What is Trade.config?
The Trade.config series goes inside the minds of traders to learn their strategies, preferred tools, habits and mindsets for success – to download their “configuration file”.
Each Trade.config post is an interview with a top trader. Our goal is to give all traders the benefit of each others’ experiences. After all, there isn’t enough time in the day (and money in the account) to make every mistake yourself.
No part of this piece is financial or investment advice, and all opinions shared within belong solely to the interviewee and do not necessarily reflect the opinions of Cryptowatch or any associated entities. Full disclaimer here.
Assets Traded: Crypto and Traditional Time Trading: 24 years Monitor Size: Laptop for now (re-doing the office) Special Gear: Two internet connections Nearly Broke: Never Follow me on: Twitter and at Quantum Economics
How did you get started in trading?
I’ve been trading since I was 13 years old. I have always been interested in the commodities markets. When I was young, I remember looking into my grandfather’s copy of the Wall Street Journal to check the price of gold, silver, and copper.
I started as an industry insider in 2008 where I was an account manager at Forex firm Ava FX. While there, I had a front-row ticket to the 2008 financial crisis and the impact it had on the markets and our clients. Some very exciting times I remember.
That experience made me realize that there’s always opportunity in the markets — even when it looks like everything is crashing, someone is always making money.
I also learnt that it pays to be optimistic. If the world is about to end then all the money in the world won’t help. So might as well bet on things getting better.
That’s kind of my trading background in a nutshell. Now I have a license to manage money from the European Union and also the co-author of a book called The Complete Guide to Fintech Investing.
Can you remember the first asset that you speculated in?
It was commodities, I remember paper trading gold and crude oil. When things moved online I opened an account at the virtual-stock-exchange.com.
A while after that I got into the FX markets. Trading forex was like the first actively traded markets online — because, with the leverage and low spreads, you could get in and out several times a day which can be quite fun.
In one sentence, how do you analyze the market?
I view the market as kind of a computer game, where you are taking information and making decisions.
As long as you do it with a strategy in mind—anyone can be a successful trader.
What tools and sources do you use for your analysis?
Social media is my number one. I spend a lot of time on Twitter: curating my feeds, making sure that I’m following the right people. Things I look for include staying relevant and providing good information about the markets. Other than that, the regular sources of news for me are Bloomberg and CNBC.
What is a positive signal to you on Twitter?
I think for the longest time, it was just about getting a feeling for what people are saying—It’s very difficult to quantify. I recently signed on as an advisor for a project called LunarCRUSH. What they do is social media stats, they can map out on a graph the engagement on any specific coin. They’ve got different ranking systems. They have a very good track record at picking out which are the most popular coins on social media at the moment. Many times that translates into forward-looking price movements.
Can you give an example correlation?
So LunarCrush was talking about Tezos before it started to zoom in price. They have also been talking a lot about Zilliqa and also more recently about Chiliz that are doing fan token offerings
(Disclosure: Mati is an advisor for the Chiliz project).
For example, Chiliz is now partnering and having token offerings with the likes of FC Barcelona, Juventus and Paris Saint-Germain—they’re actually getting social engagement off of the back of those partnerships. They are coming out with the Barcelona Coin soon—one tweet from Barcelona can cause more social engagement than entire swaths of crypto projects.
Recently the Chiliz platform has been tracking almost Bitcoin like social engagement (due to things like retweets from the @FCBarcelona account and its 32.7 million followers). I believe that either by design or complete luck the Chilliz project is on course to find a good product, market, and timing fit based on everything that’s happening currently with COVID-19.
The teams themselves (sporting clubs) are also quite eager to connect with their fans in a deeper and more meaningful way—especially given that no fans are allowed in the stadiums at the moment.
What Chiliz does is promote engagement between the fans and the teams. It allows the fans to participate in group decisions, contests, and have a chance to get different types of prizes.
A fan might buy a jersey, for example, that’s branded by the team. You know, they’re not going to want a knockoff version of that jersey. They’re not going to want a counterfeit, they’re going to want one that’s provided actually by the team itself. It’s the same with these fan tokens.
What kind of on-chain data are you looking at?
The usual: number of transactions, hash rate, transaction fees, or whatever we see is trending. On-chain data is always helpful. As an analyst, you always want to get as much information as possible.
Trade volumes are also incredibly important as a trader because they tell you about the strength of a specific movement. If Bitcoin goes from $8,000 to $9,000, you want to know if that was with low volume or high volume. When it’s on a higher volume, it gives more strength to the overall price movement.
Given the fact that volumes are not also always easy to validate (EG 2019 Bitwise report). It’s sometimes a lot more difficult to get an accurate picture. The only data that you can really rely on a hundred percent is going to be the on-chain data. So I really like to monitor on-chain data closely for that reason.
What has helped you become a successful trader?
Knowledge and experience are king. The more you do it, the better you get. The more you learn about it, the better you’re going to be at it.
I also feel that diversification is critical—and it is not just diversifying among different coins within the crypto space (because they’re all correlated)—but diversifying yourself among different markets is going to make you a more powerful investor for sure.
You have become a popular analyst on Twitter in the last few years, can you tell us how you started out?
So I joined Twitter in June 2012, about a month after I joined Etoro. While there, they were encouraging everybody to sign up for Twitter, and I took it seriously at the time.
When I had no followers—I felt like I was just shouting into a box that nobody could hear into. I would just put the most random thoughts out there. After a while continuing to do it and interacting with different people and sharing analysis that I had done, it started to get a lot better for me.
The reason that I kept on Twitter was that I’ve managed to figure out how to use it as a tool for intaking information. Like I mentioned previously, I spend a lot of time curating my feed to make sure that I’m getting a good mix of relevant information and following the right people. By doing that, I actually spend a lot less time trying to get followers and more time trying to get information.
Can you tell us more about what you were specifically doing to help grow your following online?
Probably the most significant strategy was to get my name in the media as much as possible. This started a few years ago while I was in eToro and is quite common in the financial markets. To get the firm mentioned in an article or be interviewed on Bloomberg and CNBC.
It took a lot of time and patience but in the beginning every success was cause for a celebration. Eventually, I got really good at it. Largely thanks to the journalists writing the stories, many of whom I consider very good friends by now.
This is also a strategy that I’ve taken forward with Quantum Economics. Getting the analysts on my team quoted in the news and interviewed by journalists and video bloggers is one of my main KPI targets at this time.
Tell us about your Quantum Economics project.
So Quantum Economics is in three parts: analysis, advisory and money management. For analysis, I have a daily newsletter that I’m writing. It’s read by some high net worth individuals, as well as journalists from the top financial news sites in the world.
We’ve recently also built a service called analysis on demand, which creates custom content for brokers and exchanges. These firms use this financial content to help increase things like brand engagement.
On the advisory front, I have public deals with LunerCrush and Socios—with a few other projects that I advise in private. The next mountain for us is money management, that’s going to be a difficult one to climb, but we’re taking things step by step for now.
What do you think about the growth in the market cap of Tether this year? (Bi from $5 billion to 10 billion in 2020)
I kind of see it as very similar to what the central banks are doing by increasing liquidity. That’s been a strategy that’s been working for the central bank for decades—where they’ve been gradually increasing the amount of money in the world.
In general, having more liquidity is a good thing for any market, but the question is—how much is too much liquidity? I don’t think that there are too many examples in history where we’ve seen a major economy having too much liquidity. I suppose recent examples could include Venezuela and Zimbabwe for hyperinflation type scenarios—but those currencies were not really global in the same way the US Dollar is.
I’m not sure how it’s going to play out for Tether long term—but what I do know is that Tether isn’t actually the reserve currency of crypto; Bitcoin is.
Therefore having a secondary currency to provide liquidity for the market I think can be a good thing overall—as long as you can continue to trust Tether to not take advantage of their capability of creating liquidity.
So some people see that $10 billion figure (Tether market cap) as money that’s gone into the crypto market and is now sitting in Tether—but we don’t really know with any absolute certainty if they’ve been cheating on those numbers.
The auditors frequently go into Tether and then come out with their hands raised and go out “we can’t comment on what’s going on there”—that is a bit concerning. For me (as an investor), it’s not going to be worth my time to sit there and delve into the nitty-gritty of the Tether market cap being honest or dishonest. I really don’t care all that much because I’ve never held Tether in my life, I don’t trade using Tether and I don’t see any reason to hold it because there’s that risk involved.
So when you think about holding a stable coin, you basically get all of the risks and zero return. So you might as well be holding fiat currency in your bank—which I view as much safer than holding Tether in a wallet.
As I see it, the worst case scenario if there is any erosion of trust in Tether (USDT) is that people will push their Tethers into Bitcoin and the other top cryptos.
What is your outlook on the markets for the rest of the year?
Right now the only certainty is uncertainty. There’s been a lot of volatility in the markets surrounding COVID-19 and the drastic measures that governments and banks are taking in order to prevent the spread and the financial consequences. Governments are more focused on getting the economy back on track, but now we’re seeing a second wave in some places and there’s a lot of different information coming in.
All this is just translating into a lot of volatility in the financial markets. I’ve personally had to adopt a very short term outlook on all markets that includes crypto and traditional assets (for this year).
I think it’s going to be a while before we can really pick up on some long term opportunities again.
Any other tips you have for traders?
I would say as a general tip, traders should always have two internet connections. That I believe its critical because the internet can be unstable at times. I generally have two internet connections in my house, which are the two providers that serve my area. I have the best package on both of them.
I assume you have even more internet connection through your phone too?
Well, that makes four internet connections then—as I have two sim cards on my phone. So that makes two 3G connections and two WIFI networks I have to pick from.
Keeping up with Mati Greenspan
Follow Mati @MatiGreenspan on Twitter, or at QuantumEconomics.io.
