The surge in institutional adoption created the need to develop and introduce institutional-grade services, that would allow to safely transact with large amounts. An institutional crypto trading platform WhiteBIT and Kraken are just a few examples of exchanges providing institutional services.
Cryptocurrencies were initially the space for retail traders and individuals fond of technologies and cryptography. However, over time, they smoothly became investment tools of institutions, including the established names of Wall Street companies. Institutional crypto adoption was noticed in 2018 and boosted in 2021 when Bitcoin reached its highest price level.
The surge in institutional adoption created the need to develop and introduce institutional-grade services, that would allow to safely transact with large amounts. An institutional crypto trading platform WhiteBIT, Coinbase, and Kraken are just a few examples of exchanges providing institutional services, that facilitate efficient trading, and ensure safety, reliable custody, and compliance.
Why Institutions and Banks are Interested in Crypto
In the early years of Bitcoin, institutional investments in this asset were out of discussion. However, today we can see such names as Tesla, MicroStrategy, and Grayscale Bitcoin Trust among the biggest Bitcoin holders with billions of dollars allocated in crypto. Institutions include banks, financial companies, hedge funds, trading firms, etc. Let’s see what motivates them to enter the crypto sector:
- Diversification. Investors include BTC in their portfolios to reduce the overall risk and gain returns from this volatile asset. They may hold BTC for years until its price surges, without selling it during the downtrend periods.
- Client retention. By adding crypto-related products and trading desks, banks manage to attract crypto-oriented clients and retain those customers who aim to use crypto.
- Hedging against inflation in the traditional economy. Investors see in Bitcoin a potential to protect against the devaluation of traditional assets.
The Differences Between Retail and Institutional Cryptocurrency Trading
Institutional investors manage much larger sums like millions and billions of dollars, which may affect spot crypto prices and liquidity. In addition, institutions can act as market makers, puposefully pouring liquidity into crypto assets. Retail traders use their own funds, while institutions most often use their clients’ funds. This fact increases the level of responsibility for the safety of those funds.
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Companies in crypto use an institutional crypto exchange to receive the needed infrastructure for trading large amounts. In addition, institutions have to report on their incomes, so they require an exchange that would meet the requirements in regulations. Unlike retail traders, institutions are under scrutiny to comply with the existing regulations and laws.
Final Word
Having started from the retail traders sector, cryptocurrencies moved to institutional investment, however, still maintaining tools and infrastructure for both retail traders and companies. Depending on what kind of entity you represent and how much trade volume you aim to pour into crypto, choose tools and services that best meet your requirements.
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