- Justin Chuh is a senior trader at the $500 million crypto asset manager Wave Financial.
- In an e-mail Q&A with Insider, Chuh shared his favorite trading strategies and crypto sub-sectors.
- He also shared his view on the recent correction and what it entails to be a crypto trader.
- See more stories on Insider's business page .
The massive volatility of cryptocurrencies means that trading the nascent asset class is truly not for the faint of heart.
The crypto market is also wildly inefficient , which means that it is filled with opportunities that have long been arbitraged away in the traditional financial markets where high-frequency and algorithmic traders reign supreme.
Justin Chuh, the senior trader at crypto asset manager Wave Financial , knows exactly what it means to move from traditional finance to the nascent crypto industry.
With a background in arbitrage trading in the foreign exchange world, Chuh knows how to take advantage of the mispricings in the fragmented crypto space where the same cryptocurrency often trades at different prices at different exchanges. This is how the famous term "kimchi premium," which refers to the gap in crypto prices between South Korean exchanges and foreign exchanges, came into use.
In an e-mail interview with Insider, Chuh shared his first encounter with crypto, favorite trading strategies, views on the recent correction, emerging sectors of the market that he is most bullish on, and his advice to traders.
The Q&A below has been edited for length and clarity.
What is your background and how did it lead you into the crypto space?
My professional background is mostly in traditional finance, market-making, and arbitrage trading in the foreign exchange (FX) world. I've dealt with many different currency pairs and learned how to price and recognize mispricings. Once I saw the fragmented crypto market and different pricings across exchanges, I knew there was something new for me to trade using my experience from the FX markets. I started a "Fund" in late 2017 running cross-exchange arbitrage strategies by hand. Eventually, bigger players and automation beat me in all the races, the trades thinned out, and then I met hodl .
When the opportunity arose to join Wave Financial as a trader, it was my dream job, to be working with such a highly experienced team and one of the only US-regulated digital investment managers that currently exist in the market.
When did you buy your first cryptocurrency and at what price level?
I'm a late starter, I bought my first bitcoin (BTC) in November 2017 at around $8,000 on an exchange, not to invest, but to pay my friend to paint my condo who offered discounts in BTC. I guess we could say I had a misunderstanding at the time, using it as an anonymous primary payment system, rather than a store of value. Then I continued to accumulate inventory for my previously mentioned personal fund.
Where do you think bitcoin and ether will go from here?
I continue to remain bullish on both crypto assets. It's not just the retail and institutional investor classes that are adopting bitcoin as an asset, I think the broad population is accepting that bitcoin and decentralized/distributed technologies are our future. I also think people are starting to understand and trust ethereum and smart contracts more, and that will help drive demand for ether and other tokens.
What are your key responsibilities at Wave Financial?
As senior trader at regulated digital asset investment manager Wave Financial, I work with different small teams to strategize the various funds we offer and execute trades for our Treasury and wealth management clients. So when a client wants to buy or sell one of our funds or move assets in or out of our wealth products, it's my responsibility to ensure trades are executed at the best possible price for our client and Wave. With our assets under management recently having surpassed the $500 million mark, this keeps me busy!
Trading isn't just staring at charts and jamming buy/sell buttons all day, but also speaking with various counter-parties, moving assets into/out of custody, and on-/off-ramping to exchanges and DeFi platforms. As we are regulated, naturally all my activity comes under the watchful eye of our compliance department!
Can you break down some of your favorite crypto trading strategies?
With trading, you are always learning, but currently, my favorite crypto trading strategies rotate around identifying mispricings , yield generating and farming . I absolutely love finding arbitrages, because who doesn't like riskless profits , and sometimes I like buying assets for less when I decide to under-hedge. I also like yield generation and farming strategies because if number-no-go-up, I still end up with more crypto. If I'm not actively trading a pair of assets, then I try to have them out working for me.
What are some of the digital assets tokens and/or areas of the crypto market that you are most bullish on?
I'm personally most bullish on the smart contract platforms, and the decentralized finance (DeFi), Interoperability , and Web3 sectors. Many people are losing trust in the embedded traditional finance institutions, and I think these new and disruptive technologies are very attractive to that crowd. They may not necessarily be taking over, but they're taking a good bite out of that pie. The ecosystems make sense to me, you need the platform's currency to use the DeFi dapps (decentralized applications), which rely on Web3 oracles .
(Note: Interoperability refers to the ability for different blockchains to communicate in order for them to share information with each other, much like how the internet functions today as opposed to the intranet)
How do you view the recent corrections in the crypto market? Should investors buy the dip?
I saw it as a good shakeout of participants that don't belong in the volatile class, and I also like the attention it is drawing. The driver of all this may break up mining power, but also gives opportunities to get in. I would only say buy the dip to those who can stomach risk on any given day or night, and that they understand these lulls between waves happen fast and often.
What advice or recommendations do you have for traders in the crypto market?
Don't overleverage yourself, unless you know what you're doing, which not many of us do. Stop obsessing with those voodoo lines, and it's time to get out of Dogecoin (DOGE).
Via PakApNews