Trading desks are staffing up in anticipation of a prolonged bitcoin bull run

Thanks to bitcoin's latest bull run, cryptocurrency trading desks didn't get much of a holiday break. Now, they are staffing up in anticipation of more action in 2021.

Volumes have soared across the market, putting firms under new pressure to expand their capacity in a bid to keep up with demand from a growing roster of institutional counter-parties. 

"Certainly hasn’t been much of a chance for a break; 2020 was a busy year," Richard Rosenblum, co-founder of market-making firm GSR Trading, told The Block.

Rosenblum said he suspects that companies across the industry are dealing with "stretched" systems and a "lack of resources."  His firm is among the many now adding staff. 

"Nonstop hiring, including more devs," Rosenblum said of the firm's plans, adding that he expects the firm will expand its headcount by 100% year-over-year. 

Wintermute, a European market-making firm, is looking to expand its headcount by about 30% in the first quarter of the year — and by more than 100% by the end of 2021, according to chief executive Evgeny Gaevoy. B2C2, a UK-based market maker, could expand its headcount from 50 to 70 by the end of the year. Genesis Global Trading expects to triple in size this year. 

Some firms are expanding into new business units. Wintermute is building out an over-the-counter trading desk. Galaxy Digital plans to have a fully operational prime brokerage offering in 2021.

Ahead of the price run-up, Galaxy made two acquisitions that helped double the headcount of its trading division. "We will be growing our client-facing personnel across sales & trading, advisory, and asset management significantly in 2021 and taking in a large graduate analyst class in the summer," the firm said in a statement. 

Meanwhile, the mania that began late last year hasn't slowed down. At last check, bitcoin was pushing past $34,000 and trading desks continue to clock in record volumes. On January 4, B2C2 traded a record $1.3 billion, the firm told The Block.

The ongoing trading fervor kicked off in December, after bitcoin advanced past the $20,000 mark, according to Genesis' Joshua Lim.

"Once we breached the previous all-time high around $20k, BTC and the rest of the crypto complex entered into price discovery mode," Lim said. "This means we may have a few weeks to months where we are trying to re-establish a new price equilibrium."

Looking to the next few months, desks are betting that bitcoin's price will continue to rise — and that demand for trading it will keep stretching their resources. GSR sees bitcoin trading in a range between $25,000 and $60,000 during the first quarter of the year. There's also the possibility that volatility increases, which would make the services offered by over-the-counter trading desks and market-makers become more attractive. 

In that light, Lim said Genesis plans to implement "an aggressive hiring and growth strategy across 2021."

"Expect to see us strengthening our regulatory infrastructure, making significant additions to our technology platform, expanding our product lines and investing in truly global sales and marketing outreach to broaden the institutional investor coverage and sectors," a Genesis spokesperson added.