No Substitute For Institutional Experience When Trading Bitcoin

As the value of the world’s largest cryptocurrency skyrockets past the $1tn mark, who are the likely winners of Bitcoin’s latest price surge?

There are, of course, vast numbers of retail investors buying and selling crypto. Then there are the banks getting involved, some of whom are storing the asset while others are acting as the custodian. And do not forget those non-bank market makers providing two-way pricing as an additional source of liquidity. With crypto pairs such as Bitcoin/Ethereum valued differently across multiple markets, there is no shortage of opportunity for the most computer savvy firms to profit quickly from price differences.

However, it would be a mistake to assume that just because crypto is an algo driven market – the computer always knows best. There might be a lot of computers, but only a select few holders of coins coming in and out of the market frequently. In fact, very few institutions have the skill to be able to trade crypto as an asset by hand. Those that can are set to make the biggest gains. This is due to the fact that when these institutions buy, they do so on a trend such as Bitcoin rising 8% in the last 24 hours. This pushes the price up to such a level that only the best and the brightest human traders can understand how the algos are working to make the meaty returns.

The cold hard truth is that there are very few firms that have this level of sophisticated trading capabilities. So, while the perception crypto is of this decentralised and highly democratised market where any Joe Bloggs can make a fast buck, it is the major financial institutions that have the edge as they have the brain power to make the easy gains. And in a market where more and more clients want the certainty of someone handling their order during volatile periods, crypto needs algo trading to work in parallel with the high-end global trading desk. For this to work successfully, there needs to be a human interacting with institutional grade tools. 

So as Bitcoin passes the $60,000 mark for the first time, it is worth taking stock of who the likely long-term winners are going to be. Yes, it is a market with many different participants. But as the market matures, the wider participants should be under no illusion, it is those with the trading knowhow and proven track record of handling complex algo dominated orders that will ultimately

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