Kraken Introduces ‘Block Trading’ OTC Option for Trades of $100K or More
A short post on the Kraken blog announced a major addition to the exchange. Kraken introduced a block trading option for those who are ready to bet $100,000 or more on crypto.
Block Trades by Definition
Venture capitalists, investment firms, family offices, and high net-worth individual investors are often willing to gamble hundreds of thousands — perhaps millions— on the cryptocurrency market. Yet the current infrastructure doesn’t always allow it.
Such high-value investments are called “block trades,” and receive a category of their own because of the unique challenges they encounter. For example, when a party trades $1 million worth of Bitcoin (BTC) 00, two things happen.
One, the respective investment influences the market for that particular cryptocurrency (imagine what happens if it’s an altcoin with a lower trading volume, and not Bitcoin, that we’re talking about!). Its price swings accordingly.
Second, the investors in question cannot buy/sell all units at the same price for the same reason. Therefore, in order to keep everyone happy, the investor calls upon an intermediary — which Kraken (eponymous to a species of giant squid, by the way) has just volunteered to become.
Kraken Claims to Have What It Takes to Be the Middleman
Not everyone knows how to go about block trades, however. The mediating entity must have experience in conducting these transactions with great care to avoid price volatility. As such, Kraken claims to have the right personnel for this purpose.
The ever-growing Kraken OTC team currently has nine professional traders stationed throughout North America, Europe, and Asia. Members have a combined 100 years of trading experience working for major financial institutions such as JP Morgan, Credit Suisse, UBS, Morgan Stanley, and Merrill Lynch.
This announcement reveals that 17 cryptocurrencies are already available for trade on the exchange: 9 out of the top 10 coins, plus Augur, Ethereum Classic, Dash, ZCash, Melon, Gnosis, Iconimi, and Dogecoin.
In addition to these, Kraken also presented three popular fiat currencies to pair with crypto: the US Dollar, the Euro, and the Japanese Yen.
The official announcement invited loaded traders to start using the new service right away by contacting the corresponding email address (firstname.lastname@example.org).
The respective announcement was followed by an immediate spike in trading volume on Kraken. The amount traded on the exchange rose double two times the volume prior to the announcement — approximately $160 million.
This number was adjusted one day later on September 18th to $116 million. Was it just a hit and run or did Kraken just become a favorite for cryptocurrency whales?
No, Kraken is neither the first nor the only exchange to offer cryptocurrency block trading. However, the rank #15 exchange doesn’t have that far to climb to defeat its competitors.
Do you think that block trades will bring Kraken popularity among traders? Let us know in a comment below!
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