Cryptocurrency OTC Trading Volume Surges Post-US Election, Altcoins Attract New Clients

Several cryptocurrency trading companies have indicated that the results of the U.S. election and the recent rise in cryptocurrency prices have led to a rapid increase in over-the-counter (OTC) trading volume

Several cryptocurrency trading companies have noted that the results of the U.S. election and the recent rise in cryptocurrency prices have led to a rapid increase in over-the-counter (OTC) trading volume over the past few months.

Moreover, clients are beginning to pay more attention to altcoins beyond Bitcoin and Ethereum.

Institutions prefer liquidity, and the emergence of markets like options significantly enhances their hedging efficiency.

Surge in OTC Trading

OTC trading is currently booming. This year's OTC trading volume has grown by 220% compared to last year.

Jake Ostrovskis, an OTC trader at market maker Wintermute, said that at times, Wintermute has been in discussions with some clients for several years, preparing for their market participation, and this election has played a key role in finalizing those decisions.

"A few clients who had previously planned to begin trading in the fourth quarter of this year have now moved up the timeline and began trading in the third quarter. We've seen a noticeable shift in the pace of institutional client onboarding, with an acceleration in the past six months," said Ostrovskis.

With the rise of BTC, ETH, and altcoins, both projects and investors have become more proactive in managing their funds and risks. Institutions and other organizations are also seeking new opportunities and ways to explore areas beyond BTC and ETH.

Institutions Value Liquidity, Options Markets Help with Hedging

Market makers have also pointed out that clients are moving further along the risk curve, engaging with more cryptocurrencies, including Solana, BNB, Tron, and AAVE, in addition to Bitcoin and Ethereum.

This is because these cryptocurrencies offer the strongest liquidity, naturally drawing clients. Clearly, liquidity is the biggest driving force for institutions.

As options are used more widely, the derivatives market is maturing. Large institutions engaging with cryptocurrencies need some form of hedging. Due to liquidity constraints, they might turn to OTC desks for options.

Most institutions heavily rely on these products to hedge their positions in stocks, bonds, or forex. The launch of Bitcoin ETF options has opened the door for major brokers to create cross-collateralization products, as using only the underlying ETFs to construct these products would be too costly.

According to data from SoSoValue, three Bitcoin ETFs that have issued related options are BlackRock's IBIT, Grayscale's GBTC, and BTC. As of 12/23, the total open interest (OI) amounted to $7.98 billion.

Six Bitcoin Mutual Funds to List in Israel on 12/31

Additionally, according to CoinDesk, six mutual funds tracking Bitcoin prices have been approved by the Israel Securities Authority (ISA) last week and are expected to start trading on December 31, providing investors with more diverse channels to invest in BTC.

These six Bitcoin mutual funds are issued by Migdal Capital Markets, More, Ayalon, Phoenix Investment, Meitav, and IBI. However, insiders have revealed that initially, these funds will only trade once per day, with continuous trading to be opened in the future.