Institutional investors, after speculating for months have entered the cryptocurrency market and via over-the-counter (OTC) transactions are now the biggest buyers. Bloomberg reported that, through private sales, over $100,000 cryptocurrencies have been purchased by three investors.
Global head of trading at Cumberland, Bobby Cho, revealed that the cryptocurrency market has begun to retrace its steps, correcting its mistakes. When cryptocurrencies were breaking records, in order to make more profit, Sellers and miners held on to their coins, but started selling them at the recovery points, when they realized the market was experiencing some losses. Relating to this, Cho explained “The Wild West days of crypto are really turning the corner.”
It was discovered by TABB Group, Digital Assets Research and Crypto and financial research companies that in April 2018, there were daily transactions by OTC which ranged from $250 million to $30 billion. This figure is greater than the $15 billion traded daily in crypto exchanges.
Even though the dwindling prices of cryptocurrencies has led to losses by the OTC market, its position is much more preferred to crypto exchanges. Cho said that, due to the crypto market’s volatile nature, institutional Investors are reluctant. He then concluded by saying that: “Over the last four to six months, the market has been trading in a very tight range, and that’s seems to be corresponding with traditional financial institutions becoming more comfortable diving into the space.”
Founder of crypto mining solution provider Bcause LLC, Tom Flake, in addition said that through OTC, institutional Investors are only liquidating cryptocurrencies. Quant strategist at Fundstrat Global Advisers, Sam Doctor, said that due to the fact that cryptocurrencies in large amounts are usually purchased by institutional Investors and these requirements are not met by exchanges, OTC transactions are preferable. He added that, because of the rising interest from institutional Investors, there is an Imbalance in the market. Brokerage firms are offering their services in a bid to bridge this gap.
However, these companies are not the only ones launching products for institutional Investors. Coinbase, in July, launched “Coinbase Custody” which is a custodial service for institutions. Bloomberg, in August, have a report that Goldman Sachs was considering opening the first custody for crypto funds and institutional Investors.