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“Compared to traditional assets, there are more interesting stories in the crypto space. And factors such as technology innovation and celebrity endorsement also play a big role in the rising interests,” Babel Finance’s George Liu told Blockhead, in a conversation about the mainstreaming of bitcoin and cryptocurrencies among investors.
“Under this unusual time of the pandemic, people are more concerned with liquidity challenges, and looking into innovative spaces for higher-yield investments”, said the firm’s head of derivatives, who joined in February 2022 in a newly created role for Babel Finance’s trading arm.
The appointment comes amid Babel Finance’s push to create increasingly sophisticated and tailor-made crypto-asset financial products with traditional finance characteristics for institutional and HNWI investors and upgrade internal risk control and management practices.
From Wall Street to crypto
Based in Singapore, Liu’s move into the crypto space is a familiar one, coming from a trad-fi background, and he brings experience in commodity and metal trading in London, Shanghai and New York for firms including J.P. Morgan, Noble Group, BNP Paribas, and most recently Mercuria.
“I actually started off finding similarities between crypto and traditional commodities, that’s the part that drew my interest in the first place. However, I believe the differences between the two mainly lie where the market of traditional commodities is relatively mature, leaving little space for innovative products, while crypto is far from the mature stage with a history of only 10 years”, Liu said about his journey from Wall Street to crypto.
“There are more works in terms of infrastructure, regulations, operation standard, client education, and market competition, meaning all the great opportunities ahead, which is the most important reason that drew me to Babel Finance”.
According to Liu, his immediate priorities are to bring his knowledge from the metal space into crypto and help the company develop its investment philosophy, product innovation and improve service quality. This includes expanding its product portfolio and providing traditional investors with personalised, customised products, solutions, and increased returns.
Babel Finance is one of APAC’s major crypto options traders, and currently has a monthly trading volume of US$8 billion equivalent. By the end of 2021, the firm’s worldwide trading volume market share will be 2% for spot trading, 3% for futures, and 15% for options, the Hong Kong headquartered firm said.
The firm also sees Singapore, where it opened business operations in September 2021, growing in stature as a crypto hub, and Liu said he is excited as there is “great opportunity with a lot of potential”. Its Singapore trading team is rapidly growing, with more than 30 engineers and traders on board.
“Singapore is more forward-looking, and more resilient compared to others and I’m hopeful that the country will see more investments coming to the region as a result,” Liu told Blockhead.
Outlook for digital assets
Going forward, Lu expects more diverse products such as ETFs and mutual funds and crypto asset management embracing the new wave of opportunities.
“In a world that is rapidly going digital, the shift to trading via crypto tokens is likely to be unstoppable. While the Fed’s tightening of liquidity will have some impact on asset prices, the surging crypto dollar will bring a higher floor for bitcoin. Given the global macro environment will remain accommodative, continuing investment in Bitcoin, in general, will still be preferred by institutional investors,” Liu said.
“As the Ukraine conflict goes on, the great uncertainty ahead will also drive investors to looking for assets that could help to hedge the sovereign risks. As demand increases and supply decreases, Bitcoin will continue its path towards the north as it enters the mainstream in 2022, of course with corrections,” he added.