- Institutional investors getting more involved with cryptocurrencies.
- Hedge funds are replacing high-net worth individuals as leading buyers.
- Large buyers and sellers prefer private sales.
Institutional Investors Foray into the Crypto World
Institutional investors are buying large swaths of cryptocurrencies through private transactions, and fast replacing high-net-worth individuals. Miners, who are the biggest sellers of digital currencies which they generate by confirming a transaction, are no longer holding or waiting to sell during market rallies: they are scheduling regular coin sales to privately offload them.
Research findings by Bobby Cho, the head of trading at the Chicago-based cryptocurrency trading unit of DHW Holdings LLC at Cumberland, which handles OTC Purchases, show that the longtime rally cry by cryptocurrency enthusiasts, “wait until institutional investors embrace crypto” has long been overtaken by events. Institutional investors, non-person entities, are the biggest buyers of digital coins today, buying cryptos worth $100,000 and beyond at a time.
The report by Bloomberg has also revealed that crypto miners and similar big-time cryptocurrency traders are no longer waiting for rallies but are instead creating their own schedules where they sell their coins; this includes major mining entities that have been reported to have their own liquidity desks.
Digital Assets Research reports that DRW Holdings deals with Over-The-Counter (OTC) asset trades and dealt with assets ranging between $250 million and $30 billion in terms of trade daily in April alone compared to the CoinMarketCap that shows $15 billion traded daily in digital currencies. The group, according to Jeremy Allaire, CEO of Circle International, has seen triple-digit enrollment with their Over-the-counter transactions. Bobby Cho says:
“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.”
Less Volatility Attracting Big Investors
Digital Asset Research also reveals that even though over-the-counter trading was low because of the declining cryptocurrency prices, that dip didn’t affect only exchanges and that’s what could have contributed to the recent market stabilization. Bobby believes that the reason institutional investors have joined the crypto space has everything to do with the slowing down of volatility. His report states:
“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 direct traders, according to Tom Flake of Bcause, a supplier of mining supplies, are the darlings of miners. Traders love miners since they deliver “virgin” coins that haven’t been traded and which are loved by investors who believe the fresh coins are less likely to be part of money laundering projects.