Financial Institutional Investors Entry Marks OTC Trading Trend


Momentum around big Financial Institutional Investors (FIIs) taking pole-position in cryptocurrency markets has been gaining since November 2018. There is a notable change in how these big players are trading. They engage not on exchanges but distinctly use over the counter (OTC) trading, according to research firm eToro.

BTC was the game-changing crypto since these deep-pocketed investors were attracted by this investment product, perhaps marking the shift from real economy to markets driven by crypto, says Stefan Neagu, founder of Persona a digital identity management firm.

Big FIIs are around the corner

From George Soros to Rockefeller-backed Venrock cryptocurrency investment scenario is making way to the big players. Venrock is a partner at Coinfund, an incubation center for blockchain startups.

Apart from industry evidence, crypto experts and captains of big crypto businesses like Galaxy Investment Partners’ Mike Novogratz predicts the first two quarters of 2019 will be dominated by these big players. He continues to foresee bullish crypto markets in 2019.

Perhaps an offshoot of these big players beginning to make their presence was the evolution of the Over-the-counter platform.

OTC Trading trend

The downtrend in crypto prices in 2018, whales remained stocked up in order to play the averages-game primed on the idea of scarcity in the long term. A natural business model based on this principle is brokerages or Over the top crypto dealers.

Since whales would have to pay too high to traditional exchanges since they are buying thousands of coins, OTC has caught on.

Primary players in this spectrum include many of the latest players such as ItBit, Circle, Cumberland Mining and Coincola. At the same time, there is an option in the form of Telegram, WeChat, Skype OTC groups. One of the biggest trends reported has been that of Skype OTC desks which have reported billions on trading.

eToro opened its OT in June, while Genesis Global Trading opened its OTC in May, licensed in New York. November saw biggest exchange in the industry, Coinbase along with Hodl launching their respective OTC desks.

Another reason which drove the OTC-trading trend was the ban by China preventing crypto exchanges from operating in the country.

The third reason is the principle of buying in bulk leads to savings. Apparently, OTC desks support $50,000 programs resulting in savings of tens of thousands of dollars using WhatsApp and even Telegram.

The rise of OTC-trading marks the wider adoption of cryptocurrency trading by real economy players such as FIIs. 2019 will be the test-year to prove mass adoption of DTL currencies.