In the current market, cryptocurrencies are becoming more and more available for investors across the boards as companies push to get products onto US exchanges. At the same time, over-the-counter trading of cryptocurrencies has gained popularity over the past few months. Primarily, institutional investors are taking advantage of both of these opportunities to become heavily involved in the crypto asset market.
For a long time, crypto enthusiasts have been waiting for the day that institutional investors embrace cryptocurrencies. It appears that time is now. Olga Kharif, a writer for Bloomberg, has explored the changes in the crypto market over the past six months. According to research and insights by Kharif, institutional investors are looking to get into the market because volatility has decreased for most of this year. According to Bobby Cho, global head of trading at Cumberland, the Chicago-based cryptocurrency trading unit of DRW Holdings LLC, “One of the biggest criticisms of crypto by institutional investors has been the volatility. Over the last four to six months, the market has been trading in a very tight range, and that seems to be corresponding with traditional financial institutions becoming more comfortable diving into space.”
On the other side of the spectrum, crypto miners are more actively selling their assets than ever before. In fact, many miners are no longer holding for prices to rise and then offload their assets. Instead, they are scheduling regular coin sales to get rid of their assets in chunks. In addition, miners are selling their assets directly to buyers or brokers versus using exchanges. Institutional buyers are looking to buy crypto assets faster than they are available on exchanges. Sam Doctor, managing director and head of data science research at Fundstrat Global Advisers, said, “At this point in time because more and more institutions are beginning to enter the market, there’s more of an imbalance.”
In addition, miners can offer coins in a unique fashion that exchanges are not able to offer. They are able to offer what is known as “virgin” coins, which are brand new coins. The coins can be sold at a 20% premium because it is much easier to prove that the assets are not involved in money-laundering or illegal operations.
In April 2018, the over-the-counter market facilitated between $250 million and $30 billion in trades per day according to a researcher from both the Digital Assets Research and TABB group. According to Jeremy Allaire, a chief executive officer of Boston-based Circle Internet Financial, “We’ve seen triple-digit growth enrolling in our OTC business. That’s a big growth area.”