Monday, June 17, 2019

Bullish Trend Begins Across Crypto Trading Desks on Wall Street

The crypto market that has been struggling for quite a long time is currently getting an infusion of hope from no other source than Wall Street’s trading desks.

Pressure has mounted on many over-the-counter trading desks by the increased buying rate in the crypto community. A lot of trading firms claim that this bullish trend shares similarity with the price action that recently took place across the crypto spot exchange market and is a total change from the occurrences witnessed from the beginning of the year 2018 right to its end.

Cumberland Admits To A Trading Imbalance

Cumberland, a noteworthy crypto over-the-counter trading firm, disclosed in a tweet on Tuesday that over the last week, the imbalance between sellers and buyers have increased to a whopping 60%. The firm stated that, “Historically, our OTC trading is relatively balanced between buyers and sellers.”

“Over the last week, our OTC buy/sell ratio (by notional value) has increased approximately 60% towards counterparties buying.”

Michael Moro, the CEO of Genesis Trading, supported the view of Cumberland when he said that the number of buy orders his firm received towards the end of 2018 was also on the high side due to the rush by crypto investors to sell off their assets for tax purposes. “I’ll echo Cumberland’s sentiments,” he wrote addressing The Block. “Year-end saw quite a bit of selling for numerous reasons (e.g., tax loss selling and liquidation of crypto donations).”

“As the year turned, the selling pressure from such activities has subsided, and we have seen more buy-side interest pick up,” he said.

Is OTC Trading the Most Preferred?

The institutional crypto trading that goes through the OTC desks in one day is worth billions of dollars. In some cases, the representation the OTC trading gives the crypto market is an institutional one because most trades are linked to it. Monica Summerville, Tabb Group’s director of fintech, told Forbes:

“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.”

Summerville is of the opinion that retail crypto exchanges like Binance, Kraken, and Coinbase have lesser trading activity compared to the OTC market, which she claims is about two to three times more active.

Galaxy Digital opined that the flow of things had taken a turn. In the words of the firm, “Galaxy’s trading desk saw robust tax-driven trading activity into year-end from asset manager and treasury accounts.”

“In early January, much of the flow reversed to buy back previously sold assets. Additionally, we have seen increased buying from Asia and EMEA traders, while some active sellers took a pause to start the year.” A story not foreign to Paxos.

The Bullish Trend Is Perhaps Not Everywhere

In January, the firm in control of both an exchange and an OTC desk reported a bullish trading activity.

Paxos’ head of OTC trading, Paul Ciavardini said, “The nature of most of our trading flow so far this year has been buy tickets from emerging market traders.”

The sell pressure at Circle’s OTC desk surged to a peak in Dec 2018, but as at Jan 2019, it has reduced. An email from a spokesperson said, “Sells by notional were slightly higher in December, but have started to reverse in early January.”

“Separately, we are seeing greater activity in trading alts and stablecoins in the first weeks of 2019.”

On the other hand, the CEO of DV Chain, Garrett See, claims that nothing remarkable has been observed by his firm regarding any difference in activity between this month and Dec 2018. He stated that, “In January, it’s a pretty even between buyers and sellers, with marginally more buys than sells, but not materially more.”

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