Crypto trading firm and market maker Wintermute registered a 240% yearly growth in traditional finance firms’ activity in its over-the-counter (OTC) trading desk, according to a Jan. 17 Reportage.
The traditional financial institutions will play a key role in the reshaping of OTC trading by 2024. In the report, improved policy frameworks and regulatory clarity were cited as key drivers of confidence for these institutions.
Report highlights significant drivers, including the US Securities and Exchange Commission’s (SEC) approval of spot Bitcoin (BTC) exchange-traded funds (ETFs) in January 2024 and the election of a pro-crypto president in the US in November.
Trades that are discreet have a preference
Wintermute’s counterparty volume data revealed that retail brokers also experienced a 549% growth rate, reflecting broader institutional interest.
This is due to the increasing demand of institutional traders for off-exchange liquid. Wintermute’s OTC desk saw volumes grow 4.13 times over the previous year, driven by counterparties seeking to place large trades without significantly impacting the market.
The demand aligns with institutions’ preference for efficient, discreet trades that avoid the capital inefficiencies associated with holding assets on exchange platforms. This preference was the driving force. Wintermute’s OTC volumes to hit new milestones, surpassing its previous weekly record of $2 billion in 2023 with a single-day volume of $2.24 billion in November 2024.
The challenges of memecoin and their focus
Traditional financial institutions are also shifting their attention to the assets they prefer. Alternative segments, such as cryptocurrency mining and cryptocurrencies like bitcoins saw their trading volumes drop by 3%. “memecoins” You can also find out more about the following: “currency networks” Gained traction
Memecoins have seen a growth of 210% and now account for 16,2% Wintermute OTC total volumes. This is up from 7.3% back in 2023. It reflects the willingness of institutions to invest in higher-risk assets and earn more returns.
Noteworthy, it was noted in the report that, as traditional financial firms solidified their position on the OTC markets, crypto-native companies faced increasing pressure.
Entry of large-capitalized companies with scale, and pricing that was competitive squeezed out smaller players. The declining market share of crypto-native companies indicates increased competition. Institutions are leveraging resources to dominate this space.
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