Perhaps institutional players arenâ€™t that hard to come by. Perhaps they are interested in crypto after all, and perhaps they do want to diversify their portfolios with new technology.
Institutional Investors Are More “Forgiving” Than We Thought
Thatâ€™s the sentiment of a London-based OTC firm known as BCB Group. According to a new report issued by the organization, institutional investors are still intrigued by bitcoin and its crypto cousins despite the nasty price falls weâ€™ve been witnessing as of late.
Bitcoin spent most of September trading for over $10,000. However, following the dismal performance of Bakkt - the ICE-owned trading platform designed to bring retail players closer to crypto assets - the currency lost over $2,000 in a matter of minutes, dropping into the $7,000 range and then eventually settling in the low $8,000 range just days later.
Bitcoin and most of its altcoin counterparts are still meandering through red territory, but that hasnâ€™t stopped institutional traders from getting involved. Daniel Fruhman, one of the organizationâ€™s directors, claims that many investors opt for “over-the-counter” purchases, as there tends to be little to no liquidity on exchanges. He says that there are “tens of millions of pounds” being traded weekly through the BCB Group.
Describing his role and journey with the company, Fruhman and his brother - who also serves as one of the directors - have been involved professionally in crypto for over six years, and ultimately landed at BCB following their studies of minersâ€™ activities. He explains:
We met a lot of miners and kids who had a lot of BTC, but there was no robust or structured way to liquidate bitcoin. This is when we got into the whole world of brokering and transactions, and while it was lucrative when they closed, most of the time hedge funds and buyers would waste our time… Then we came across BCB Group. They were registered by the FCA as a payment institution and authorized by the Swiss financial body VQF. The staff all had senior roles in traditional financial services, and they began to bring that experience into crypto, so we naturally started to send our clients across to BCB.
At press time, the firm has grown from simply providing over-the-counter options to offering larger payment services to corporations and hedge funds including Galaxy Digital, Bit Pay and Bitstamp. It garners anywhere between $10 million and $100 million per week.
Paving the Way for More
Fruhman says that the company is far less focused on price and concentrates more on building the institutional presence within the crypto space. He comments:
Weâ€™ve definitely seen a rise in investments from institutions, but more importantly weâ€™ve seen less of the hype from the retail sector. Weâ€™re starting to see fundamental changes in this space… Youâ€™re starting to have insurance companies like Allianz getting involved in blockchain technology.
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Cryptocurrency is a digital currency that uses encryption (cryptography) to regulate the generation of currency and verify the transfer of funds, independently of a central bank. Cryptography is the practice and study of techniques for secure communication in the presence of third party adversaries.
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