Meet the new boss, same as the old boss? “Algorithmic trading in the new digital assets paradigm”?

Written by Sam Tyfield, Partner at Shoosmiths

My starting premise is that trading digital assets (particularly cryptocurrencies) is a natural progression or home for those firms which major on algorithmic trading strategies in traditional markets. The premise is built on a number of factors. Firstly, it is patently obvious that a large number of algorithmic trading firms were early movers into the market - both in the over-the-counter (OTC) and order-book-based markets. A number of crypto-native trading firms have spun-out of traditional trading firms: they apply the same technology, infrastructure and strategy formulations as the firms from which they spun-out. Secondly, the cryptographic elements of the underlying asset are the same as those on which the algorithmic strategies are built. Thirdly, there is enormous benefit in having the existing centralised and decentralised infrastructure and connectivity as well as the data, data parsing and risk management these firms have already. Digital asset markets run 24 hours a day, se…