OTC Desks Register Growing Trading Volume While Spot Markets Lag Behind
Cryptocurrency trading volume has been declining throughout 2018. After a bull run in 2017 and a volatile beginning of 2018, day traders and investors have left the market. Now, over-the-counter (OTC) markets are starting to grow and increase their liquidity. Furthermore, there are some OTC desks that are entering the market.
The cryptocurrency market has been growing all over the world. Retail investors and smaller buyers are not the only ones involved in the market. Indeed, larger firms and companies are entering the space and need to make larger purchases of digital assets. OTC markets have some advantages over spot markets since they eliminate slippage, they improve privacy and have more liquid order books.
Just a few days ago, Coinbase announced new features and services that were specifically designed for high-volume customers in both Asia and Europe. These customers would have access to Coinbase Custody and exchanges. Another popular cryptocurrency exchange, Bittrex, announced that they were launching an OTC desk giving support to 200 cryptocurrencies.
Furthermore, Bitgo informed that it was signing a partnership with Genesis Global Trading and provide institutional clients custody services. At the same time, these clients could have access to buy and sell orders. In other countries such as Australia, there are companies that launched OTC services.
It seems that this growing interest in OTC markets is related to a larger activity related to virtual currencies. The cryptocurrency company Circle announced that the OTC trading desk that it manages was able to produce a volume of $24 billion just in 2018. Additionally, Genesis Global Trading informed that the OTC trading desk registered a 50 percent increase in just a year.
During the second half of 2018, the crypto market reduced its volatility and also its trading volume. Spot exchanges have also shown smaller profits and are starting to implement some measures to avoid falling even further. For example, Coinbase decided to add support to new tokens and offer new trading pairs in order to compete against exchange platforms such as Binance with more than 200 trading pairs and different quote cryptocurrencies.
Cumberland, another crypto trading platform that was launched back in 2014, announced that its OC buy/sell ratio increased around 60 percent towards buys. Usually, there was a balanced OTC market with 50 percent sellers and 50 percent buyers. It seems that this bear market is attracting several buyers that want to make large purchases.