Christophe De la Celle – Hedgeguard: Bitcoin & Institutional players, sentiment & machine learning


Dear crypto community and blockchain
buddies across the globe welcome back to Cryptonites, the no BS blockchain built
with the community and for the community and today we have another amazing guest
here at the Cryptocompare digital asset summit Christophe De la celle from Hedgeguard. It’s a pleasure to have you Christophe! So, why are you here today? What are you talking about? There’s so many
exciting things going on here at the event yeah screaming there’s a real buzz
at the event it’s great to see that. I think obviously with the rebound in
crypto prices everybody’s in a good mood that helps as well we’re very much on
the institutional side of crypto so we work very closely with crypto hedge
funds asset managers family offices anybody who wants to on these trips like
get involved into the digital space so it’s great to see all the players here
it’s a business great event that’s really really cool and speaking of which
you guys come from a traditional background and it’s a bit scary right
for traditional players to jump into crypto people fron upon the those type
of actors maybe because of the lack of understanding but how was your
experience kind of like talking to clients and moving from a more
traditional financial background to the crypto space which some people think
it’s like a lot of other ways yeah sure yeah I mean I agree with you there was a
bit of a misconception regarding crypto coming from traditional players although
I find that those mentalities are changing very rapidly and in a good way
I think you need to separate the price action in cryptocurrencies which can be
quite volatile from the projects that are being built in the background all
the blockchain related products that are very innovative and the two combined
together you know it’s creating a really great ecosystem very interesting
institutional outlook for the for the space that sounds really really good and
speaking of which I won’t name the bank but one of my friends working for one of
the big American Wall Street banks wasn’t allowed to purchase crypto back
in 2017 it was forbidden okay so he asked his wife’s sister to do kyc and he
would give her u.s. dollars to buy crypto for him okay
can you back up to an hour I think it’s not forbidden but it’s kind of again
frowned upon okay progress but based on obviously
that was his experience but what is the sentiment these days in terms of the
institutional guys looking at the crypto space I think it’s very positive so for
example if you look at the states obviously which is a big market and a
lot of big institutional players there you’re seeing endowments for example
that I’ve now invested into crypto so not only with a VC type approach but
they’ve actually invested into crypto hedge funds that are trading the market
I mean that’s a big leap forward in a very short period of time and as you
know you know in crypto two days in crypto is equivalent to two years in the
traditional world so everything moves really fast so the sentiment at least
from our perspective is is very positive I think if anything the crypto winter
was was quite healthy the conversations that we were having now are much more
institutional much more structured and I think those foundations are very healthy
for the ecosystem as a whole that’s cool like in general like obviously it’s very
difficult to put a perfect number on it but how much do you think institutional
players put into crypto in terms of their entire portfolio yeah I mean
you’re being very transparent about it I think it’s still a very small portion of
their portfolio the way you can see it is that they’re kind of dabbling in the
crypto at this stage but one of the big hurdles for example was custody you know
how can you tackle that problem of security and having safe custody of your
crypto assets well now you have all these really interesting solutions that
are being rolled out the institutional grade, Fidelity for example you know has
it as well that a solution and that’s getting the bigger Institute
institutional players much more comfortable fidelity are definitely one
of those forward-thinking companies they’ve they’ve always been ahead of the
curve I remember them building the fixed protocol back in the day to allow
normalization standardization for banks to share liquidity so very cool company
in terms of what your what problems you’re trying to solve are you giving
accessibility through your crypto hedge funds to institutional players is that
you want them to get into the space exactly so you will hedge guard is a
fintech company and we have a portfolio management and an execution management
solution for institutional players so for the buy sides that includes crypto
hedge funds family offices you know traditional players additional hedge
funds additional asset miners who want to get into crypto so they can use our
system to trade and manage their portfolios so we’re kind of at the the
center of that institutional ecosystem we connect all the different parties
amalgamate all the data and allows people to run their their trading
business through our software that’s really cool in it I guess the data sets
like you’re saying is that where you can provide the most value a lot of people
say that data is the new currency of the world is that is that where most of the
value comes from is it the data on top of the obviously the platform yeah so
well it’s in addition to the connectivity and all the different
analytical tools but you’re right the data is quite powerful I mean if you’re
looking at a crypto hedge fund manager one you know raising money for a hedge
fund is difficult it’s a hard thing to do it’s even harder for crypto hedge
fund managers because they have to educate their investors so obviously
data is a very powerful tool they’re also faced with a new generation of
investors who use big data tools themselves to analyze the underlying
funds so being able to harness your data through technology is quite important
thing it’s definitely an important thing so I’m trying to picture like the
typical typical conversation you would have with a institutional player have
you ever had someone coming in it’s just like yeah but isn’t this used just for
money laundering for buying drugs the whole Silk Road you know those things
kind of created a bad stigma for the crypto space have you had any people or
traditional people have those objections or concerns and how would you address
those concerns with those who still think that it’s a bit of a dark the dark
side of yeah it’s a good question it comes back to what we’re saying earlier
about people who are kind of standing on the sidelines of crypto and looking at
it from outside if you’re in crypto yes I mean it’s fair to say there’s probably
some money laundering going on in crypto but the same same thing in Fiat you know
so you have to sort of wait things and with a balanced fashion in crypto I mean
what we’re looking at is sort of very institutional grade projects so there’s
that involves kyc that involves anti-money laundering guidelines etc so
it’s a bit of a different sphere so you’re trying to build like you said KYC
AML custody all the solutions that they would get in a traditional world so that
they feel comfortable a little more comfortable exactly so we actually work
with custodians in the crypto space we will be working with AML and kyc type
solutions that help fund managers and we’re at the center of all that
amalgamating everything for the the fund manager and the portfolio managers who
are looking to access crypto cool in terms of the percentage of my of their
portfolio a lot of people tend to say to institutional players put 1 or 2%
because if you lose 2% it’s not a big deal but the actual potential bull run
could you know if you had yeah hundred percent to your portfolio which could
maybe increase your portfolio by 40 50 percent by only taking 22% RISM is are
you kind of along those lines would you suggest a little less or a little more
is it so we work a lot with pure crypto hedge funds so they have sorry they have
a hundred percent of their portfolio in crypto but on the traditional side so if
you’re looking at traditional asset managers some you know hedge funds that
are dealing in equities bonds and traditional asset classes in back in
2017 they had a small portion of their portfolio in crypto kind of dabbling
testing it out and when I was the market rally that portion became something more
substantial and they got interested much more interested all of a sudden so I
would agree with you crypto does offer those sort of asymmetrical return
profiles and if you’re a fund manager really you want to be in an asset class
that has a lot of volatility and it produces a lot of opportunities to
capture alpha you know I want to ask you a really that’s such an interesting
answer asymmetrical risk return ratios is
something that Carl Icahn talks about a lot as well do you mind just explaining
that in simple terms how you would actually define asymmetrical risk return
ratios well really you know when you’re trading it’s all about risking
returning for just boiling it down to simple the simple approach so if you’re
risking as you said earlier if you’re risking 2% to potentially increase that
exposure to 10% let’s say you know that’s a that’s a very nice risk return
profile a little bit of risk but a lot of potential return and crypto is
volatility offers a lot of opportunities for fun matters to capture those price
moves yeah absolutely that’s a really good point I think if Tony Robbins is
well he talks about how you know like some people see everything is high-risk
high-reward but if you understand something it’s not necessarily always
high risk it could be medium or low risk and high reward just depending on your
level of understanding 20 Robbins trading crypto is over I wonder yeah and in terms of so you you are you offer
also PMS to these institutional clients can you tell us a little bit more about
what a PMS isn’t sure and why so is what you call a front to back system so in a
nutshell it’s a software that allows fund managers to focus on finding new
trading ideas and raising assets for the fund and everything is taken care of by
the PMS what does that mean it allows you to track your performance organize
and manage and track your portfolio and your positions take care of compliance
risk management reporting and a lot of different operational back-end type
functionalities as well so it’s a very complete system and it really helps the
he as I was saying that the fund manager does a lot of weight off his shoulders
it allows them to focus on high-value tasks and speaking of taking off weight
off people’s shoulders obviously machine learning is being used more and more in
this base what what do you see in terms of having men and machine like do you
eventually see like machine learning and algos taking over the job of the trader
or will we always still need to have a physical person there – I think it
depends on skill sets really I mean if you look at the hedge fund space you
have anything you know increased number of systematic strategies have been
rolled out over the past years but you still have very very talented
discretionary portfolio managers who are not using machine learning
or not using systems or system a systematic approach to trade but just
relying on their sort of gut instincts and an experience to pick out good good
ideas so to answer your question I think is me a combination of both definitely
what we’re seeing from from our end in the crypto space there’s a lot of
systematic automated market neutral type strategies that are they’re being rolled
out and looking to capture opportunities in crypto across different exchanges
yeah absolutely that that makes a lot of sense like relying completely on
technology is still something that’s a little bit difficult so having a
combination of both whoo it would make sense like a lot of our other people in
our company that work on machine learning they say that machine learning
is just a tool to help you the human being make better decisions but doesn’t
make decisions for you yeah is that kind of like how you see it yeah I think I
think that’s fair I think obviously if you’re looking at
from a pure training perspective machine learning technologies are you know are
adding a lot of value if you’re if you’re running a systematic strategy and
especially in crypto where there’s a lot of arbitrage opportunities that rely on
a systematic approach if you want to capture them quickly
yeah arbitrage opportunities especially in 2017 was bonkers right a lot of the
crypto hedge funds were making a lot of money so these days with YouTube a lot
of people are doing technical analysis and and wanting to learn a lot more but
it’s a full-time job like trading is no easy feat and even professionals
sometimes get burnt what is your advice versus when you when it comes to
comparing trading investing yeah I think you raise a really interesting point you
know if you look at social media you be it YouTube or Instagram you can quickly
dive down the rabbit hole and you have all these crypto slash forward slash
technical analysis experts so for somebody starting out you have to be a
little bit careful as you navigate that that world now if you want to become a
full-time trader that’s one thing you know you have intraday traders you have
swing traders who are looking at more medium term type positions so maybe
that’s an easier thing to manage if you have a full time full time job on the
side if you’re looking to invest that’s a whole different sort of time frame or
time horizon in terms of your invest look and it’s interesting you raise that
point because on the institutional side a lot of the hedge funds that were
crypto hedge funds that you know started off a few a couple years ago they were
actually applying VC type investing which were in essence longer term
investment horizons but within a hedge fund structure and so it’s a total
mismatch between fees and liquidity so they’ve had to now reposition and
rebrand themselves as a more sort of VC type vehicles rather than hedge funds
that’s an amazing answer that’s really really cool take on that so if we want
to follow you, get to know more about the PMS, the platform you’re
offering the datasets where should we just visit the website or are there any
sources? Well, yeah the website is a good place to start at hedgeguard.com
we put up a lot of material in there a lot of educational material brochures
and everything if you want to you can download very easily so that’s a good
starting point and we’re also on Twitter and on LinkedIn if you want to fill your
Friday evenings by following a the crypto crypto institutional role it’s a
good place to start it was an absolute pleasure hearing and learning from you
and and understand the institutional side because we it’s really hard for us
to guess what’s going on it’s usually behind closed doors so having your your
insight on that was was really really fun thank you so much for coming in
today good to be here yeah definitely have you in the future and thanks again
for tuning in it’s a Cryptonites if you have any questions please feel free to
put them in the comments we’ll try to get back to you with an answer and don’t
forget to Like and subscribe and blast that Bell notification thank you so much
and catch you next week

4 thoughts on “Christophe De la Celle – Hedgeguard: Bitcoin & Institutional players, sentiment & machine learning”

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    00:33 Crypto market rebound = positive mood
    00:58 Institutional players today in the U.K
    01:54 Wall street banks & Institutional sentiment
    03:20 One of the biggest hurdles was…
    4:08 A gateway for institutional players
    5:02 Data is a premium tool
    5:50 Money laundering is a global concern in dollars too
    7:22 What % should traditional players put in crypto?
    8:32 What is an asymmetric risk/ return?
    9:16 Why fund managers need a PMS (portfolio management systems)
    10:26 Machine learning: Man vs. Machine, who wins?
    12:24 Trading vs. Investing…
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  2. I have a question. Metcalfe's law can be used to compute the value or worth of a network, or the effect of that network's size. However, isn't the same law applicable to the "network of units of value" i.e. doesn't it imply that in order to increase bitcoin's price, each dollar needs to be matched with another dollar somewhere else? In short, to increase the value of bitcoin it becomes more and more difficult because the amount of combinations needed to increase the average price grows in the square of the nominal value? Therefore, the a "networked" market cap should be computed as a square of the current market cap. So you see, whenever a dollar flows into bitcoin, that could only grow the squared market cap by a linear amount, and so the growth would slow down parabolically. The effect of obtaining 1 satoshi on the other hand would have a relatively constant (scale-free) effect. So, the only way to keep the growth constant, is if people buy satoshis at a constant rate. Thanks.

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