Michael Creadon is CEO at 4Rev, an independent research and analysis firm that focuses on cryptocurrencies. He previously served as CEO of Traditum, a Chicago-based proprietary trading firm that specialized in yield curve trading on the CME Group.
GIven our recently announced partnership with Coinbase’s GDAX exchange and the growing demand for cryptocurrency trading—not just among our traditional professional customers, but among investors in general—I thought it would be interesting to get Mike’s point of view on this market. He has a background that goes beyond trading and includes having worked as a journalist at Bloomberg, TIME Magazine and Voice of America Radio as well as serving in the United States Peace Corps in Namibia.
I found Mike’s commentary to be very insightful. I hope you enjoy our interview.
– Brian Mehta, CMO
You created and built a highly successful proprietary futures trading firm. Why have you changed your focus to cryptocurrency trading?
Mike: I have never seen a marketplace as dynamic as cryptocurrencies are today. Every day reminds me of back in the credit crisis in 2008 and 2009 when market volatility in stock, bonds and other asset classes was off the charts. Even on slow days, you have coins jumping or falling 50%. It’s totally nuts, but it’s fun, too. And clearly there is a tremendous amount of opportunity.
What does your new venture, 4Rev, offer the crypto trading community?
Mike: 4Rev offers independent analysis and research. There is a huge information gap in the crypto space. Most retail investors will never be able to afford a Bloomberg terminal, which is $2,000 per month. Banks don’t put out sell-side research reports. And the crypto media is all pretty compromised because they are being paid to run ads and marketing campaigns by the ICOs. How will the average trader get information to make trading decisions? We hope to help out in the area.
The crypto trading community is still very small at present. That will change in coming years in a dramatic fashion. Every time I go to one of my son’s basketball games, I ask people: “What do you know about Bitcoin?” I always get the same answer: “I’ve heard of it, but don’t know much about it.” I’ll bet in five years all those same people will have a crypto account opened and will own coins.
What are the major differences between crypto and futures trading?
Mike: The biggest challenges with cryptos is you can’t short them. I believe that that will change in coming years through an increase in the number of exchange-listed futures contracts, options and ETFs. And when that happens, crypto volumes will explode and the trading opportunities will be endless. Imagine the spread opportunities that will exist when you can go short a product: there will be literally thousands of weighted or 1:1 spreads that traders will be able to do. The opportunity set to make–and lose–money will be astonishing. Options are another area that will galvanize this entire space. I think crypto options, or products akin to options contracts, will likely develop even faster than futures contracts, and once those are safely in the mix, volumes will spike yet again.=
As someone familiar with TT, what do you think of TT’s partnership with Coinbase/GDAX?
Mike: As I posted on LinkedIn recently, I honestly love it. I think it’s great. There are a lot of shenanigans in the crypto space, but the partnership between Coinbase and TT brings together two of the most trusted players in the trading space. I think traders will love what they’re about to see. Most of the trading platforms that I have seen thus far leave plenty to be desired. I am accustomed to trading on CME, Eurex, ICE—three of the largest futures exchanges in the world. The vast majority of exchanges that I have seen aren’t nearly as good, to be honest. But of course, that will change over time. The core functionality that TT offers will make retail investors’ (who are new to online trading) heads spin.
How do you see the crypto space evolving?
Mike: The crypto space is going to grow exponentially in the next 5-10 years. It won’t be a straight line higher, though. There will likely be major setbacks. But in 10 years, most American adults will have crypto investments in their portfolios, and around the world, cryptos will be even more popular than they are here. We have a stable political process and banking system; not too many other countries can say the same thing, and that is why cryptos will always be even more popular outside the U.S. than here.
The proliferation of new coins will continue uninterrupted for years. Money will move overseas as laws in the United States are too rigorous and cumbersome, and this will disadvantage U.S. investors over time. You already see it happening. I’ve talked to a half dozen contacts this week, and everyone is moving their crypto entities offshore. I am likely going to have to do the same thing. U.S. securities laws are well intended, but they are a mismatch for the current ICO landscape, and capital raising won’t slow down—it will move elsewhere. This is already happening as we speak.
Blockchain technology is the most revolutionary force in my lifetime. It will change society as we know it. I believe it is inevitable that a digital asset, or many digital assets, will be a necessary tool to facilitate blockchain commerce. Bitcoin or Ethereum could be major contenders for the crown, or it may end up being a digital currency that doesn’t even exist yet. I don’t know. No one does. There is so much to try and figure out.