Jump Trading, a Chicago-based firm, has developed a digital bitcoin OTC trading platform, which it expects will revolutionize the bitcoin trading arena for institutional investors.
Electronic Bitcoin OTC Trading
Jump Trading’s new platform is a significant upgrade on the usual OTC bitcoin trading paradigm.
Usually, firms conduct such transactions with their counter-parties over the phone or via secure messaging services. This method is an auditing nightmare what with having to scrape telephone and messaging records.
The new platform built by Jump Trading allows the firm to conduct electronic trades with its clients. The firm created a GUI, which makes it possible for its parties to interact with the OTC desk via a desktop platform. The connection is secured, and users will not be able to connect with external exchange platforms.
OTC trading is popular with large bitcoin traders who don’t want to deposit a large amount of funds to online cryptocurrency exchanges. Also, such large volume trades might upset the balance of the market as the presence of a massive buy/sell order could send the wrong signals to retail investors.
There is also the problem of slippage, i.e. significant price changes between order placement and execution that can affect the profitability of such large transactions.
Bitcoin is Maturing as an Asset
The new Jump Trading bitcoin OTC trading platform is yet another indication that the cryptocurrency is rapidly maturing. According to forex trader, John Spallanzani, a portfolio manager at Miller Value Partners, bitcoin’s growth closely mirrors that of the multi-trillion-dollar forex market.
In the early 90s, long before the advent of desktop and mobile FX platforms, brokers would call multiple banks at once for spot FX prices. These days, everything is done in front of a computer or smartphone screen, and now it appears bitcoin is on the same trajectory.
Since 2017, bitcoin has emerged as a viable investment asset with dozens of investment funds and OTC trading desks. There are over 360 different bitcoin and cryptocurrency investments funds in the market, operating in various places around the world.
In 2018 alone, more than 60 new bitcoin funds have been established. Many commentators also attest to the fact that institutional investments in the cryptocurrency will help to increase its price to new all-time highs.
Will Jump Trading’s electronic OTC platform improve the speed and efficiency of large bitcoin trades? Keep the conversation going in the comment section below.
Images courtesy of Jump Trading and CoinMarketCap, Shutterstock