Bobby Cho Of Cumberland Trading Thinks That The ‘Wild West’ Days Of Cryptos Are Over
Institutional investors have replaced high net-worth individuals as the biggest buyers of cryptocurrency transactions worth over $100,000. Traditional investors and buyers such as hedge funds have become more involved in the $220 billion cryptocurrency market through private transactions.
This revelation comes via Bobby Cho, the head of trading at Cumberland (the cryptocurrency department of DRW Holdings LLC). Cho personally handles many of the purchases for the hedge funds and other OTC traders. Many in the cryptocurrency space have been waiting with baited breath for the “entry of institutional money” to trigger the next bull market. However, Cho and others believe that it is already beginning to trickle in.
He said that “the Wild West days of crypto are really turning the corner,” and that the situation demonstrates “the professionalization that’s happening across the board in this space.” Cho added:
“One of the biggest criticisms of crypto by institutional investors has been the volatility. Over the last four to six months, the market has been trading in a very tight range, and that seems to be corresponding with traditional financial institutions becoming more comfortable diving into space.”
Whilst precise figures are difficult to come by, researchers from Digital Assets Research and TABB Group believe that the value of OTC trades is catching up or possibly exceeding those taking place on traditional exchanges. The figures they provide range from between $250 million and $30 billion in trades per day during April. This compares with around $15 billion in daily trades on exchanges.
However, despite the ratio of OTC sales to exchange trades growing, the numbers for both are down overall owing to declining prices throughout 2018. The declines have also seen a drop in the volatility of the market, which Cho believes is also luring institutional players towards the market:
“One of the biggest criticisms of crypto by institutional investors has been the volatility… Over the last four to six months, the market has been trading in a very tight range, and that seems to be corresponding with traditional financial institutions becoming more comfortable diving into space.”
The scene will possibly change in the coming months. The products currently under development from Intercontinental Exchange, Morgan Stanley, and Goldman Sachs would all offer regulated investment options for a segment of big money which has hitherto faced hurdles to entry.