According to a recent Bloomberg report, institutional investors have taken the place of high net worth individuals (HNIs) as biggest buyers of cryptocurrency transactions worth over $100,000. The report stated that traditional investors such as hedge funds are attracted to the cryptocurrency market and started investing in the digital assets.
Northern Trust, the United States based custody bank is helping traditional hedge funds to expand into cryptos. Northern Trust is working with three hedge funds to add cryptocurrencies in their portfolio. The financial service firm Northern Trust has even created new services and administrative tools for the crypto assets. As the popularity of digital assets is increasing more and more people are looking for investing in the cryptos. People especially who are risk-averse are choosing crypto hedge funds so that they can make big profits without buying and holding crypto coins and tokens. Crypto hedge funds are the best choice for the people who want to gain high profit but do not want to trade in cryptos themselves. The fund managers of hedge funds carry out in-depth analysis to determine where to invest so that the investors can earn more profits. Some of the top performing crypto hedge funds are Pantera Capital, PolyChain Capital, CoinCapital, Bitcoins Reserve, Binary Financial, etc.
According to the report cryptocurrency miners are the biggest sellers of the digital assets and now they have started to sell the cryptos regularly instead of holding and selling them during the market rallies. Crypto miners and hedge funds have been shifting sales to the over the counter (OTC) market. According to a research conducted by Digital Assets Research and TABB group, the OTC market facilitated $250 million to $30 billion in trades per day in April, while recently exchanges have handled daily trade of around $15 billion.
Global head of trading at the Chicago based cryptocurrency trading unit of DRW Holdings LLC, Bobby Cho said that “the Wild West days of crypto are really turning the corner and this situation demonstrates the professionalization that is happening across the border in this space.” According to Cho, volatility in the crypto space is the major issue for the institutional investors. From last four to six months the crypto market is trading in a very tight range and “that seems to be corresponding with the traditional financial institutions becoming more comfortable diving into space.”
According to the head of data science and managing director at Fundstrat Global Advisors, Sam Doctor if more an more institutional investors will enter in the crypto market it can cause an imbalance which makes brokerage firms to enter in the crypto industry to assist the institutional investors to find the inventory.