CoinShares CEO Jean-Marie Mognett joins Yahoo Finance Live to discuss the launch of new algorithmic trading platform Hal, bringing institutional trading to retail investors, the crypto selloff ahead of Wednesday's FOMC meeting, and the outlook for crypto markets.
- We are seeing crypto continuing its decline today, with Bitcoin falling more than actually 3/10ths of a percent right now. But it is holding right at that $19,000 handle. European-based digital asset manager CoinShares is launching an algorithmic trading platform designed for long-term crypto holders. That platform, known as HAL, allows traders to tap into a wide range of active trading strategies to ultimately get better returns.
For more on the crypto market, we welcome in CoinShares CEO Jean-Marie Mognetti as well as Yahoo Finance's David Hollerith. It's good to have you on today. Let's start by talking about what exactly HAL is. How does that work?
JEAN-MARIE MOGNETTI: Well, thank you for having me. And first of all, HAL is a wink. HAL is a wink to HAL 9,000, the articulately programmed algorithmic computer in "Space Odyssey" from Stanley Kubrick. But it's also a wink to Hal Finney, which is kind of one of the first types of cipher punk, and more importantly, the first one to receive a Bitcoin from Satoshi.
So it is really something which is there to help people simplify their journey in crypto. The, I will say, direct access to the crypto market has been done, has been done very well by companies like Binance or FTX. And it's now time to sprinkle a little bit of an overlay on top of that to help people navigate this complicated market, as you mentioned, a little bit better, and help them generate better risk-adjusted returns. So it's above anything about risk management.
DAVID HOLLERITH: Jean-Marie, turning to the markets real quick, most analysts I speak with say that crypto right now, for most of the year, too, is mainly a macro asset. It's trading that way, especially with this Fed decision upcoming. And I was sort of curious how would a trading platform like this be used to deal with that, or how does it relate to the current market dynamic?
JEAN-MARIE MOGNETTI: So it's a very fair point to be making, because right now when we look at crypto and the crypto environment, first of all, it's a 24/7 market. It's always trading in the wrong direction when you're sleeping, or when you're not available. So having a little bit of help from an algorithm like HAL.trading is a fantastic solution for your help, to help you on a daily basis. Now, if you think about crypto being trading as a macro asset, I think crypto right now is trading as a risk-on asset.
But more importantly, crypto is waiting for a sign. And the sign crypto is waiting for is the US net liquidity index starting to increase again. And people get very confused all the time about this liquidity index or net liquidity index when we speak about it in general, because people track the Fed balance sheet and track the Fed rate as a proxy for that.
But people forget to look into the Treasury Journal Account and the overnight reverse repurchase agreement, which can count a merger effectively as a QT at the same time. So really what we're looking for is the start of a decoupling in crypto. And the kind of precursor to this decoupling, in my mind and in our research, CoinShare mind, is really when this US net liquidity index is going to start to grow again.
So you can plug that very easily on any software, financial software. And because these markets are very complicated-- sorry, go ahead. Sorry.
DAVID HOLLERITH: My fault. Yeah, the epic decoupling is a big crypto moment to watch. I was sort of curious, until we get to that point, how is CoinShares positioning itself as a business? It's obviously not your first crypto cycle.
JEAN-MARIE MOGNETTI: No, so, yeah, so CoinShare has been around for, as CoinShare as a brand 2016, but realistically, in crypto since 2017. So we have learned to evolve and to survive in this kind of environment, which are called crypto winter, which are never really good exercise from a market situation, but which are fantastic exercise from a build situation. And that's why we couldn't find a better time than now to launch something like HAL.trading, because it is in this kind of bear market situation that you are building the bedrock of your future success.
And we're doing the same thing across the management product. We kind of keep innovating, keep bringing to market new things, which are going to be there and stabilize before the markets start to take a new dynamic. So it is time for building. It is time for innovation, and HAL.trading is this illustration you're looking for.
- Jean-Marie, it's been interesting to see how crypto has been so closely correlated with some of these risk assets in the equity space. You mentioned you've seen these downturns before. How do you think what you're seeing right now plays out? How does that compare to the past declines that we've seen?
JEAN-MARIE MOGNETTI: It's a very good question, because a very different time, effectively. You know, if you go back to 2017, or 2018 more precisely, you know, my head of trading and myself look at our book, and the book was very simple. You move back to 2021-2022, and you end up with a much more complex book, because the whole crypto ecosystem has been asking for institutional to come to crypto. Institutional adoption has been on all the leaps. And it has happened to some degree in the US.
And with that comes complexity, comes sophistication, comes risk interoperability, and composability. So all these kind of issues, which are typical Wall Street issues, are now permeating into crypto, making this crypto downturn much more complicated, much more vicious to some degree, because the risk management is very, very different, and needs a lot of focus. And then you need to not forget that, back in 2018, there was nothing like DeFi.
Everything was very simple. Everything was a couple of very much smaller centralized exchanges. And now we get massive centralized exchange, and a very kind of important DeFi activity. So everything is very different this time, and make it, as usual, a bit more complicated to navigate for the user, which is not 24/7 and living and breathing crypto, as we are.
- Yeah, those challenges are a lot more layered as you said, as we've seen in the past. Jean-Marie Mognetti, CoinShares CEO, it's good to talk to you today. And our thanks to David Hollerith as well.