Over the past month, Bitcoin volatility has dropped to 25.75%. According to James Banister, CEO of Market Synergy, this was due to the growth in high-frequency trading.
Paolo Ardoino, technical director of the Bitfinex cryptocurrency exchange, agrees with Banister. It is this platform that attracts high-frequency traders (HFT) - they form 80 to 90% of the trading volume in popular cryptocurrency pairs on Bitfinex. Market Synergy provides Bitfinex with a solution to connect institutional investors interested in trading cryptoassets.
“In cryptocurrency trading, there is now a period long gone in traditional markets. Here, high-frequency trading still brings significant profits even without sophisticated algorithms. For example, this is arbitrage trading and the use of different spreads on different platforms, ”said Ardoino.
At the same time, Bitfinex CTO emphasized that the abundance of high-frequency traders plays into the hands of retail users. HFT traders add liquidity to the cryptocurrency market and significantly increase the number of available orders, making the market more efficient.
High liquidity in the bitcoin market leads to a decrease in asset volatility. This means that the industry is maturing, and cryptocurrencies are becoming a full-fledged investment asset, which has often been criticized for being too volatile.
Paolo Ardoino previously said that USDT stablecoin could significantly increase liquidity and make the DeFi industry more stable.