Institutional Trading of Crypto: Services and Potential for Industry Growth


In their early years, crypto assets were treated as a joke, but today’s potential looks like a future game changer in the whole financial system. In 2009, no one could imagine Bitcoin would fall into hundreds of portfolios of the world’s largest companies in 2023.

MicroStrategy, Tesla, Goldman Sachs, Morgan Stanley, and other world-known companies were the early crypto adopters. Hedge funds, investment banks, payment processors, and just high-net-worth individuals all rushed into the crypto sector, understanding its opportunities as well as risks. It is estimated that in the next 5 years, hedge funds alone will hold $312 billion in crypto, which is 7% of their capital.

Such an active institutional crypto adoption can not pass without a trace for the crypto sector. In this article, we will discuss how the crypto space is going to change in the face of growing interest from institutional investors in cryptocurrency.

Institutional Services Offered by Crypto Exchanges

Institutions invest in digital assets through crypto platforms that provide them with institutional services:

  • Liquidity for quick and efficient trading with large amounts
  • Institution-grade security and custody
  • Coin listing on exchange
  • Account management and reporting tools
  • Market data analysis
  • Lending programs
  • Sophisticated trading tools, margin and futures trading
  • Market making
  • Algorithmic trading
  • etc.

How Institutional Crypto Trading Changs the Crypto Space

Institutional participation in crypto stimulates the development of new products and crypto assets. Many traditional products that now appear in the crypto market, were not available here before. An example may be the launch of Bitcoin ETF in the USA. Institutions are used to traditional products in conventional markets so they “pull” the same products to the crypto sector to expand investments and make money in the field they know well. 

The next thing institutions are going to bring to the crypto market is maturity. The entrance of traditional companies into the crypto space brings clearer regulations and trust to this sector. This stimulates other investors to join. The more companies come to the crypto industry, the more experience they bring into it, the less volatile the market becomes, and the less risky it looks for both institutional and retail players. Thus, the more mature the market becomes.

Next comes regulations. There should be a more regulated framework that would create a safe environment for crypto trading. Institutions force the development of regulation oversight for crypto, and the more clear it is, the more new investors will come. 

Wrap Up

Institutional crypto exchange platforms offer numerous opportunities and safe trading infrastructure to institutional players. They, in turn, bring many benefits to the industry: new products, the promotion of clear regulations, and the overall maturity of the market.