Ari Paul, the chief information officer and managing partner of BlockTower Capital, believes liquidity for institutional investors and professional traders within the bitcoin and cryptocurrency markets will drastically increase in the upcoming months.
Recently, Coinbase, the largest bitcoin wallet and trading platform in the world, raised $100 million at a $1.6 billion valuation. One of the strategies Brian Armstrong, the CEO at Coinbase, implemented upon the closure of its hundred million dollar funding round was an improvement in infrastructure to better serve institutional investors and professional traders.
“Coinbase experienced unprecedented growth over the last year, and we have now exchanged over $25 billion USD of digital currency for our customers. We’ll be using this new funding to continue scaling even further. Specifically, we will open a GDAX office in New York City, further investing in our ability to serve institutions and professional traders.”
Gemini, another strictly regulated US-based major bitcoin exchange founded and operated by the Winklevoss twins, integrated a similar strategy to Coinbase by securing a partnership with the Chicago Board Options Exchange (CBOE), the largest options exchange in the US.
Last week, CBOE announced that it plans to integrate bitcoin by the end of 2017 in order to provide a more efficient and practical ecosystem for institutional investors to trade bitcoin futures and options. At the time, Tyler Winklevoss, the CEO at Gemini, stated:
“Gemini’s key concerns in the cryptocurrency ecosystem have always been security, compliance, and regulatory oversight. By working with the team at CBOE, we are helping to make bitcoin and other cryptocurrencies increasingly accessible to both retail and institutional investors.”
The strategy of leading bitcoin exchanges and trading platforms including Coinbase and Gemini to target retail and institutional investors is vital for sustaining the upward trend of the bitcoin price because as CNBC analyst Brian Kelly noted, one of the driving factors that led bitcoin price to its new all-time high at $4,200 has been the significant rise in demand towards bitcoin from institutional investors.
‘@BKBrianKelly breaks down the 3 things that are taking #bitcoin higher pic.twitter.com/iO6giALIU2
— CNBC’s Fast Money (@CNBCFastMoney) August 10, 2017
The demand from institutional investors and multi-billion dollar investment firms toward bitcoin will continue to rise at an exponential rate if necessary infrastructures can be established by leading bitcoin and financial service providers.
According to Ari Paul, liquidity for bitcoin traders and institutional investors is drastically increasing and as a result, Paul explained that he expects the daily trading volume, which is a key indicator for the performance of bitcoin, to double in the next three months.
“There’s a wall of liquidity coming to crypto. Dark pools, growing over-the-counter desks, liquidity aggregators, bitcoin futures and options. I expect bitcoin volume to be double in 3 months. Ethereum will benefit, not sure how far down the market cap run it will flow. This matters. It’s currently hard to trade even a couple million dollars of the 10th biggest cryptocurrency without huge slippage,” said Paul.
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