Generally when we think of big-time cryptocurrency investors, people like the Winklevoss twins come to mind. Not so much do we consider institutional investors—large, nonperson investment entities—as big digital asset buyers.
A Moving Majority
However, according to Bobby Cho, head of trading at Cumberland, the Chicago-based crypto trading section of DRW Holdings Inc, institutional investors are the “biggest buyers of large swaths of digital coins worth more than $100,000 through private transactions.”
This news was reported by Bloomberg and reveals that miners and other big-time crypto traders are now scheduling their coin selling rather than waiting for rallies. Some major mining operations have reportedly “set up their own liquidity desks” as well.
DRW Holdings, which handles over-the-counter (OTC) asset trades, handled ranges of $250 million to $30 billion worth of trades every single day in April, according to Digital Assets Research. In addition, CoinMarketCap.com reports $15 billion in daily trading over digital exchanges.
“What that’s showing you is the professionalization that’s happening across the board in this space. The Wild West days of crypto are really turning the corner,” says Cho. In other spaces, Jeremy Allaire, CEO of Circle Internet Financial, states that the group has seen “triple-digit growth enrolling” in their OTC transactions.
Focusing On Privacy
Digital Asset Research reveals that while OTC trading has fallen off with the crypto price decline, that same dip hasn’t affected online exchanges, which may have contributed to the recent market stabilization.
Cho believes that institutional investors are getting involved because volatility has slowed a bit:
“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.”
Private trades are ideal as prices can be locked in in advance, which helps to avoid volatility entirely. These direct trades are popular among miners too, according to Tom Flake, the founder of mining facilities supplier Bcause. Miners also provide “virgin” coins—assets that have been freshly produced and never traded—which some investors love says Travis Kling, founder of the Ikigai hedge fund. These fresh coins are less likely to have been involved in money laundering projects.
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