FNG Exclusive Interview… With increased crypto volatility leading to increased crypto trading volumes at many retail brokers, we thought it would be a good time to catch up with Tom Higgins, CEO of Gold-i, who shares his views with us about cryptos, FX, volatility and trading technology.

FNG: Hi Tom, and thanks for joining us today. How has the volatility in the last six months impacted FX and crypto?

Tom: There’s always a direct correlation between increased volatility and an increase in FX and CFD trading. In the last six months volatility has been high, with a spike when it was widely reported that the US may be going into recession. It has dropped slightly but is still higher than it was – and this has been good news for FX brokers.

Crypto trading isn’t impacted by volatility in the same way as FX. That’s because it is used to volatility and has become immune to continual volatility. Good news for crypto advocates is that volumes are gradually and steadily increasing. When Bitcoin drops by 10%, as it did in August, it isn’t ‘gloom and doom’ as some people may think. In fact, when Bitcoin dropped, all the other major indexes declined as well, and then they recovered, just as Bitcoin did. This highlights how robust cryptos have become – they are now connected to macro figures. They have entered a stage of maturity and are here to stay.

FNG: Are you seeing an increase in demand for cryptos amongst retail brokers?

Tom: We’re seeing continued increase in demand from both pure play crypto players and FX brokers. FX brokers are typically looking for high quality crypto liquidity, a good set of coins, decent depth of market and very tight pricing – and this is where Gold-i is ideally placed to help them. There is also continual interest on the fund side, particularly in Spot and Perp liquidity, driven by the Bitcoin ETFs. However, the lack of regulation is stalling uptake. There’s a big surge coming once regulation in Europe and the UK is fully in place, and hopefully in the US too.

FNG: What demand are you seeing for altcoins and other tokens?

Tom: Financial institutions that want to invest in cryptos aren’t just buying Bitcoin anymore. Interestingly, when buying Bitcoin, many of them are using their expertise to get a bargain on altcoins too. These tokens, which are like penny stocks,  are driven by news and sentiment and are incredibly volatile. There are about 150 coins that people trade, with altcoins being around the 50 to 60 in the list of top coins. There is some interest in going further down the list and opting for meme coins and doge coins – although I’m not convinced that the ones near the bottom end of the list will survive in the long-term as many don’t have a real value and aren’t powered by a real blockchain.

FNG: Where are you seeing the growth area for Gold-i?

Tom: Crypto is certainly the biggest growth area of our business now. The De-Fi market is increasingly of interest to us too. It was originally fraught with security issues but is on the edge of becoming more mature. Peer to peer trading – with no central counterparty – results in better pricing and less fraud and will therefore have huge appeal. It won’t be suitable for all traders though, as many will want the service and support that a broker can provide.

We’ve also seen an enormous uptick in business coming in from prop firms. Fundamentally, there’s nothing wrong with prop trading and it is encouraging to see that, as the market evolves, the bad actors aren’t surviving and the more credible firms are leading the way. For prop trading firms to succeed, their profit needs to be underpinned by the best pricing as well as technology that enables them to get the best execution for clients. This plays to our strengths which is why we are continuing to get leads in this area for our MatrixNET liquidity management platform.

FNG: Are you seeing any new trends in the market that brokers should be aware of?

Tom: The amount of price data is increasing substantially every month. Given the huge number of price changes every second, a broker really needs to focus on having high performance trading platforms to cope with these very high update rates. We’ve prioritised making sure that our technology is extremely high performance – in fact, we recently tested MatrixNET to ensure it can cope with up to 100,000 changes a second. Brokers need to be mindful of high-performance capabilities when selecting a technology provider.

FNG: What are you predicting for the industry over the next six months?

Tom: It depends on macro events. If there’s a major or shock announcement from any of the superpowers about their economy then there will be a significant increase in volatility. As highlighted above, this will increase demand for FX and CFD trading. If there are more wars, then I think we’ll see enhanced volatility but it won’t be at significantly high levels because the market has become desensitised from the recent wars.

With enhanced volatility, brokers need better risk management platforms and really strong access to liquidity. If brokers are B-Booking 80% of their business, as so many brokers are, they will have to be really aware of the positions that clients are building up against them and monitor them to protect themselves against latency arbitrage. We always see an increase in leads for Gold-i’s Visual Edge risk management product in periods of increased volatility as brokers realise that they can’t manage effectively without such advanced tools.