Ainslie Yuen sees a silver lining in the collapse

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Yuen met The Australian Financial Review in the kitchen of the offices of digital asset group Trovios in Sydney on a calm Wednesday morning in January.

In her pursuit of all things interesting, complex and different, she seems to revel in the intense volatility of cryptocurrencies, a wild new frontier of capital markets.

How much

It’s a whole new universe with new metrics, she says of cryptocurrencies, admitting the nonsense of meme coins such as Doge and Shiba made her scratch her head at first.

It’s important for us not to invest money in things that are dying or just a fad, she says.

As Yuen prepares for another year of trying to ride the digital asset workhorse, it seems little can surprise her. She’s seen it all in a career that has taken her to San Francisco and New York with detours to Cambridge and Paris.

Yuens’ undergraduate degree was in physics and engineering, driven by a desire to understand how things worked. At the time, engineers were in high demand in Silicon Valley, so she traveled to the United States to work at a start-up.

But even though she liked working as an engineer, the work was not that interesting.

So she set out to pursue her doctorate at Cambridge University’s 580-year-old Kings College. Her interest in finance was piqued when she read about how her endowment fund lost money in the 1998 Southeast Asian crisis, and she wondered if she could help herself. apply to prevent such a situation.

His doctoral dissertation involved using interesting tools to examine financial data by applying fractal analysis to analyze intraday price movements of US stocks.

To learn more about finance, there was only one logical place to go—Goldman Sachs.

The bank, she said, tended to collect doctorates in various disciplines, so it seemed like a natural fit.

Yuen landed on the US bank’s multi-asset props desk. She applied her quantitative skills to create tools and analyze the unusual mix of assets purchased by the bank: from planes to satellites to credit card wallets.

But life in New York became more difficult after the global financial crisis when Goldman’s solvency was threatened and friends of Yuen were fired. The cold winters made her homesick, so she quit, telling her boss she was going back to sunny Australia to open a bakery.

I had spent years doing math, science and everything. I wanted to do creative and fun things, she says.

This brought her to Paris to study to become a pastry chef, an experience she describes as intense.

Yuen never discovered that commercial rents from cake shops in Sydney were too unprofitable, but she started a business that made furniture covers.

It was good to have my products in stores in the United States, she says before adding that sales are really very difficult.

But at some point, she decided it was time to get real so she explored careers in finance, and she rediscovered her passion for quantitative analysis, which was once again in vogue.

There were new buzzwords like machine learning and data science, so everything had progressed and become beautiful.

Crazy parts

Her return to finance took her to Australian credit fund Coolabah Capital and asset consultant Lonsec before joining Pendal in the quantitative analysis team.

Yuen then followed Pendals Vimal Gor to Trovio and is now a portfolio manager at the digital asset fund. It’s fair to say that analyzing and trading cryptocurrencies never seemed to be his destiny.

She says she first heard about bitcoin from her roommate in 2010, but it felt like a gimmick. Another friend told him how they were talking at the European Central Bank about blockchain.

If that wasn’t enough of a signal to get involved, there were the ads on the buses.

I should have listened to them. But I’m here now, she said.

Needless to say, trading cryptocurrencies is a different ball game from traditional financial markets. While stocks tend to go up the proverbial staircase and down the elevator i.e. a gradual rise in price and then a sudden fall, crypto assets do not tend to trade in a linear fashion. .

The apparent network effect means that the value assigned to them is more asymmetrical, and so they can go up quickly, but also go down quickly.

So, is this the ultimate application of technical analysis?

I wouldn’t call it purely technical. Part of it is behavioral observations of what people are doing, she says.

Crypto is also a new frontier for data analysis with limited data sets from various sources.

Few find data analysis glamorous, but those of us who do, take notice. A lot of time and effort is spent cleaning up data from different and sometimes unreliable sources before it can be analyzed.

Sift through the garbage

It’s boring, but it has to be done. If your data is garbage coming in, it’s garbage coming out, she says.

Sifting through the garbage is especially important in cryptocurrencies where all sorts of weird, goofy, and dodgy coins end up in exchanges.

The craziest we have excluded. We have an algorithm that selects the ones that we think are the most interesting, and then we’ll analyze that and where the value might come from and if there will be a network effect in the future.

Of course, 2022 was the annus horribilis for crypto-assets. The implosion of the Terra stablecoin that swept away a string of crypto market participants seems like a distant memory after the collapse of former crypto prince Sam Bankman-Fried’s FTX empire.

The pain of the crypto plunge has been felt by major venture capital funds with speculators young and old. But Yuen sees a silver lining in the events of the past year.

This means that bad players are shaken off, which is a good thing.

Regulators will finally step in and fix the problem, and then the institutional money will flow. This is how we see it.

She is convinced that digital assets and blockchain technology are in their infancy.

It’s actually really fundamentally helpful. In some form, this will prevail and make things better.

The triumph of efficiency is the way she says the world works. But if Yuen had to sum up what she’s learned along the journey, it’s this: being adaptable.

Markets are constantly changing and the world is changing rapidly. You must be able to adapt, learn and try new things.

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