Episode 9 of Season 4 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Avi Felman, Co-Portfolio Manager at Blocktower Capital.
Track live crypto price of 10000+ coins!
This episode is brought to you by our sponsors Fireblocks, Coinbase Prime & Chainalysis
Fireblocks is an enterprise-grade platform delivering a secure infrastructure for moving, storing, and issuing digital assets. Fireblocks enables exchanges, lending desks, custodians, banks, trading desks, and hedge funds to securely scale digital asset operations through the Fireblocks Network and MPC-based Wallet Infrastructure. Fireblocks serves over 725 financial institutions, has secured the transfer of over $1.5 trillion in digital assets, and has a unique insurance policy that covers assets in storage & transit. For more information, please visit www.fireblocks.com.
About Coinbase Prime
Coinbase Prime is an integrated solution that provides institutional investors with an advanced trading platform, secure custody, and prime services to manage all their crypto assets in one place. Coinbase Prime fully integrates crypto trading and custody on a single platform, and gives clients the best all-in pricing in their network using their proprietary Smart Order Router and algorithmic execution. For more information, visit www.coinbase.com/prime.
Chainalysis is the blockchain data platform. We provide data, software, services, and research to government agencies, exchanges, financial institutions, and insurance and cybersecurity companies in over 60 countries. Our data powers investigation, compliance, and market intelligence software that has been used to solve some of the world’s most high-profile criminal cases and grow consumer access to cryptocurrency safely. Backed by Accel, Addition, Benchmark, Coatue, Paradigm, Ribbit, and other leading firms in venture capital, Chainalysis builds trust in blockchains to promote more financial freedom with less risk. For more information, visit www.chainalysis.com.
Avi Felman’s eyes are glued to his trading screen, waiting for market-moving headlines that could be prime opportunities to put on a multi-million crypto trade.
These past few weeks have been especially active for the portfolio manager, who joined crypto investment firm BlockTower in November 2019. Felman, who co-leads the firm’s flagship fund, navigated price gyrations stemming from macro and industry news, ranging from headlines that government officials recovered funds from Bitfinex’s 2016 hack to more recent news that Russia could invade neighbor Ukraine.
On this episode of The Scoop, Felman explained the decision-making process that goes into making a trade on headlines, using reports that Russia was on the verge of invading Ukraine as one case study example.
“I know that the context is that the Biden administration has been warning about Russia for quite some time,” he said. “I know that bitcoin doesn’t like uncertainty. I read the headline as being extremely uncertain.”
Whether a certain news event adds uncertainty is just one factor Felman considers. Timing is equally important.
“Okay, I want to make a trade and this all happens in the span of, you have to think, about 15 to 30 seconds,” he explained. “You need to make those connections. Then I need to start de-risking a little bit.”
In some instances, Felman takes a cue from the S&P 500, which has been moving very closely with bitcoin despite the crypto’s reputation as a hedge asset.
“The vast majority of time the bitcoin decouples from the S&P, it’s because of a delayed reaction,” he said. “It’s because bitcoin has some idiosyncratic crypto native bidder that isn’t paying attention to broader risk.”
On this episode, Felman and Chaparro also unpack:
- How the Russia news “threw a wrench” in Felman’s bullish thesis
- How momentum and value are the two main considerations for putting on a big bitcoin trade
- How large traders put on big positions without spooking the broader market
- The degree to which Federal Reserve hikes impact his decision-making
© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.