Institutional Crypto Trading And Its Main Actors

Institutional investment and trading require an institutional cryptocurrency platform that provides investors with advanced tools and services such as a highly protected crypto institutional account with 2FA, cold storage, anti-phishing measures, and encryption protocols.

In its early years, the cryptocurrency market was a space for retail traders and tech-savvy people, who believed in crypto. At that time, any idea of institutions’ participation in the sector brought laughter and wasn’t taken seriously. However, as time passed, crypto institutional trading became a reality we are living in today.

Following retail traders, companies and high-frequency traders are actively tapping into the crypto sector. As it happened with early investors in the stock market, traders find many inefficiencies in the crypto field. However, as more institutions join, the crypto trading infrastructure expands, offering quality institutional services. Guided by technologies and innovations, institutions try not to miss out on the chance to get exposure to these next-generation assets, at least for diversification purposes.

In this article, we will discuss what institutions invest in crypto and how they do it.

How Institutional Crypto Investors Act

Institutional investment and trading require an institutional cryptocurrency platform that provides investors with advanced tools and services:

  • A highly protected crypto institutional account with 2FA, cold storage, anti-phishing measures, encryption protocols, etc.
  • Sufficient liquidity 
  • Flexible fee structure
  • Access to markets
  • Advanced trading tools
  • Algorithmic trading
  • Custody solutions
  • Compliance with regulations (USDT AML check tools, KYC verification, etc).

An institutional trading platform enables investors to buy and sell assets and manage the funds on behalf of their clients, shareholders, members, etc. Institutions may include family offices, tech companies, investment banks, crypto funds, hedge and pension funds, and different financial institutions. 

These companies may participate in the crypto market in different ways. They may buy and hold assets long-term or trade them on the spot market. They also may engage in crypto derivatives and speculate on crypto prices. This helps investors hedge risks and grow capital. 

An example of crypto funds may be: 

  • Grayscale Bitcoin Trust and Grayscale Ethereum Trust (help their clients get exposure to popular crypto assets without having to buy them directly). 
  • JP Morgan Chase bank added crypto trading desks for its clients.
  • Payment company PayPal was among the first to add crypto payments into its system 
  • MicroStrategy tech company was one of the first to invest in Bitcoin and now has over $7 Billion worth of BTC holdings. 

Final Word

Institutional companies create the most active trading activity in traditional markets. As they start to join the crypto sector, they’re going to make a huge impact on it. Some institutions use crypto volatility to gain income from arbitrage trading and futures, while others just hold crypto long-term and receive overperformance in their portfolios after a while.