- OTC cryptocurrency trading volumes are up 220% year on year.
- The US election leads to increased risk-taking and activity.
The remarkable growth in over-the-counter, or OTC, cryptocurrency trading is now seeing 220% year-over-year growth on Kraken and other exchanges, with volumes reaching those of a peak in 2021. These dynamics, fueled by election dynamics and heightened interest in the market, are a sign of investor strategies that continue to shift towards alternative exchanges.
Tim Ogilvie, Kraken’s head of institutional sales, said the OTC market was going gangbusters. Even if prices are up, he mentioned that trading volumes went much higher. It would help if the US elections became a big factor because before their elections, traders changed positions and the market adjusted.
US Election Spurs OTC Trading Boom
Wintermute’s OTC trader, Jake Ostrovskis, said that activity was muted during the middle part of the year but accelerated very quickly at the end with election results. Clients who had been waiting on the sidelines started to onboard and trade in the light of the political climate being a cue to act. GSR also reported trading activity as diversified investors looked elsewhere outside the Bitcoin and Ethereum asset bases.
Cryptocurrency custodian BitGo jumped into the fray also by stealthily launching an over-the-counter desk in January 2024. Said Brett Reeves, chief Go Network at BitGo Two-thirds of our business over the past three months was post-election activity. He emphasized that the US market is at the epicenter and commented that the interest in trading Ethereum, Bitcoin, and other newer assets such as Solana was on the rise.
With volatility still defining the crypto market, OTC trading provides an alternative that is more stable. Analysts and industry leaders expect the demand for OTC transactions to stay strong into the new year with a mix of institutional interest and risk diversification.
The electoral cycle’s effect on trading activity highlighted once again how volatile is the interplay between politics and the cryptocurrency market as the institutional players move the digital assets landscape in unprecedented ways.
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