The New York-based cryptocurrency brokerage and trading platform Tagomi has solved one of the biggest challenges associated with trading cryptocurrencies: how to short Bitcoin(BTC)trade and Ethereum (ETH)trade with ease. As reported by Bloomberg Quint, the firm is aiming to make cryptocurrency shorting easy and address the key issues faced by crypto traders.
Tagomi was founded by former employees of Goldman Sachs and Union Square Ventures, a digital assets brokerage firm provides institutional-grade digital asset trading services powered by superior execution technology.
Tagomi, which launched an electronic-trading service for crypto last year, is now allowing its clients to lend or borrow Bitcoin and Ethereum to facilitate long or short positions on digital tokens. The Tagomi platform will facilitate immediate access to multiple counterparties on a single-stage which allows to short cryptocurrencies as quick as shorting a traditional equity.
Short-selling crypto assets without eliminating the profits is quite a grueling task as investors or traders have to make a call to a host of brokers and trading desks to find the best deal for such borrowing. Unlike conventional stock markets where trading calls and puts can be accomplished within a fraction of second, it is quite impossible to do so when it comes to crypto.
The crypto market, being highly volatile, can immediately reverse direction while the trader is busy dealing with brokers, resulting in a significant loss. Tagomi is aiming to solve this issue with its lighting fast executing technology and its borrowing and lending services.
“In other asset classes this would be done with one click, but in crypto, it’s very long and tedious to try and put a short on,’’ said Kevin Johnson, Tagomi’s chief operating officer, who previously worked at Citadel’s Aptigon unit.
Shorting Crypto Is Complex and Lengthy
Many institutional investors and traders cannot short cryptocurrencies as quickly as they can short in the equity market because the existing shorting process of digital assets is way too complex and lengthy.
Johnson said: “It’s multiple steps, it’s a lot of work.” Defining the biggest barrier for institutional investors he also added:
“First, you have to either find an exchange that’s able to lend, or talk to one of the centralized lending counterparties, negotiate rates, settle that, borrow, and then you could get to be in the process of actually selling the coin short.”
According to Dennis Chou, director of trading at Pantera Capital in San Francisco, the ability to short is inevitable to traders. And the ability to short isn’t only important for traders, but it can also be useful for relative-value trades, quantitative strategies, and hedging.