Bloomberg: Algo trading linked to this rally, changing playing field

03 Apr, 2019
by David Borman
Bloomberg: Algo trading linked to this rally, changing playing field

Bloomberg recently reported that there is a significant chance that algorithmic trading, or algo trading, is tied to this recent crypto rally. Chepicap already explored the possibility that a single order across three exchanges is what kicked thhis rally off, but this article explains it may be more than that.

Algorithmic trading is basically setting up automated systems to execute trades based upon set algorithms. Unlike humans, it takes all emotion out of the trades, and can run around the clock, executing trades every second.

This could mean that not only was the initial push based upon algorithms, even the sustained growth could be, up to a point. No doubt human traders are getting in on the action too.

Some argue that algo trading is unethical, whereas others believe it is healthy for the market. Oliver von Landsberg-Sadie, chief executive officer of London-based crypto firm BCB Group, is quoted in the article:

"Some people are in the camp where algorithmic trading is a manipulative device, and others are of the view that they are a way to make markets more efficient... I am definitely of the second view."

Algo trading can reduce volatility, as there will always be set levels baked in for buys or sells to balance the market. Furthermore, much of the crypto market is already made of algos simply because it is much easier in crypto. From the Bloomberg writer Aaron Brown:

"Algo trading is much easier in crypto than traditional financial assets... Most exchanges have simple APIs -- that is, interfaces for automated trading -- while traditional exchanges require expensive connections and permissions and have lots of rules. So crypto algo trading has always been an activity for technically sophisticated financial amateurs."

Whether or not algo trading is pushing up this bull run, it is certainly part of the market, and likely will be for some time.

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