- Dan Gunsberg is the founder and CEO of Hxro Network, a decentralized derivatives platform on Solana.
- A 25-year veteran trader, he has been active in crypto since buying bitcoin at about $200 in 2015.
- He shares why he’s not worried about the recent price correction and 3 altcoins he is positive on.
Some calmness has settled into the crypto market following weeks of price gyrations and investment outflows.
Bitcoin was trading at above $44,000 after breaking above its 50-day moving average. Ethereum was hovering above $3,100. The entire global crypto market cap climbed back up to $2 trillion once again, as of Monday afternoon.
Still, talks of a crypto winter, which is characterized by long periods of depressed prices after an initial plunge, have not abated.
With cryptocurrencies becoming increasingly correlated with high-beta risk assets, the key determinant for their medium-term performance appears to lie in the pace and strength with which the Federal Reserve hikes interest rates and tightens financial conditions.
For Dan Gunsberg, the founder and CEO of Hxro Network though, this time is “substantially different.” Institutional investors of all stripes have injected capital into the space, while crypto entrepreneurs are now more sophisticated and engaged in more sustainable projects spanning decentralized finance, non-fungible token, blockchain-based gaming, and other Web3 applications.
As a matter of fact, despite sliding token prices since the start of the year, venture capital investors poured a monthly record of nearly $5 billion into the crypto sector in January, according to The Block.
"There's such a wave of traditional financing and associated capital coming into the space that they are going to more than likely see any pullbacks as an opportunity to get invested and get involved," Gunsberg said in an interview. "I don't think you are going to see the same level of extreme down moves that you saw from 2018."
Building a derivatives network in a 'nasty crypto bear market'
A 25-year veteran trader who started his career on the floor of the Chicago Board of Trade, Gunsberg went down the crypto rabbit hole in 2015 while working at proprietary trading shop DV Trading.
After stumbling across blockchain and crypto, he heard about a colleague's experience arbitraging bitcoin prices across global crypto exchanges. This arbitrage trading strategy famously netted FTX founder Sam Bankman-Fried 10% daily gains on million-dollar trades in the early days.
Gunsberg was intrigued and said he scooped up bitcoin for about $200 after the digital token's price plunged amid the collapse of then Tokyo-based crypto exchange Mt. Gox.
"That got me to start looking at these early exchanges like Coinbase. As I learned more and more about the industry, it had all the makings and feelings of everything that was happening in the Nasdaq boom," he recalled. "It really got me very interested in the space as a whole."
As the crypto market has become substantially more liquid and mature, those lucrative arbitrage trades are harder to come by, but many traders, including Gunsberg, believe that crypto derivatives promise new opportunities. With that in mind, he set out to build an on-chain derivatives protocol at the onset of a "nasty crypto bear market" in 2018.
Today, Hxro Network has evolved into a decentralized derivatives primitive platform built on the Solana blockchain. The network, which will include various protocols, is designed to provide liquidity to support derivatives markets on futures, swaps, vanilla, and exotic options.
In Gunsberg's view, decentralized derivatives provide traders with a constant flow of new opportunities because the engineers at the application level are willing to use them beyond the scope of how they've been used traditionally, such as creating new markets that previously didn't exist.
3 altcoins he is positive on
One of the new markets still inaccessible to many retail investors is the altcoins options market, which exists in the over-the-counter market.
"It is so nascent, with that latency and with the level of volatility that exists there, it does create incredible trading opportunities," Gunsberg said. "Just like how bitcoin went from being a hyper volatile asset into something that is still volatile but more manageable at a larger scale, I think you're starting to see the early stages of that in things like altcoin options."
Indeed, healthy derivatives markets tend to improve liquidity for the spot markets. They could also open the door for more participants to get into the market, he added.
When it comes to altcoins, Gunsberg likes those tokens that are more tied to the infrastructure around DeFi. Though to be sure, the governance token of Hxro (HXRO) fits the bill. It has fallen about 5% in the past month, though still up 51% in the past year, according to CoinGecko pricing.
Regardless of a bull or bear market, he has also been positive on solana (SOL), serum (SRM), and arweave (AR), which have declined 12%, 13%, and 16% in the past month. Over the last year, SOL and AR surged 1,869% and 734%, while SRM was down 6%, CoinGecko data shows.
"I really would be focusing on any tokens that I can participate in the network, stake and, earn portions of network rewards, whether it's portions of transaction fees or actually being rewarded for my efforts within the network itself," he said. "So the value accrues to the token in a way that isn't just massively inflationary to the network."
To Gunsberg, the fact that such tokens exist is yet another proof of how much this cycle is different from the crypto winter of 2018.
"Now, there's a lot more technology that you can actually own tokens, stake the tokens in the network, and then realize the value from the network as opposed to it just being more or less of a money game," he added.