“The Crypto system is the largest arms race in decades” - Interview with Steven Hatzakis, part 2

In the first part of our interview with Steven Hatzakis, we talked about his early days in the cryptocurrency world and his opinion about the most suitable trading strategies. Today we will discuss the current state of the crypto markets and what Steven (@shatzakis) expects for the future.

What is your opinion about the crypto-trading community today?

I find those who are passionate about the crypto industry are truly inspired about what many call the next industrial revolution that is underway, and they feel part of something so big that it might happen once in a lifetime. I also recognize that some aren’t ready to dive in and need to learn at their own pace. Others may just be in it for the speculation, and that is fine too, although the conversations with such people is usually centered around price, compared to those who believe that some of these next-generation technologies will help solve many real-world problems.

Do you share opinions and experiences with fellow traders?

Even though we haven’t yet solved all the challenges of decentralization and scalability, it’s a work in progress that could take 20 years to fully come to fruition

I am always happy to share my thoughts with others whether in person at events and meetups or in group chats, in addition to what I cover on ForexBrokers.com about crypto, and some panels that I’ve spoken on about related themes in fin-tech and financial services. I do have a lot to say, but I am also actively listening to what others are saying, as crypto is all about the community, and even though we haven’t yet solved all the challenges of decentralization and scalability, it’s a work in progress that could take 20 years to fully come to fruition. I think it’s just a matter of time, but no one knows how long and many challenges have yet to be solved.

How would you describe the stage of development the crypto market is at right now?

We are all early explorers in this new frontier, even if someone has been in crypto for 10 years already, this is still new territory, as it represents the convergence of existing technologies in new novel ways. The crypto industry – trading included – has great prospects and this is evidenced by the significant investment being made by companies and governments, and new laws and regulations being enacted, even though we are still in the very early stages, I think crypto is here to stay for good, and that’s why I continue to research it and attempt to stay on the forefront of this new landscape. Many crypto assets (and ICOs) are highly experimental, and much will be learned from their failures, and any lucky few that succeed in developing useful tech. Again, the most sophisticated investors I’ve met are involved in many projects as they don’t know which ones will be around in ten years, and being active in the crypto community lets you access and share information, across interconnected communities that make up the ecosystem. This is the largest arms race in decades and it follows giant cycles both upwards and downwards, and the core of the community understand that and are in it for the long term, as geopolitical forces are at play with the potential for trillions of dollars to pour into crypto assets in the decades to come.

More and more stocks and forex traders are dipping their feet into crypto-trading. Is there any advice you can share about how to choose an exchange or a broker?

This is the largest arms race in decades and it follows giant cycles both upwards and downwards

I’ve written several dozen broker reviews on ForexBrokers.com, where more than 2/3 of the brokers we’ve reviewed offer crypto trading. I’ve also written a guide on crypto trading. I think the larger regulated brokers are often the first choice for many, as some may even reimburse clients in the event the exchange is hacked (like Bithumb just announced they would). Therefore, choosing a well-capitalized and regulated broker is one way to filter from the hundreds of crypto exchanges that appear to be popping up each day. Otherwise, it will depend on where a trader is located and the crypto assets they are interested in acquiring. In addition, those participating in ICOs should understand that tokens acquired could be deemed private securities where related regulations could apply depending on the applicable jurisdictions.

Institutions are gradually entering the crypto scene, as you mentioned earlier. Do you think that this could significantly affect trading?

As more top-tier and major institutions enter the crypto industry, this will help provide the needed infrastructure for institutional investors to continue to enter the market, which I think is a net positive for the longer-term development of the industry as crypto assets become a household asset just like they are starting to become in South Korea for example. The arrival of more indexes, derivative and securities that track crypto assets should help further support that trend, and make crypto more easily accessible for those that don’t want to hold private keys or trust an exchange to hold them on their behalf and willing to accept counterparty risk from their broker.

Is there any specific crypto index you follow?

I've invested in crypto indexes such as the Blockchain Index (BLX) that Iconomi offers, but otherwise I don't use indexes much personally although they are being used increasingly as benchmarks to calculate rates for instruments like bitcoin futures contracts or other products with settlement and margin-related price tracking requirements such as CFDs or managed funds.

To finish with, your forecast. Where do you see cryptocurrencies heading to by year end?

Choosing a well-capitalized and regulated broker is one way to filter from the hundreds of crypto exchanges that appear to be popping up each day

I am very bullish on the industry and its many positive developments this year, even if returns are delayed further into next year, valuations should more accurately reflect the underlying value and not just speculation. Looking at price projections from two diagonal support and resistance lines I drew a few months back using a long-term (daily or weekly) chart of bitcoin prices, I remember seeing a lower range of $2-3k for a bottom, and an upper range of $70 to $100k for a top, so if we don’t reach either of these this year, I would extend those projections to next year.

Would these prices be “unhealthy” for the Bitcoin?

No, I don’t think so. I instead feel that Bitcoin is agnostic to some degree over its own price, although it is correlated in terms of the cost of electricity and mining equipment for those incentivized to secure the network as well as the actual demand from end users and number of transactions being made for every block mined. What could drive the price is a wave of mass adoption. Otherwise, I think there will be consolidation as many crypto assets are proven to remain centralized, or requiring more time than originally expected to bring their product to market or gain adoption. For comparison, it took forex markets decades to develop best practices such as those proposed by the Global FX code which are being adopted now, so crypto assets are reminiscent from that context to the early 90s of FX trading desks, except now it’s an asset that spills over into potentially every branch of digital commerce, not just currency.