Many investors use rules-based trading strategies to account for external events: A trader might, for instance, create a standing order to buy U.S. Treasuries if global stock markets drop by a certain amount. Such strategies help to maintain an even-keeled investment approach—but are they possible in the relatively new world of cryptocurrency?
Rachel Mayer thinks they are. Her company Trigger, which let investors create rules to automate their trades, was acquired last year by crypto giant Circle, and she believes rules-based strategies can apply to cryptocurrencies.
Right now, she says, traders use technical indicators like Fibonnaci sequences, moving day averages, and volume to inform their decisions. While Circle doesn’t currently offer the tools to create “triggers” for trades, she expects these will be available in the future for traders and ordinary investors.
“You could have the ‘flippening trigger,'” she said on Fortune’sBalancing the Ledger, referring to a possible event when Ethereum eclipses Bitcoin in total market cap.
Mayer added that crypto trading is very news-based, so investors could also create “tweet-based triggers,” which could initiate a trade based on Twitter activities by the SEC or high profile crypto figures like Ethereum creator Vitalik Buterin.
Overall, she emphasizes that the justifications for automated trading apply equally in the crypto world as in the world of traditional investing.
“[It] removes the emotional aspects consumers have with money,” Mayer said.
You can watch her remarks about rules-based investing around the 5 minute mark in the video above, which contains other interesting observations from Mayer, who traded foreign exchange on Wall Street before starting her company and moving to Circle. These include diversification strategies for the crypto market, including those offered by Circle’s new “Invest” product, which lets ordinary consumers purchase virtual currencies or “buy the market” of seven top coins weighted by market cap.
She also shares her thoughts on the SEC’s speech on Ethereum, and how people in her native Venezuela are using cryptocurrency to escape some of the economic ruin created by the country’s dictator.