‘The market is robust.”
That’s how Jeremy Allaire, chief executive of fintech startup Circle, described the nascent institutional cryptocurrency trading market, which he says has grown dramatically in 2018 even as prices entered a bear cycle.
Speaking with Business Insider, Allaire said that Circle Trade — the company’s over-the-counter (OTC) trading desk — has doubled its minimum order size in recent weeks, though most trades are much larger.
“The minimum ticket size has moved up to $500,000 with an average of $1 million,” he said.
Previously, Circle Trade’s minimum order size had been set at $250,000, with the firm reporting that it was handling about $2 billion worth of OTC trades per month.
OTC trading is crucial for increased institutional adoption of cryptoassets, as these platforms allow traders to execute large orders outside of conventional exchanges, where a large order may cause a violent price swing that ripples throughout the global markets.
The trustee of now-defunct Bitcoin exchange Mt. Gox, for instance, drew criticism when he revealed that he had liquidated about $400 million worth of Bitcoin and Bitcoin Cash on order-book exchanges rather than using an OTC trading desk.
Allaire said that Circle, which has received financial backing from Goldman Sachs, has processed individual trades in excess of $100 million.
“That watermark will continue to rise,” he predicted.
A variety of platforms offer OTC trading for institutional clients, and the number continues to expand as large firms begin to dip their toes into this asset class.
Gemini, the cryptocurrency exchange founded by Tyler and Cameron Winklevoss, recently announced that it would begin offering block trading, with transaction data reported on a delay to minimize its impact on exchange pricing. Another US-based exchange, Kraken, began offering OTC trading in April as well.
But though institutional trading remains a central focus for Circle’s cryptocurrency ventures, the company has also increasingly expanded its retail-focused product line in recent months.
Earlier this year, Circle acquired cryptocurrency exchange Poloniex in a deal reportedly worth $400 million. Then, the company launched Circle Invest, a cryptocurrency investment app that allows users to make commission-free trades that leverage the company’s OTC trading desk.
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Last modified: May 20, 2020 8:51 PM UTC