Cryptocurrencies have become all the rage over the last year or so, largely due to the rise in Bitcoin’s price from around $7,000 to over $40,000 at one point this month. Bitcoin is currently trading at around $30,000, which is still a huge increase since last January, and other cryptocurrencies such as Ethereum have also had significant rallies during this time period. This has led to a lot of people who were previously out of the loop as far as crypto was concerned, to try to get in on this market, which has been a big factor behind this price increase. However, there are also many pessimists who believe that a crash is around the corner, much like in 2018 when Bitcoin tanked after a similar rise in price.
The difference between then and now is that there is a lot more demand to prop up the price, and that many businesses and industries are looking at crypto and blockchain as viable solutions for a range of problems, making this a long-term play. For example, the online gambling sector, which has anyway seen a revival in 2020 due to the pandemic, which forced people to go online due to casinos being shut all over the world, has also turned to cryptocurrencies at this time to try and get even more people playing.
There are various online operators who are offering their customers the option to place bets using cryptocurrencies. Blackjack crypto and other casino table games which are linked to crypto are driving a lot of traffic to these sites, and could be a big factor in the online gambling industry for years to come. Another reason for Bitcoin’s rise has been the interest that institutional investors have shown. The previous rally in 2017 was largely driven by retail investors and smaller businesses, but this time around, we have started to see big institutional players make investments into Bitcoin and other cryptos, which is another reason why this situation is more sustainable. On those lines, it is interesting that we have also now seen the launch of an over-the-counter (OTC) trading desk for cryptos, which will be used for institutional clients as well as ultra high net worth (UHNI) individuals.
This service has been launched by BlockFI, which is a US-based crypto lending platform. The OTC desk will be running throughout the day, which will allow it to serve traders all over the world, with the primary targets being those in the USA and Asia, since these are the two regions most active in terms of crypto trading. It will help execute trades, and will also offer spot trading, margin trading and credit capabilities, much like trading desks for assets such as equity and debt. However, this OTC desk will only support trades for Bitcoin, Ethereum and Litecoin at the moment.
This initiative comes at an important time in the evolution of the crypto market, since we have already seen a lot of interest from institutional clients, and this will only help improve the services provided to them. Various high-profile investors and even asset management firms have publicly disclosed their cryptocurrency investments, both actual and potential, and thus it is important that services such as these are made available to aid investment, which will only help improve the prospects of the crypto trading industry as a whole. BlockFI is also looking to evolve into a fully-fledged crypto financial services firm in the near future, so this is an effective way to achieve those plans as well.
It is expected that BlockFI’s OTC desk will help improve liquidity in the crypto market, and therefore increase trading volumes and efficiency.