The AI boom is creating a new kind of market. Companies are pouring money into computing power and infrastructure, and financial markets are starting to form around it. These markets are brand new with little price history and trading spread across many platforms — a lot like the early days of crypto. Joining us is Jake Ostrovskis, Head of OTC Trading at Wintermute. Jake, thanks for being with us today.
Yeah, thanks for having me.
What does a crypto market maker like Wintermute actually do?
At a basic level we provide liquidity to the market — allowing prices to discover themselves and creating a place where people can transact. We do that by using our own balance sheet as a proprietary trading firm to post bids and offers consistently across a number of different markets. Not just cryptocurrency but some of the more interesting frontier markets.
What have years of trading fast-moving crypto markets taught Wintermute?
With any new market — whether crypto or AI — everything starts from a base of non-existence and comes out of nowhere. Liquidity is fragmented across tons of different venues. There might be no singular price that everyone can lean on and pricing methodologies differ drastically across different exchanges. We are live and active on maybe 50 to 55 different crypto venues. The other side of it is everything is so fast-moving — one day you could wake up and there has been a completely new paradigm that has shifted in our market. That ability to move fast in a fragmented market with pricing models we can lean on very quickly lends itself very well to these frontier names.
How do you put a price on something like AI compute that has very little trading history?
If you are a proprietary trading firm you have to price the risk yourself. When we are talking about compute it comes down to understanding who are the players actually driving price discovery, how are they trading, where are the offtake agreements, how far down the curve. That allows us to work back into a price we would be happy to warehouse risk within. There are CME futures launching very soon that will give us even more information to feed into pricing models.
How does experience in fragmented crypto markets help as AI markets develop similarly?
Fragmentation has been core to our business and profitability since we started. One of the ways we have got around it is turning ourselves into a technology company — building the infrastructure internally to get information from venues at the right time and price it accordingly. That technological capability crosses barriers very easily whether we are trading eggs, crypto, or compute.
What does that look like for markets tied to AI and compute?
A lot of it is showing a price we are willing to buy or sell and then warehousing the risk of the asset itself. The price we show will be proportionate to where we feel we can hedge out or how long we may need to hold. Because a lot of these things are illiquid — and we have tons of experience dealing with assets across a wide range of liquidity. On an RWA contract with deep liquidity it is one thing. On compute, we might have to warehouse something for a number of months. We have to stand behind that price and believe it is more accurate than the rest of the market.
Do crypto-native firms have an edge over traditional Wall Street players?
Definitely in some areas — and that is what we have seen. We are doubling down significantly on infrastructure and made a very large investment into AI and the technological side of the business. That pushes us into rooms where we are competing at a much larger scale. We move fast, go after frontier markets, and traditional firms are a little behind in their rollout. Moving fast, pricing efficiently, and having the technology to scale — that is what we have built and it is putting us in a great spot.
What role could Wintermute play in connecting the Middle East to global markets?
One of the beautiful things about digital assets is that a lot of this can transcend borders. When a sovereign invested into Binance and settled it with a stablecoin — that shows new financial primitives at work. As AI CapEx flows into the Middle East through data centres, that naturally creates direct avenues with digital assets. The rails are already there.
Jake, thank you so much for joining us.
Yeah, cheers.
