Crypto OTC desks say trading volumes are ‘going gangbusters right now’
2024-12-26
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Top crypto trading firms say that over-the-counter trading volumes have rapidly increased over the last few months, with the election outcome a key driving factor.
“Long story short, OTC is going gangbusters right now,” Tim Ogilvie, head of institutional at crypto exchange Kraken, told The Block, adding, “Prices are up, but volume is way up.”
Ogilvie noted that Kraken’s OTC trading volumes have risen 220% year-over-year, and other crypto trading firms saw a similar increase.
Jake Ostrovskis, OTC trader at market-making firm Wintermute, said the market was quiet in the middle of the year until prices rose heading into the election, and market participants wanted to be positioned for the result. He noted that Wintermute had been in onboarding conversations with some clients for as long as a few years, and they saw the election as a green light to finally start trading.
Embert Lin, trader at market-making firm GSR, said the company had seen volumes increase substantially since the election.
"With the rally in BTC/ETH and altcoins, projects and investors are becoming more active in managing their treasuries and risk at these levels," he said. "Institutions and others are also looking for new opportunities and ways to get exposure beyond BTC and ETH.”
A trader at one OTC firm noted on background that recent trading volumes have easily matched numbers seen in 2021 when crypto saw a big peak in interest.
BitGo, a crypto custodian that launched in 2013, quietly opened up an OTC trading desk in the first half of 2024 in order to capitalize on the bump in volumes immediately following the ETF approvals. Brett Reeves, head of Go Network at BitGo, said the election was a big driver of recent volumes, with two-thirds of its volumes coming in the last three months due to the election result. 
“America is the largest market in the world and them being potentially more favorable towards this is significant,” Reeves said.
An increasing risk appetite 
OTC desks noted that clients have also started moving further along the risk curve, dipping their toes into more cryptocurrencies — as long as they have sufficient liquidity.
“There's probably a generalized feeling on the desk that there is an appetite for taking on more of a risk. You know, we see that in two ways. One is just buying, but we also see it in people moving out the risk curve. They start with Bitcoin. It moves to Ethereum. It moves to Solana, maybe they start moving out into some of the [altcoins],” said Ogilvie. 
He added that solana is a risk asset trading in larger volumes in recent months.
Ostrovskis listed a few more assets tied besides solana that Wintermute’s clients typically focus on, namely bitcoin, ether, BNB, tron and aave. He said this was because they’re the most liquid, and clients naturally gravitate there.
“I do think liquidity is the biggest driver for institutions. They just look for where they can get size away. Whereas retail obviously have the ability to be a little bit more selective and play around with different themes,” he said.
Similarly, Lin said that GSR’s clients are looking for new ways to gain exposure beyond bitcoin and ether.
Expectations for crypto OTC trading in 2025
Looking ahead into the new year, BitGo's Reeves anticipates that the raised demand will be sustained, particularly for bitcoin and ether. He said OTC transactions have reduced some of the volatility in the exchange markets, even though there's still more volatility than in traditional finance.
“It's much calmer compared to those previous kinds of years because people believe the asset class is actually around to stay. Those ETFs have solidified that position. And so I think we see that have an impact both on the OTC markets and just more generally for crypto adoption,” he said.
Reeves added that the crypto market might see another ETF — whether that’s solana, XRP or another coin.
Ostrovskis, meanwhile, said a key development he’s watching is the growing maturity of the derivatives market as options continue to become more widely used. He said that big institutions exposed to crypto require some form of hedge. With liquidity constraints, they might turn to OTC desks looking for what’s on offer, with options a key solution. 
“Most of them will lean quite heavily on these products to hedge an underlying equity book or even bond or FX exposure, they'll lean on volatility products to hedge that,” he said. “So I think that's a huge area of growth. I'd argue we are seeing it already and I think that probably takes off into next year.”
Ostrovskis added that the launch of options on bitcoin ETFs has opened the door for prime brokers to create cross-collateralized products that were too expensive to make with the underlying ETFs alone due to their fees. 
“That makes it very close to, again, what the equity market looks like,” he said. “It opens up a whole pool of capital there. I think that where that flows into will be interesting.”
Disclaimer: Evgeny Gaevoy, the founder and CEO of Wintermute, previously sat on The Block’s board of directors from April 2023 to early November 2023 and remains a minority shareholder.
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