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.