Institutional money might have quietly stepped into the cryptocurrency market

04 Oct, 2018
by Matthew Kim
Institutional money might have quietly stepped into the cryptocurrency market

“Institutional money is coming” has been a phrase echoed across crypto communities since the dawn of the bear market. Everyone held their breath, patiently waiting for the triumphant moment, but it never came. Months have passed, and just as the villagers grew tired of the shepherd boy’s cry for “wolf”, people have grown weary of the speculation for incoming institutional money. However, new information from Cumberland shows that a surprising amount of institutional investors might have already entered the market.

Bobby Cho, the global head of trading at Cumberland states that these “institutional” buyers have now replaced high-net-worth individuals as the biggest buyers of cryptocurrencies. Bloomberg reports that these purchases easily surpass $100,000 and fit the description for the type of money that the market has been waiting for.

Yet the market has failed to notice, not because of a lack of attention but because these purchases have been private transactions through over-the-counter (OTC) purchases. Cumberland, the Chicago-based cryptocurrency trading unit of DRW Holdings LLC, is one of the companies that handle OTC purchases and has witnessed the institutional money flow into the market.

But these transactions differ because transactions occur in private sales at a fixed price, regardless of the price action of the market. This also means that the market price is unaffected despite the purchase of these digital assets by the institutional investors.

For institutional investors, private sale is the perfect method to enter and exit the market. Cho states that “one of the biggest criticisms of crypto by institutional investors” is its extreme volatility, but private sales allow them to avoid sudden drops or spikes in market price. Additionally, private sales allows for the institutional investors to ensure that there are as money coins for sale as they would like to buy.

Many might have expected the arrival of institutional money to turn the market around and jumpstart another rally, but reality could be that the institutional money has already been unknowingly flowing into the market. Yet, despite the lack of explosions in price, the entrance of institutional money is an indication that the market is maturing, and for that the community should be rejoice.


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