Outpacing interest of institutional investors in OTC cryptocurrency operations amid deferral of SEC regulations

The US SEC has kept declining ETF proposals, eyeing on stringent regulatory framework, Despite the crypto market downturn which began after the news of the US Securities and Exchange Commission’s (SEC) delayed decision on an ETF product approval, bitcoin, on the flipside, has been sensing a lot of developmental activities also. 

While BTC ETFs would be the significant aspect that most likely to herald the inflow of institutional funds into crypto-avenues. While there may be abundant BTC to invest in.

For Bitcoin, the institutional money inflow in a fully legalized asset like an ETF would be an indication of authenticity. Some traditional finance firms have made forays into Bitcoin, but those were mostly small-scale test investments.

Thus, Kara Stein, the the Commissioner of US SEC, recently sent the guidelines as to how the regulator is considering steps to oversee developments in the cryptocurrency industry, citing the establishment of the Strategic Hub for Innovation and FinTech space.

Amid these developments, institutional clients seem to be shrugging-off momentary obstacle and are choosing over-the-counter (OTC) markets instead of exchanges to enter the bitcoin space, as per the Forbesreport.

Since the supply of bitcoin is comparatively limited, and is open for trade at many exchanges but with some liquidity and regulatory hiccups, these exists the essentialities of some ideal players to be listed on OTC markets.

An investor who’s keen on investing a multi-million-dollars worth of investments into crypto avenue cannot afford to just sign up at a random exchange and do it. They may encounter the glitches in the IT infrastructure, liquidity, and regulatory obstacles with cryptocurrency exchanges to execute large bulk orders. Just for instance, some ABC exchange can enable its clients to trade with limit orders (per say, max worth $15k cryptocurrency) per day.

Such limits are standard all across the formal exchanges. While Kraken, the leading US-based exchange allows withdrawals $2.5k per day and $20k a month. 

Another renowned exchange, Binance is exclusively crypto-to-crypto trading platform. Hence, their liquidity options come in the form of stablecoins, which again is a risky alternative to institutional traders.

Monica Summerville, the director of fintech research at UK-based Tabb Group, interviewed with Forbes, states that“the big deals have to go OTC. A lot of the exchanges limit the order size, so you have to break up your orders, and that’s just fatal”.

The OTC market volume has surpassed $12 billion globally and it is two-to-three times larger than that of standard crypto exchanges, she mentions in a report. 

While evaluating the future prices for this unconventional currency BTCUSD. Pricing BTC vanilla options are available at players, like, ORE and Sentrix. They are not straight forwards as they are the latest and a very volatile instrument. These players appear to be exploiting with advanced mathematical models and techniques to try and infer future behavior of BTC.

Capitalizing on such Bitcoin vanilla options, BTC option traders can get a clarity about bitcoin future prices and volatility to certain extent.

Currency Strength Index: FxWirePro's hourly BTC is flashing at -11 (neutral), while hourly USD is flashing at -14 (neutral), while articulating at 13:06 GMT. For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex