Bitcoin Price Prediction: How It Could Reach $ 100,000 in Q4: Jakob Palmstierna

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Jakob Palmstierna is a former Two Sigma trader who now runs the product for crypto trading company GSR. It explains how GSR operates in the crypto derivatives market, including a strategy that offers high returns. And he explains his outlook for the fourth quarter of this year, with bitcoin hitting $ 100,000.

Traders are flocking to the alpha-seeking crypto market in hopes of exploiting the kind of inefficiencies that have mostly been diverted from traditional asset classes.

Jakob Palmstierna made this change years ago when it was seen as risky, rather than trendy.

In 2018, Palmstierna moved from a senior position as head of the EMEA zone at Two Sigma, a legendary quantitative-focused hedge fund, to the crypto “Wild West”.

The decision came years after he dabbled in crypto through his personal trading account. Since Two Sigma was not involved in the world of digital assets at the time, there was no conflict of interest.

“It was interesting for me to see this brand new emerging asset class, which is actually trading, which is liquid and you see how the order book worked with the naked eye, which you certainly couldn’t. do in traditional finance, ”Palmstierna said. Insider in a November 4 interview.

When Palmstierna left Two Sigma for full-time crypto, he was not subject to the same lengthy non-compete agreements as most of the executives leaving the organization. Indeed, crypto was not seen as a threat to hedge fund operations.

This is about to change.

“A lot of companies see crypto as a bit more competitive now,” Palmstierna said.

Palmstierna is currently responsible for product and business development for one of the leading crypto trading companies, GSR.

“We relied on our skills early on, namely the fragmented liquidity within the crypto and consolidating it within our trading network, but also looking at the properties of all these tokens and developing non-linear markets of derivatives and options, ”Palmstierna said.

In particular, they capitalized on the inherent volatility of digital assets through options.

“For example, just use bitcoin, as an example, and bitcoin has an underlying volatility of 100%. That’s an order of magnitude higher than what you would see in stocks,” he said. he declares. “And because option pricing is derived from volatility and so on, the return you can get on covered buy strategies is really high.”

One such strategy is covered call options. An investor writes a call option but owns an equivalent amount of the underlying security, creating a revenue stream from the sale of those calls.

“It’s a very good risk and it’s a way to win over a very volatile asset,” said Palmstierna.

GSR’s options strategy has now been developed not only on bitcoin, but also on altcoins.

Q4 outlook

When Palmstierna joined GSR, he experienced the volatility of crypto when the market slumped 75-80% in 2018.

Knowing how fast the crypto markets can turn, Palmstierna is careful not to make any bold claims. But he points out that he expects bitcoin to hit $ 100,000 before too long.

“But I’m also prompted to say it’s going to increase, because it’s good for the rest of the ecosystem,” Palmstierna said.

Currently, the momentum is quite strong, said Palmstierna, who he believes will bring a fairly good final quarter of the year.

Bitcoin (BTC) is currently trading at all time highs around $ 68,000, while Ether (ETH), the second most popular cryptocurrency, is trading around $ 4,800, also a new high.

“$ 100,000 seems like a stretch today, but I’d be happy to have to spend a few dollars on it,” he said.

His thesis is mainly reduced to very few obstacles in the crypto market. The biggest hurdle Palmstierna sees is regulation and even that has been exhausted, he said

“As participants in this market, we would like clear regulation,” Palmstierna said. “We wouldn’t want punitive regulation, but we would like clear and fair regulation that focuses on orderly markets and consumer protection that would be super bullish for the market.”

Despite the bullish outlook, he sees bitcoin as almost the “dinosaur” of the market. He’s more excited about what’s going on beyond bitcoin in the decentralized finance and altcoin space.

Challenge

At first, the GSR team was skeptical of DeFi’s potential, Palmstierna said. But with the density of talent coming into this space, the team is much more convinced of their likely success.

GSR is now looking into the expertise of these protocols with liquidity solutions, as well as pricing and execution.

They don’t try to pick winners, but rather look at well-funded projects with a good team and good ideas, with a particular focus on the plumbing of crypto and DeFi systems.

“It is by no means altruistic,” Palmstierna said. “It’s just that we’re a pure crypto company, we only focus on digital assets. The long-term delivery of crypto’s promises is really where we’re aligned, rather than the short term.”

This is different from how individual and retail traders can capitalize on this space.

“If you are trading on your own PA account, or if you are a small group, or if you are coming from TradFi, and you are just looking for a bit and trying to make some quick cash in crypto,” Palmstierna mentioned. “You can exploit some of the child segments to sort of do front running … or just exploit the slowness or immaturity of these chain-type solutions. [that are] in the early days. “

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