Blockchain.com, one of the leading cryptocurrency wallet providers has launched an over-the-counter (OTC) trading desk. The project will offer users the opportunity to make large trades outside of public exchanges. Kraken and itBit have similar trading options, but OTC trading desks are not common on exchanges.
A simple explanation of how an OTC trading desk works can be found by Conor Maloney, at CryptoIsComing. Maloney explains:
OTC stands for “over the counter”, and it’s a way for the super-wealthy to buy and sell Bitcoin and other assets or cryptocurrencies without seriously inflating or deflating the price, maximizing their trading power. A regular exchange simply can’t handle the purchase of several million dollars worth of Bitcoin in one go. As the order is being fulfilled, suddenly the price is going up accordingly, and you’ll end up with a fraction of the Bitcoin you aimed to buy or paying A LOT more than you’d expect. Traders call this “slippage."
OTC trading avoids this “slippage” by allowing private trades outside of exchanges.
Blockchain’s wallet is one of the most popular in the world, with over 28 million downloads and $200 billion in transactions. The company has also raised over $70 million from the leading investors in Silicon Valley, Wall Street, and London, according to their website.
The trading desk will be run by former DRW fixed-income trader Vince Machi, and ITG executive Jamie Selway, according to a report from theblockcrypto.com.
In the report, a source indicated that the firm was positioning themselves for the next bull run in the crypto market.
This new platform is expected to lure institutional investors who have been rushing to get involved in the industry. They will also be providing services for high dollar clients from the traditional banking world, such as custody services. Custody services would allow institutional investors who are not familiar with the technology to invest in cryptocurrency without the risk of user error.
Institutional Interest Still High
Numerous projects have recently launched with the goal of bringing institutional investors into cryptocurrency markets.
Last week, CryptoGlobe reported that former executives of both Goldman Sachs and SpaceX were launching their own cryptocurrency projects. These are just some of the most high profile names in an ever-expanding list of institutional investors taking interesting in crypto.
Despite the ongoing bear market, 2018 has still seen the opening of 96 crypto hedge funds - representing a substantial increase from 2016, where just 42 firms entered the market.