Institutions Using a Back Door for Crypto Purchases

Bloomberg has reported that institutions are using a back door for cryptocurrency purchases and states that these investors may be more prominent than previously expected.

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The report highlights that firms such as Hedge Funds have replaced large private investors for purchases of over $100,000. Circle, the Goldman Sachs-backed startup has also seen a rise in “over-the-counter” trades (OTC), with the company’s CEO Jeremy Allaire stating, “We’ve seen triple-digit growth enrolling in our OTC business… That’s a big growth area.”

The Bloomberg report added that, “Large buyers and sellers like private sales because transactions on exchanges can move coin prices. In a private sale, parties can fix the price in advance, instead of worrying about a sudden plunge or spike just as the transaction takes place.”

The key takeaway from this article is that smart investors are piling into cryptocurrencies and are doing so through private sales, in order to avoid volatility on the exchanges. The arrival of intermediaries to help instituions find suitable blocks of coins shows an imbalance between supply and demand and thus far this has not translated to price rallies. It may need regulation or a retail wave before we see big changes in price, however the arrival of  the “smart money” hints that this development may be just around the corner.

Circle Adds “Collections” to Its Retail-Friendly Portfolio

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Circle, a crypto and fintech startup funded by Goldman Sachs and Baidu has continued to build on its rapid development with another new product: “collections”.

Collections is another addition to the Circle trading portfolio which seeks to bring cryptocurrency trading to the masses. The feature allows investors to gain access to an investment theme: payments, privacy or platforms. This type of investment makes it suitable for investors who want to gain access to the space without doing the due dilligence and research. The feature is very retail-friendly, similar to the company’s “buy the market” feature, where investors can buy a basket of cryptocurrencies. With Collections, Circle will provide educational material to explain the purpose of the different groups and as crypto evolves, more collections may be added.

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These features are similar to the current options available in the tradtional finance market, where investors can buy a theme, such as “emerging markets” or “european banks”. The moves by Circle highlight what I have mentioned in my Medium posts recently: crypto regulation is coming and the insiders are building products for a pending retail wave.