Cryptocurrency flash crash sees business boom
Whatever the markets are doing, institutional interest keeps barrelling in like a freight train.
Five of the last six weeks in cryptocurrency have been a downturn, bringing the total cryptocurrency market cap down about US$640 billion from its peak and leaving many coins reeling as they drop 90% or more from their all-time high. The last few weeks in particular have hit hard, dropping markets to a 10-month low.
And all around the space, it's business as usual, with many exchanges sticking to their growth plans, catering to quickly-growing institutional interest and working to expand product offerings to keep up with a growing influx of demand from large traders.
"Although retail interest in cryptocurrency has waned in light of this year’s price drops, we are seeing a consistent increase in institutional interest in line with the maturing products being offered in the market place," said Adrian Przelozny, CEO of the Australia-based Independent Reserve digital asset exchange. "Over the past nine months, we have seen new offerings come into the market geared towards large scale investment. These include custodial solutions, insurance, greater regulatory certainty and deep liquidity on offer by a worldwide network of OTC providers."
This is part of a continuing trend seen throughout the year, with a lot of the volume that has disappeared from retail exchanges reappearing on high volume OTC exchanges. In April, the Circle Trade OTC platform doubled its minimum order size to $500,000, while predicting further rises in the future.
Przelozny's view from Independent Reserve might be similar.
"At Independent Reserve we have enjoyed a front row view of this incoming wave of new and more sophisticated investors," Przelozny said, "[and] broader adoption of digital assets in investments, trading, asset transfer and risk management happening faster than ever before."
Institutional cryptocurrency investment firm Grayscale has also noted similar experiences, with its 2018 half yearly report showing a distinct trend of institutional buying sprees occurring whenever prices take a hit.
Given the scale and abruptness of the recent downturn, it seems likely that many professional-oriented exchanges are busier than they've been all year and that the last few weeks have been a period of significant growth.
"We are speaking to more infrastructure players in this space than ever before," Przelozny noted. "Focusing below price levels, we are super excited about the growth of the sector."
Coinbase, which said in February 2018 that it aimed to double its staff from 250 to 500 by the end of the year, said it hit that target on 9 September.
Retail speculators are unsurprisingly shying away from the belly-flopping markets, while institutional traders are unsurprisingly racing to get involved. Prices aside, it's business as usual in cryptocurrency, and business is utterly booming.
Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VET, XLM, BTC and ADA.