryptocurrencies have also increased demand..
“The ETF has changed everything because it gives the corporate side of the business authority to crypto assets,” Higgins said. “It has allowed traditional players without licenses or regulations to play in Bitcoin without actually playing in Bitcoin. When they buy a fund at the price of bitcoin, they don’t buy cryptocurrencies; they don’t need to be regulated, and they buy a standard traditional fund..
But if they have a fund priced against Bitcoin, someone should hold all the bitcoins to support it. So, there have been a lot of bitcoin purchases, which means there are a lot of bitcoin buying inflows, outflows from exchanges to funds, and inflows to exchanges to the funds you buy. This led to a significant rise in prices due to pressure due to lack of supply..
“Everything has its place in the market“
While the demand for cryptocurrencies is increasing, many new players are also entering the market, including encrypted electronic communication networks (ECNs). Although ECN networks are very popular in Forex trading, they are new to the cryptocurrency space..
Higgins added: “There are many different ways to access that liquidity, and ECN networks provide a nice way to do anonymous aggregation, so nobody knows who either side of the trade is, which is good and bad. The downside is that since the provider doesn’t know who you are, they will generally have to offer a slightly wider range. They have a risk they’re not sure about.”
“Everything has its place in the market: undisclosed ECNs, revealed ECNs, aggregated feeds, live feeds etc..”
“AI will confidently give you the wrong answer“
At iFX EXPO, Higgins participated in a panel discussion, during which he discussed the implications of artificial intelligence (AI) and machine learning in financial services, especially trading..
There’s a lot of abuse of the term,” Higgins said on artificial intelligence and in particular ChatGPT. “It’s more about using news and being able to understand emotions to guide where you’re going to trade rather than generating buy and sell signals directly, which is very complicated for AI. You will get a lot of incorrect information because one of the problems with generative AI models is that they will give you the wrong answer with confidence.
“Our view is the other side.” “If all traders have great robots that use AI to tell them when to buy and sell, and you as a book broker or hybrid broker have nothing to protect you from, you could suddenly lose a lot of money. You need the ability to use AI on your part to be able to analyze the trading patterns of these traders to see when some news will come and be able to react and possibly widen spreads, reject orders, or drop prices if they hit hard. You should be able to interact with the Trading API.”
