Octagon Strategy’s Ryan Rabaglia: Bitcoin Could Be North Of $15,000 At Year-End

Ryan Rabaglia is head trader at Octagon Strategy Ltd., the largest digital asset broker in the Asia-Pacific region. He has over 16 years of financial trading experience across various major product spaces, including equities, commodities and FX. Prior to joining Octagon, he built his own proprietary trading firm in New York, as well as traded at a multinational oil company in Hong Kong.

Rabaglia spoke to CoinBlock.Asia, a service of China Money Network, about the future of cryptocurrency investments.

Watch the video interview, or read a Q&A.

Q: What is the main business of Octagon?

A: Octagon Strategy is Asia’s largest digital asset brokerage. We’ve been operating in this space as a group for almost five years now here in Hong Kong. So we have a pretty strong foothold in what we’re doing. Our primary business is over-the-counter block trading of digital assets. So we facilitate buy-and-sell order in digital assets for large players, ultra high-level individuals, institutions from family offices, private banking clients, hedge fund and fund-of-funds.

Q: What is your trading volume?

A: We generally reach around US$2 billion monthly in trading. The (crypto) market has land itself to a more active trading (status). Recently I think we’ve seen a low in the market. But it hasn’t stopped some of the key institutional players from continuing the trade.

Q: The OTC market for crypto assets is relatively new. What is the industry landscape in OTC market now?

A: The OTC market, people know it as an old concept. But in today’s high-tech world of digital asset trading, it’s sort of a new concept. We’ve been engaged in this since 2016. But it hasn’t really seen the spotlight in the media until probably early 2017, when ourselves and a few other corporate players were really kicking off the volume.

Q: What are some of the trends you see in the OCT market for crypto now?

A: I think it’s pretty similar across other part of the industry. On the surface, most people understand OTC as this sort of private network where people trade essentially like a dark pool (similar) to traditional assets. So the whole demographic shift from your retail investors to your institutions wanting privacy and hands-off approach (is really taking place).

Q: I notice you say “digital asset” rather than “crypto asset”. Obviously there are differences. By making that distinction, what are you including in the mix?

A: I think it’s just terminology, everything is called crypto currency and digital assets (interchangeably). Of course we understand digital asset do include a whole array of other products. Our objective going forward is to continue along the past of being institutionally focused company.

Q: Currently, how much percentage of your clients are institutional?

A; I might say around 45% to 50%. It’s very close to half-half at this point.

Q: How much do you see that ratio increasing?

A: It definitely was a smaller figure a year ago. There is a continuing shift for institutions to become more attracted to OTC market. It’s tough to say how it (will go up to) because I think we’ve all been going down in the rabbit hole, but it is coming on a little slower than people had thought.

Down the road, one thing is the potential custody issue, as a lot of institutions will require that because it’s an important piece to (make this something they) could offer to their clients. So I would probably say there could be a significant jump but wouldn’t go up more than 70% to 75%.

Q: From where you sit, what do you think drove the market volatility in the past four, five months?

A: I think it’s pretty clear what drove that volatility, including the tension from countries such as Japan and Korea, even India at times. I would also say the retail segment of the market is definitely what has drove the volatility.

Q: For the rest of this year, what kind of drivers are going to determine how markets would evolve?

A: The biggest one, of course, everyone knows it’s regulation. Each country is putting their stand on how they will deal with these assets in the markets, the people who trade them and the companies that offer the services.

So I think regulation is going to be the number one driver. I also think who will be the first one offering custody services (will also impact). Will that open a gateway for the institutions? I think those two would probably be the biggest drivers.

Q: Any the other factors you are paying close attention to?

A: Hedging tools and derivative products. The liquidity and volumes coming through those products are actually increasing. There is a very significant increase month-over-month starting last month. I think more products coming in the lines of derivative hedging tools, more complex instruments where people can use in hedging trade would also be critical.

Q: What are the new institutional products you see coming to the market this year?

A: More futures product, of course, and more options, options-based futures as well as new ETFs.

Q: Last question. Give us your wild guess of where Bitcoin would be trading by the end of this year?

A: I’ve been asked of this a number of times. And I’ve seen some wild stabs.

Q: Right. Tim Draper just said US$250,000.

A: It’s tough for me to go out (to predict). Because of course Tim Draper’s made great calls in the past. But it’s really tough to say. I’ve been in this market for five years. We’ve seen almost everything that’s occurred, that being said, there’s never time with market won’t teach you something that you didn’t know. So I think everyone needs to sort of keep that in the back of their mind.

Q: So you are going to be smart and not give a prediction?

A: I would like to say north of US$15,000. I don’t think we are going to hit another high this year. But once again, it really comes down to what event catalysts there are. Because as we know, this market is purely event-driven.