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Institutional Traders Tap OTC Markets for Cryptocurrency Purchasing Needs


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Buying cryptocurrencies can be rather complicated in this day and age. Institutional traders know these struggles all too well. With no convenient solutions accessible yet, less-than-traditional means need to be explored. OTC Trading has always been an attractive alternative, and it continues to gain more traction.

Institutional Traders Want Bitcoin

A recent survey shows how under 40% of crypto trades take place through centralized exchanges. A similar amount of volume flows through decentralized trading platforms. The remainder of all trades occur through peer-to-peer and OTC trades. It is this latter industry which attracts a lot of institutional traders. With sufficient liquidity and no disruption of order books, OTC trading is a safe bet for those looking to purchase significant amounts.

The vast majority of OTC trades are not visible to the public. Not because they are done in a shady manner, but primarily because those volumes are not tracked by most major websites. Buying $100,000 worth of Bitcoin through private transactions is very common in this OTC industry. Cumberland is one of those over-the-counter service providers noting an influx of institutional traders as of late.

Providing liquidity in the OTC market is done by cryptocurrency miners. Rather than selling coins through normal exchanges, they sell directly to institutional traders. This has created a very different take on cryptocurrency mining and selling. In a way, it is another sign of how the cryptocurrency industry continues to mature. It also highlights institutional parties want to be exposed to volatile markets.

Building The Future of Crypto Trading

While many centralized exchanges try to tackle institutional traders, their ventures have not always been successful. Gemini sees little active trading volume, yet their daily auctions are quite popular. Coinbase Pro aims to cater to this group as well, yet its initial traction has not yet materialized. It appears OTC trading solutions have a leg up over their competitors.

Circle Internet Financial is one of the bigger players in the OTC trading segment. The firm has noted triple-digit growth, according to Jeremy Allaire. That is remarkable, given the bearish pressure across all major cryptocurrencies. It is expected at least $250m worth of OTC trades take place every single day. That number can go as high as $30bn per day, depending on the circumstances. A stark contrast to the $15bn in “regular” trades tracked by statistics websites.

These details indicate institutional traders are already involved in cryptocurrency. More severely than most people had anticipated at this stage. The world of crypto trading is about much more than centralized exchanges. Decentralized, peer-to-peer, and OTC trading are all starting to take center stage. The industry as a whole is in a very good place, according to this research.

How will an increase in OTC trading affect non-institutional crypto traders? Let us know in the comments below.

Images courtesy of ShutterStock

JP Buntinx
JP Buntinx
JP is a freelance copywriter and SEO writer who is passionate about various topics. The majority of his work focuses on Bitcoin, blockchain, and financial technology. He is contributing to major news sites all over the world, including NewsBTC, The Merkle, Samsung Insights, and TransferGo.


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