Gemini Adds Block Trading to Reduce Impact of Large Orders on Bitcoin Price

April 9, 2018 10:12 PM UTC

Gemini, the cryptocurrency exchange founded by the Winklevoss twins, has added a new feature that will reduce the impact that large buy and sell orders have on the Bitcoin price.

Announced on Monday, Gemini Block Trading will allow cryptocurrency “whales” to execute large trades outside of the exchange’s continuously-updated order books, where a single trade can have an outsized effect on the market as a whole.

Using the new platform, customers can place block orders that are only published to market makers, who can decide whether to make a market for the trader’s indication of interest.

Transactions made using the block trading platform will be published on a 10-minute delay, ensuring that all market participants have access to pricing and liquidity information while also reducing the data’s propensity to have a cascading effect on the Bitcoin price (or the Ethereum price, as Gemini supports both coins).

In recent months, the market has been forced to weather at least three major sell-offs that have demonstrated the need for these trading services.

The first came when the trustee of now-defunct cryptocurrency exchange Mt. Gox sold more than $400 million worth of Bitcoin and Bitcoin Cash to settle the bankrupt company’s JPY liabilities.

Similarly, though on a much wider scale, taxpayers in the US and other regions have withdrawn as much as $25 billion to cover capital gains accrued during fiscal year 2017.

Finally, Fortress Investment Group revealed that it had sold approximately $200 million worth of Bitcoin it was holding.

While the latter sale was most likely done through an over-the-counter (OTC) trading platform like the one Gemini is launching, the other two have occurred in the order books.

Tom Lee, founder of Wall Street strategy firm Fundstrat, estimated in a recent note to clients that every dollar converted from cryptocurrency to fiat has a $25 impact on the cryptocurrency market cap.

On the other hand, large buy orders can spur outsized rallies, which is perhaps one reason that institutional buyers have been hesitant to trade cryptocurrencies more aggressively.

Last modified: June 14, 2020 10:58 AM UTC

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