Analyzing Data to Understand Drivers in the Crypto Markets
"People fixate on market cap when they try to analyze crypto projects but that is misleading. It's like judging the quality of Justin Bieber's music based on the number of Twitter followers he has," said Adam Zarazinski, Co-Founder and CEO of Inca Digital Securities. "If you want to figure out value and volatility, traditional factors largely don't apply to crypto."
Inca and Hehmeyer Trading + Investments (HTI) have been working together to better understand what drives crypto markets. We sat down with Adam to learn more about his background, how he is analyzing drivers in the digital asset space and how he is helping HTI make better investment decisions.
Analyzing Crime, Then Crypto
One of Adam’s earliest jobs was working for INTERPOL in France. It was there that he met Inca Digital Securities Co-Founder Evgeny Dmitriev. “We had a shared interest in disruptive technologies and the friendship grew from there.”
They eventually went their separate ways, Evgeny went on to run IT security for Banque de France, and Adam became a judge advocate in the US Air Force.
It was while Adam was in the Air Force that Evgeny brought him down the rabbit hole.
“We started out trading cryptocurrency and in the process developed a platform to help us make informed investment decisions in the crypto space. We were, for example, arbitraging ZCash between exchanges and mining pools.”
“When we look at cryptocurrencies as an asset class, we aren’t investing or trading in a product, but a technology.”
He explained that Inca Digital Securities aggregates data and creates custom analytics by not just looking at market data for the thousands of coins and projects they cover, but by also analyzing technical data and natural language data, to get a holistic view of the crypto markets.
“Take technical data as an example, valuation and pricing must take into account the hash rate, volatility and mining rewards as well as the strength of the code,” he said. “This is how we help analyze the technology. Looking at how it is valued today and how it might be valued tomorrow.”
Adam met Brian Tehako, through a mutual connection, and Brian was immediately interested in how Inca could help HTI use a nuanced and data driven approach to gain insight into crypto markets.
“Inca processes and analyzes large amounts of data. Hehmeyer has the expertise to interpret those analytics and take action in the market. It’s a really powerful collaboration.”
At the end of our conversation, I asked Adam why he believes so much in crypto. He explained that he was excited because of the technology behind it.
“The future is bright. Crypto can make a difference in so many areas. There is a Cambrian explosion of new financial organisms. The trick is to identify which ones are going to survive,” he said. “For Inca, as more assets and whole industries, move to blockchain or become tokenized in some fashion, we’re going to be able to tease out comparisons and analytical nuance that was never available before.”
On blockchain more generally, he said, “I hate using buzz words, but it really is all about disintermediation. Most of us access the internet, and services on the internet, through intermediaries. Intermediaries then profit from serving as a third party. You interact with people socially on Facebook. You send money to your relatives with SWIFT or SEPA transfers through correspondent banking. Bitcoin allows for transactions and interactions on the internet without third parties.”
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