Institutional investors use backdoors to bet on cryptocurrencies
According to recent news, several institutional investors and investment funds have already got involved into cryptocurrency offers. They would get these by negotiating directly with miners, outside the trading platforms.
Crypto-transaction growth and Institutional investors
While no ETF (Exchange Traded Fund) on bitcoin has been yet approved in the United States, many institutional investors are already speculating on crypto-markets. In any case, this is something Bobby Cho is certain of. He is the trading executive of the crypto-investment firm Cumberland, specializing in over-the-counter exchanges.
At the same time, the miners would have scheduled regular sales to secure their assets. Some have even set up their own exchange offices for investment companies.
“This shows the professionalism that takes place in this ecosystem,” explains Mr. Cho. The era or ambiance of “cryptocurrencies Far West” is really disappearing.
According to researchers at Digital Assets Research and TABB Group, the off-market transactions would have made between $ 0.25 billion and $ 30 billion worth of exchanges each day during the month of last April. For their part, trading platforms have recently processed about $ 15 billion worth of daily trades, according to data collected by the site CoinMarketCap.
“We were able to achieve triple-digit growth in our OTC operations,” said Jeremy Allaire, General Manager of Circle. This is a very fast growing sector for institutional investors.”
If the activity in these parallel markets slowed down with the fall in cryptocurrency offer prices. It would seem that the volumes involved have not decreased as much as those traded on trading platforms. Down 80% since their peak. For Cho, if many institutional investors decided to turn to cryptocurrency offers, it’s partly because their prices are more stable than they were few months ago.
“One of the biggest criticisms of institutional investors for crypto-markets is volatility,” says Cho. Over the last four to six months, prices have moved in a narrow range, and this seems to coincide with the change in attitudes of some traditional financial institutions, who are more comfortable with the idea of interacting with this ecosystem.
Institutional investors and the strengths of these “private sales” and cryptocurrency offers
If the big players and institutional investors favor such sales, that is simple. It’s because they know that a large transaction on a traditional trading platform can have a strong impact on prices. On the other hand, in an over-the-counter sale, the two parties can agree on a fixed price, and do not have to fear a sudden change in prices during their exchange.
“When they resell Tokens, they do it over the counter,” said Thomas Flake. He is the founder of Bcause, which provides services to cryptocurrency mining companies.
And institutional investors are there too. Sam Doctor is managing director of investment firm Fundstrat Global Advisers. For him, trading platforms do not list enough sales offers to meet the needs of institutional investors.
“Currently, as more and more institutional investors are entering the market, there is a certain imbalance,” says Doctor. This would explain the emergence of many brokerage companies offering to help institutional investors to get the tokens on which they want to bet.
Finally, there would be another reason why these big investors would ogle the cryptocurrencies offered by minors. According to Travis Kling, the founder of the Ikigai investment fund, it would be easier to show that these newly mined corners have not been involved in money laundering operations. This would allow mining companies to dispose of these assets at prices up to 20% higher than those of the market.