Institutional adoption of cryptocurrency began in 2013, a time when most investors were skeptical about this asset class. Tyler and Cameron Winklevoss were pioneers in institutional investments in crypto, having purchased BTC worth $11 million in 2013. Fortress and Pantera, launched in 2013 and 2014, respectively, were among the earliest crypto investment funds. In the 2020s, this trend gained significant momentum, exemplified by giants like MicroStrategy starting to buy Bitcoin. This was followed by Fidelity, which opened its Fidelity Digital Assets in October 2018.
An institutional investor in crypto is a company, financial entity, tech or software company, or any other organization that allocates a portion of their portfolios to crypto assets. Companies may participate in the crypto market directly by investing through an institutional cryptocurrency exchange or investing in funds that further invest in their best interests.
What Institutional Investors in Cryptocurrency Look for in the Crypto Sector
A financial company interested in active trading and earning may choose to become a market maker on a large crypto platform. For example, the WhiteBIT crypto exchange market-making program offers advanced trading tools, flexible APIs, low fees, rebates, and VIP support for institutional investors.
Institutions entering the crypto space have specific requirements (speed, connectivity, compliance, advanced orders, etc.). Here’s how institutional exchanges meet their requirements:
- Standard connectivity through APIs. Institutions require seamless integration with their existing systems, facilitated by standard connectivity through industry-recognized APIs. Large crypto exchanges support these APIs. It allows for automated institutional crypto trading, real-time data access, and efficient management of assets across different platforms.
- Low latency performance in volatile market conditions. Institutional traders prioritize low latency to execute trades as close to their intended price as possible, minimizing slippage and maximizing potential returns. Exchanges that invest in robust infrastructure, including advanced order-matching engines and high-speed connectivity, are more attractive to institutional clients.
- Support for multiple order types. Beyond basic limit and market orders, institutions look for platforms that support various order types to execute sophisticated trading strategies. These include stop-loss orders and take-profit orders, which enable more precise control over entry and exit points. Exchanges that offer a broad range of order types can satisfy the complex needs of institutional traders.
- Compliance. It is crucial for institutional investors in cryptocurrency to adhere to the laws and regulations set forth by the governing bodies. Reputable crypto exchanges understand the importance of regulatory compliance and take all necessary measures to comply fully with the standards.
Institutional investment in cryptocurrencies is a growing trend that reflects the increasing interest of financial entities in this asset class. With the development of reliable cryptocurrency exchanges, more institutional investors are likely to invest in crypto.
