The Bitcoin (BTC) market has been quiet lately. A little too quiet. On Tuesday, Bitcoin’s volatility was at a level that has not been observed since 2017. Bitcoin has fallen behind in recent weeks as investors turned to altcoins such as Chainlink (LINK) and Cardano (ADA). A possible explanation for the consolidation of Bitcoin could be the stronger presence of high frequency trading companies (HFT) in the crypto sector in the past few months. Paolo Ardoino, CTO of Bitfinex, said that he considered HFT to be one of the main reasons for Bitcoin’s low volatility.
“In the crypto space, we are back in the old days of HFT before this kind of trading became the zero-sum game it has become today. In the crypto space, HFT companies can make a lot of money by using relatively uncomplicated methods such as cross-exchange arbitrage and take advantage of the spread between two exchanges. “
HFT and cryptocurrencies
HFT is a trading method that uses algorithms to process a large number of orders in a fraction of a second. It has long been at home in the cryptocurrency space. Billionaire Paul Tudor Jones recently revealed that he has Bitcoin. And just like him, other institutional investors are increasingly entering the market. This could explain the increased use of HFT. Bitfinex claims to play a major role for HFT in crypto. The exchange recently revealed that between 80 percent and 90 percent of the volume on Bitfinex would now come from HFT companies. Bitfinex has partnered with Market Synergy and offers “institutional standard cryptocurrency connectivity”.