Search ForexCrunch
  • Institutional investors replaced individuals as the larges players in the OTC market.
  • Low volatility allowed big investors to join the game.

Institutional investors are more interested in cryptocurrency and blockchain industry than it may seem at the first glance.The research, conducted by   DRW Holdings LLC expert Bobby Cho revealed that hedge funds have replaced wealthy individual traders as biggest buyers of large lots of digital coins via private transactions.  

Basically, it means that institutions have already arrived to the over-the-counter market where trading volumes fluctuates from  $250 million to $30 billion  per day (April statistics, supplied by researchers including Digital Assets Research and TABB Group). Meanwhile, crypto exchanges process transactions to the tune of about $15 billion a day.

Jeremy Allaire, chief executive office of Boston-based Circle Internet Financial confirms the theory that big institutional money has been flowing to the market through the back door:

“We’ve seen triple-digit growth enrolling in our OTC business. That’s a big growth area,” he explained.

Subsided volatility may be regarded as one of the reasons, why institutional buyers decided to venture the crypto space, as wild price swings were among the biggest factors that discouraged those players from joining the game.

“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’s seems to be corresponding with traditional financial institutions becoming more comfortable diving into the space,”  Bobby Cho explained.

Large traders prefer OTC market due to lower risks of unwanted price fluctuations.   There is no need to worry that the price will change in a split second ahead of transaction as buyers and sellers can fix it in advance.