There is a general idea that institutional investors are waiting for ETF s to get approved so they can start getting involved in cryptocurrency. But it seems that the $220 billion dollar cryptocurrency industry is finding every day more institutional investors that want to get involved and Institutional money seems to be more involved in cryptocurrency than we think.
According to Cumberland, Bobby Cho which is a leading platform for over the counter (OTC) transactions, there is an institutional investor take over the individual whales that used to rule the market. Mostly those institutional investors buy $100,000 in bitcoin or other cryptocurrencies.
Cryptocurrency enthusiasts frequently speak about how the institutional money will enter the industry and how the market will go up insanely. This thing seems to be happening in a quiet way without getting much attention. Many of the biggest miners have set up desks to sell directly their mined coins without having to compete in the traditional exchanges. And those investors are targeting those desks to buy their coins.
OTC trading seems to have been growing substantially this year. According to reports from Digital Assets Research and TABB Group in April this year the OTC trading volume was about $250 million daily. At the present time, the volume has reached $15 billion based on data gathered by Coinmarketcap.
Jeremy Allaire, (Chief Executive Officer for Circle internet Financial) said:
“We’ve seen triple-digit growth enrolling in our OTC business. That’s a big growth area.”
“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 the space.”
The bigger buyers and dealers enjoy the privilege of a personal sale, due to the fact these transactions have a lot of power to move the market prices. On a private sale, parties can establish the price ahead, rather than competing on cryptocurrency exchanges.
Because the sales provide mining facility options, and most of the people in their customers base are institutional miners that desires get the hands-on bigger number of mining hardware. Bigger miners may also use their personal coins to sell to other dealers or to make an income via a brokering.
Tom Flake (Still, founder ) says:
“If they’re liquidating [coins], they are liquidating them via OTC.”
One of the best benefits to purchasing a coin out of the exchanges is because of the opportunity to purchase more bitcoins than the exchanges provide. This observation has been noted by using Sam Doctor, who works as the coping with director and head of facts studies for Fundstrat Global Advisors.
Doctor said:
“At this point in time, because more and more institutions are beginning to enter the market, there’s more of an imbalance.”
As a result, brokers are looking to help institutional investors discover the cryptocurrency opportunities they are searching for.
Another thing to keep an eye on is if eventually Bakkt gets approved in November the bitcoin price might go up quickly and institutional investors will want to pick up earlier in crypto.
Conclusion
Big bitcoin miners have large amounts to sell and they do not want to drive the prices down so they choose to sell on OTC platforms. On the other side, big investors want to buy big amounts which if done in normal exchanges would drive the price up. So big miners and big buyers use OTC because it is more convenient to them. And this does not affect too much the price on normal exchanges.
Would like to hear your comments about this.