Circle Trade has reported a 30% increase in unique institutional investors during May 2018, despite the Bitcoin bear market that has seen price decline by 70% since December 2017. Circle’s CEO Jeremy Allaire says, “A lot of folks on the institutional side are on-boarding, and getting their ducks in the row”.
This is a positive sign for the market, since institutional investment has the potential to bring the price of Bitcoin back up to USD 20,000 and possibly way beyond.
Circle Trade is geared towards institutional investors, with a minimum trade requirement of USD 250,000 and over USD 2 billion of cryptocurrency transaction volume per month. Apparently, Circle Trade is growing rapidly and is now doing 15 times more transaction volume per day than a year ago.
In June 2018, Circle began automating institutional trades through an electronic interface. Allaire says it is “maturing this into a more traditional product” for quicker and more flexible trading. The automated electronic interface allows institutional investors to make the high-frequency trades that they are used to more efficiently and should lead to higher trading volume. Before, upgrade trades were done manually through instant messaging, significantly slowing the process down.
Cryptocurrency experts including Mike Novogratz, Charles Hoskinson, and Kyle Samani have said that institutional investors will unleash large amounts of money into the cryptocurrency markets, so this news could be a harbinger of that prediction. If even a tiny fraction of the trillions of dollars held by financial institutions is diverted to Bitcoin it would push Bitcoin to record levels. As of this writing, Bitcoin has a relatively small market cap near USD 100 billion.
Circle has ambitions of becoming an SEC licensed broker-dealer so that it can trade securities, since most initial coin offerings are now considered securities in the United States. Also, Circle is looking to obtain a national banking license so it can access inter-bank loans at the federal funds rate, which would help it reduce costs, and more importantly, so it only has to answer to federal government regulation rather than being regulated on a state to state basis.
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