Wednesday, November 28, 2018

The quiet surge 🤐

November 28, 2018

While Retail Investors Show Worries, the OTC Market is Quietly Building

Coinbase joins the game

Yesterday, in an interview with Cheddar, Coinbase head of sales Christine Sandler revealed that the San Francisco-based cryptocurrency exchange launched its over-the-counter (OTC) trading desk this month.

The OTC desk will help link two parties - a buyer and a seller - to exchange large sums of cryptocurrency value. Because institutions can't use normal exchanges to purchase large sums, they are now using OTC as an "on-ramp for crypto trading."

For now, Coinbase's OTC service is only available to Coinbase Prime customers or rather, institutional investors.

Not the only ones

Though Coinbase is the latest exchange to reveal its OTC services, it's not the first. When 2017 brought retail investors, it looks like 2018 is bringing in institutional investors.

Earlier this month, Binance, the world's largest exchange by volume, invested $3 million into its own OTC trading desk. In addition, Goldman Sachs-backed firm Circle has its own OTC trading desk that requires a minimum of $250,000 per trade.

The OTC wave

While retail investors fled falling markets this year, the OTC market has flourished.

One report by TABB Group estimates that the OTC market volume is 3 times larger than the total volume of crypto exchanges per day.

It's also growing too. Genesis Global trading, an OTC services firm in New York, saw its average daily trades grow more than 10 times larger than last year.

It's happening quietly

So how is the OTC market growing so fast with little impact on the market? That's the point.

Institutional investors use OTC services to avoid drastically impacting the market. Since normal exchanges don't have full order books, a massive institutional order would drive prices significantly higher.

Though it's still unclear how much OTC deals can affect the total crypto market, one thing is certain: institutional interest is already here.

STABLECOINS

Binance is Creating a Unified Stablecoin Market

Choosing the right stablecoin

With integrity concerns surrounding Tether, a flood of new stablecoins have entered the market in the past few months. More importantly, exchanges' adoption of 'alt-stablecoins' has increased giving investors the choice of which stablecoin to use.

For the first time ever, investors now have to decide which stablecoin to use. What makes this question difficult is that all stablecoins are very similar.

Binance aims to eliminate this choice

Binance has begun to roll out a combined Stablecoin Market (USDⓈ) which will eliminate the investor's decision to choose a specific stablecoin. The goal of this new market is to make all of the stablecoins agnostic and fungible.

At inception, Tether will be the only stablecoin included in Binance's Stablecoin Market. But, it seems that more stablecoins will be included in the market in the future. When visiting Binance, you will no longer see a USDT Market as it has been completely replaced by its Stablecoin Market.

The goal of this new venture is to offer more stablecoin trading pairs without having to add pairs for each of the many stablecoins.

Binance explained in its blog:

"Binance has renamed the USDT Market (USDT) to now be a combined Stablecoin Market (USDⓈ). This is to support more trading pairs with different stablecoins offered as a base pair. We will make a further announcement soon on the exact pairs to be initially moved or added to this market. Please note that USDⓈ is not a new stablecoin: it is the symbol of Binance's new stablecoin market."

EXCHANGE

Bitstamp Introduces Tool to Spot Market Manipulation

Committed to fair trading

In an effort to promote a fair and orderly market mechanism, Bitstamp is implementing a new technology called the Irisium Surveillance platform.

As a novel asset class, with relatively little regulation, cryptocurrency trading has been plagued by bad actors and manipulation in the markets. If cryptocurrency will ever gain true mainstream adoption, it will need to be more trustworthy than it has in the past.

The new platform that Bitstamp has set out to implement on its exchange aims to bring greater integrity to its trading platform. Irisium Surveillance is a technology that monitors trading activity and flags manipulative trading activity.

CEO of Irisium Surveillance, Alastair Goodwin, commented on Bitstamp's implementation:

"Bitstamp's pro-active adoption of Irisium and close partnership with us demonstrates their desire to increase transparency, integrity and confidence in the cryptocurrency market. … Enhanced customer protection and market integrity will help drive adoption and market liquidity."

This implementation is a continuance of Bitstamp's efforts to attract institutional investors to its trading platform. Earlier this month, Bitstamp replaced its own trading engine with a more robust engine called the TRADExpress platform created by a company called Cinnober.

BITS

But wait, there's more...

The Commodity Futures Trading Commission says blockchain smart contract laws are subject to regulation in its new primer.
Major Canadian-based jewelry manufacturer and retailer Birks Group has begun accepting Bitcoin (BTC) through a partnership with U.S. payment processor BitPay.
Nasdaq and U.S. investment firm VanEck have announced a partnership to jointly launch a set of "transparent, regulated and surveilled" digital assets products.

MEME