Wild West Scenario: Institutional vs Whale vs Exchange. Who Gains The Upper Hand?
Is the ‘Wild West’ of crypto world over or not? The enthusiastic quotes appear on the pages of mass media and blogs. The decrease of volatility on crypto market is something most people refer to in this statements while appealing to the idea of lasting stability. But wait, the tranquility on the cryptocurrencies’ markets and a lack of huge price leaps may lead one into false conclusions. The ‘Wild West’ is still here, a recent story by WSJ is called this way, and clearly shows that the rules are not established and it would take some time. The ongoing lack of regulations and transparency influences the investors’ trust not in a positive way at all.
Let’s take a wider look: the exchange price manipulations, pump-n-dump schemes and spoofing are not the only things to consider.
The so long-awaited institutional investors are rumored to enter the market. It went somehow unnoticed, without any red carpets and fanfares. Money loves silence, as it has been said through the years. Nevertheless, this seems suspicious, as no great shifts occur due to such news. The institutional investors’ behaviour was described in a story by Olga KHARIF, according to which, the hedge funds and other institutions choose private transactions. Bobby CHO, global head of trading at Cumberland, the Chicago-based cryptocurrency trading unit of DRW Holdings LLC is positive on this trend: “What that’s showing you is the professionalization that’s happening across the board in this space. The Wild West days of crypto are really turning the corner.”
Indeed, the over-the-counter trading in crypto might be the solution to the ‘Wild West’ issues which happen on crypto exchanges right now, according to WSJ. But can it be a cunning and strategic scheme of seizing the markets as they are seemingly falling dormant? The OTC daily trade reached $30 bln in the April of this year, according to TABB Group research. Meanwhile, crypto exchanges tend for not more than $15 bln per 24 hr, and this number may be overestimated, if we recall the fake trade volume issues widely discussed earlier. From a global point of view, the OTC crypto trading may seem a humongous strategic move of force accumulation.
Such thoughts also come to mind, when one studies the brief analysis of Bitcoin Whales’ TOP-100 wallets balance performed by Cryptovibes this month. The main conclusions are that ‘The Whales’ buy bitcoins in progression and hold more than 90% of them. Who are they? What are they holding for? What do they know? The open source information doesn’t provide the straight answers, as these movements are obvious but the intentions are obscure.
The hypothesis stays: the force accumulation is a prelude to further manipulation, the threat that may be more serious than local exchange bot fights. As the institutional investors are said to obtain more crypto via OTC, the impact on the price movement of virtual assets and on the exchanges in general, is awaited. The latter understand that too. The investors expect the value of crypto to increase. Everyone tries to load as much as possible and take their time. Who shoots first and who falls first?