Diar, the cryptocurrency and blockchain centric research firm has published an analysis on December 17, which identifies a growing movement of institutional investors to the over-the-counter (OTC) Bitcoin markets.
In the analysis, the investment in OTC funds offered by Coinbase, the U.S. based cryptocurrency exchange has seen a stark increase especially in the last few months of the year. The report stated that Coinbase performed better than Grayscales’s Bitcoin Investment Trust (GBTC) in terms of BTC trade volume on the OTC markets. However, OTC markets are open for just 31 percent of yearly tradeable hours but are still significant given this observation.
Earlier in December, Diar noted that during the first three quarters of this year, Grayscale saw net inflows of $216 million into their BTC Investment Trust. Despite the decrease in Bitcoin interest given the incredibly bearish market, GBTC still holds over 1 percent of total Bitcoins in circulation, which totals 203,000 BTC or $721.2 million.
Coinbase, on the other hand, is one among many crypto-exchanges in the world, seeing over 30 percent more trading, excluding trading outside the exchange hours. In an October analysis, Diar stated, “With no time stop on trading, institutions and big money would require access around the clock from fears of a rude awakening in a market that remains highly volatile, despite that decreasing to new lows this year.”
Trading volumes between the exchange, Coinbase and the investment trust, GBTC have changed between the years. Last year, the volumes mirrored each other but this year there is a vast disparity. Bitcoin trading volume on Coinbase, during the OTC Markets hours, rose by 20 percent, whereas the volumes of GBTC have fallen by 35 percent.
“The shift could be a sign of investors seeking private placement in a market that has seen regulatory clarity, at least in terms of Bitcoin, the development of custody solutions, many of whom have also secured insurance cover,” stated the report.
Other cryptocurrency exchanges are also moving into the OTC space, with Max Keidun the CEO of Peer-to-Peer exchange HodlHodl which also boasts an OTC desk, told Diar that there is a clear growth in the number of large orders in this space in 2018. He, however, added, “It’s quite harder than usual to find a seller at current prices.”
Coinbase announced the launch of their OTC trading desk for institutional investors in November and believes that the dual operations of an exchange and an OTC business are a tremendous impetus to the investors.