On May 19, bitcoin took traders on a wild ride with a same-day 30% plunge and surge, causing outages on major crypto exchanges. That was the kind of day for crypto market maker B2C2 to shine.
"It was looking pretty ugly," Rob Catalanello, co-CEO of B2C2, told Insider in an interview at the Chicago Trading Show. "We had our daily meeting and I was like 'guys, remember your training, keep breathing, and we will be good.'"
Catalanello, a 26-year Wall Street veteran who had worked at Credit Agricole, Merrill Lynch, and Goldman Sachs, was unperturbed because his team was on top of all of their client positions and their own balance sheet.
"Unlike anybody else, we actually have a live view of our balance sheet 24 hours a day seven days a week, so we know exactly where all our money is," he said, "which really comes in handy on a day when we settle over $1.5 billion."
Amid bitcoin's extreme price swings on May 19, some crypto exchanges stopped settling trades for a while but B2C2 kept on pricing, settling, and risk-managing trades even when customers were calling for large orders. In fact, the firm's global team did a record 725 individual settlements in a 24-hour period, according to Catalanello.
"Exchanges are only as good as the pricing that goes into it because an exchange is a place where buyers and sellers meet," he said. "What we do is we are the knuckleheads who are out there picking up pennies in front of steamrollers."
Catalanello recalled that when he first got into crypto in 2019, it took a lot less to move bitcoin 10%, but the moves are significantly dampened as more liquidity is in the system.
However, big global regulatory and political actions can still shake the markets quite a bit. For example, he noted that liquidity, particularly in some of the altcoins, has become thinner ever since China announced it was banning bitcoin trading.
While B2C2 does not take a directional view on bitcoin, Catalanello personally thinks bitcoin could reach $70,000 by December 15 this year.
The reason, he believes, is that the congressional gridlock over the Biden administration's $1 trillion infrastructure bill is weighing on stocks and the economy. The market is nervous about President Biden's nomination of Saule Omarova, a law professor who is critical of crypto and has advocated for more regulation of big banks, to run the Office of the Comptroller of the Currency. Additionally, inflation, as measured by the PCE price index, recently surged to a new 30-year high, he added.
"All of this is a snowball effect and that's good for crypto," he said. "Stocks have sold off very aggressively but crypto has done fine."
B2C2 makes markets in 14 cryptocurrencies. It does not go down the food chain in terms of altcoins because only a few altcoins trade in a way that fits the firm's 24/7 quoting business model.
Before his team can consider quoting an altcoin, they must make sure that it can be traced via on-chain analytics, has adequate consumer demand, and has a big enough float where he can borrow those coins to satisfy short positions that arise from clients' market-making.
Another factor that makes him cautious about altcoins is simply the sheer number of them, most of which are probably not going to make it. But Polkadot (DOT) and Solana (SOL) are two altcoins with "fantastic" underlying technology, he said.
Created in 2016 by Ethereumco-founder Gavin Wood,Polkadot, which has been called "the internet of blockchains," is a protocol that aims to enable different public and private blockchains to connect with each other.
Catalanello thinks Polkadot's native token, which is mainly used for governance and staking, could trade between $45 and $50 by the end of the year. That would mark an up to 61% surge from its current price level of about $31 as of Tuesday evening.
Solana is a decentralized blockchain that achieves consensus via a hybrid of proof-of-history and proof-of-stake models. It is one of the fastest and lowest-cost blockchains with over 400 projects spanning DeFi, NFTs, and Web3 in its ecosystem.
"Solana can process over 50,000 transactions per second and has very strong technology," he said. "People just keep wanting to buy it."
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