The efforts to grow the crypto marketcap is shifting its focus from retail to institutional investors. New companies and exchanges are working feverishly to attract accredited investors more than retail investors. The objective is to replace the liquidity of the market from short-term speculative traders to long-term stable holders. And to break the inertia created by declining prices. Crypto exchange Seed CX’s CEO Edward Woodford describes the current market as an opportunity for large accredited buyers to enter the market. He affirms on “Low prices, low prices, low prices” to back his plan to target institutions.
Seed CX, Ltd is an institutional platform for trading digital assets. It is regulated; holding licenses by the CFTC, NFA, and FinCen with pending Bit licensing from the NYDFS. Today, the company announced it will start spot trading of Bitcoin to institutional investors. This will add to margin trading of additional crypto derivatives such as Litecoin and Bitcoin Cash. The exchange plans to target large investors only as a way to create a niche market and expands its business. Competitors like Bakkt, TZero, Coinbase, ErisX, Binance, and others share the same goal: to promote big money entering the space.
OTC markets continue to evolve in order to serve instituional trading. Last week, BitGo and Genesis Global Trading joined forces to create a makeshift exchange that will draw services from both firms. BitGo is a blockchain wallet and custody services, and Genesis offers large volume transactions services. Together, they plan to facilitate access to cryptocurrncies to institutions via OTC desks.
In fact, BitGo and Genesis are the latest batch to join the melee to get a piece of the OTC trading volume. According to Digital Assets Research and the TABB Group, OTC transactions ranged between $250 million to $30 billion in daily trades back in April 2018. And this is at a time of intense losses due to the start of the bear market.
Institutional interest remains strong despite media reports of a pull back. Profits are too good to be ignored and corporate strategies are shifting to capitalize on this sector.
Last week, through Galaxy Digital, venture capital investor Mike Novogratz invested $58 million dollars to boost BitGo advance to create an institutional-grade trading platform. In the meantime, to solidify their competitiveness, ErisX (backed by TD Ameritrade) hired Joseph Lubin (a co-founder of Ethereum) to its board of directors. And to sweeten the deal for Wall Street investors, exchanges now offer custody, clearing, settlement, security, insurance, and regulatory compliance. All the key elements major investors look for.
All of these moves intend to unlock the vast financial reserves of Wall Street (probably in the trillions of dollars). And infuse them into the crypto market. To achieve this, a conglomerate of companies is busy building the custody infrastructure with which to serve a future multi-trillion dollars securitized crypto market.
The market is shifting to target institutional investors (institutions and accredited investors). Investors are pouring huge amounts of money to create platforms that will accommodate the transaction, storage, and management of massive sums of money. The goal is likely to grow cryptocurrencies alongside STOs sheppered by the SEC and sheltered from manipulation. The endgame is to create a new pool of investment fund from where to create new markets, instruments, and financial offerings.