Wall Street traders are unleashing old-school financial tricks to make the best out of the $2.5 trillion cryptocurrency market. Conventional trading strategies deployed in asset classes such as price arbitrage, futures trading, options writing are taken up by newcomers to tame the world of wild price swings and uncertainties of the crypto industry.

Wall Street Deploys Old Tricks in the Upcoming Crypto Market

While cryptocurrency investors have made the best out of the relentless rallies across this year, more Wall Street traders are dipping their toes into the crypto market.

For those who can handle the price swings, the threat of exchange hacks and the Byzantine market structure, systematic old school financial tricks are offering an alternative refuge to ride the crypto-mania.

For instance, Mark Treinkman’s career mostly involved in proprietary stock-trading shops like Chimera Securities. He now seems to be taking a renewed interest in quant trading:

“I’ve been going through some of my old strategies and things that wouldn’t have worked in equities in decades have an edge in crypto still.”

A market-neutral strategy run by Treinkman’s $60 million firm BKCoin Capital gained 71% last year using investing styles that often included arbitraging different prices across exchanges and the gap between the spot and futures market.

Entering Crypto Through the Conventional Route

Fasanara Digital trades short-term momentum and a form of statistical arbitrage that bets on gaps between various digital currencies. Nikita Fadeev, a fund manager, at $60 million crypto unit at quant firm Fasanara Capital, said:

“The crypto market is still dominated by retail investors who use excessive leverage and bid the premiums for futures.”

While in Zug, Switzerland, St. Gotthard Fund Management has transformed from an old-school family office writing options on Swiss shares to a digital evangelist, aiming to yield 8% a year.

While those who have been investing in cryptocurrencies over the past year have long seen profitable gains, for those choosing to enter crypto through the systematic route, the latter group continues to rise.