A recent industry survey has uncovered notable inconsistencies in the estimates of over-the-counter (OTC) trading volumes within the cryptocurrency market. While some liquidity providers report daily trading figures surpassing $100 billion, the average estimate hovers around $39 billion.
This survey aimed to analyze the landscape of institutional cryptocurrency trading as it approaches 2025. It involved a diverse group of industry stakeholders, including liquidity providers, market makers, and prime brokers. Findings indicate that the cryptocurrency market is marked by significant fragmentation, comprising over 700 trading venues worldwide. This multitude of platforms presents challenges, such as connectivity issues, where transactions can be inefficiently matched due to buyers and sellers operating on different platforms. Such discrepancies in estimates are not surprising given these complex market dynamics.
Despite these hurdles, there are signs of optimistic growth in the sector. Approximately 18% of participants foresee year-over-year growth that exceeds 100% by 2025, while nearly half expect more modest growth rates ranging from 10% to 60%. The surge in trading volumes in 2024, which saw a remarkable increase of over 100%, particularly in stablecoin transactions—jumping almost 150%—is contributing to these optimistic forecasts. Notably, half of the surveyed industry experts noted that OTC cryptocurrency trading volumes had more than doubled compared to the previous year.
The adoption of artificial intelligence (AI) technologies in trading operations is gaining traction, with over 70% of firms reporting existing AI integration. Furthermore, more than half of these firms plan to boost their AI investments by 5-30% in the upcoming year. AI is predominantly seen as beneficial for back-office activities, such as settlements and reporting, but there is also recognition of its potential in analyzing market data and facilitating cross-asset trading.
The survey indicated a significant shift in institutional participation in the cryptocurrency marketplace, with 42% of institutional players now incorporating digital assets into their routines, showcasing a departure from mere exploratory interest. Factors contributing to this momentum include expected support for crypto-related policies and regulatory clarity from U.S. authorities, with major topics identified as influencing adoption being cryptocurrency ETFs and upcoming elections.
European regions account for 38.5% of the demand for institutional OTC crypto trading, followed by North America, Asia, and the Middle East—which each claim approximately 15.4%. The embrace of regulation is also highlighted, as most institutions plan to pursue additional crypto licenses in 2025. Singapore, Switzerland, and the UAE are recognized as leading territories for favorable regulations surrounding institutional trading operations.
In terms of hedging strategies, options and futures are prominent within the OTC crypto market, with a majority of respondents favoring options. However, low liquidity presents a barrier to broader acceptance of crypto derivatives. Innovative derivatives are gaining attention as well, such as those enabling miners and stakers to sell their rewards at volume-weighted average prices, with settlements to occur upon reward receipt.
As the marketplace matures, key trends are emerging regarding the future of OTC crypto trading. The role of Central Clearing Houses is becoming more critical in addressing counterparty risks, and there is potential for the integration of decentralized solutions into OTC trading as the regulatory environment evolves.
The increasing institutional engagement has significantly influenced Bitcoin’s performance, which saw a remarkable rise of 120% in 2024. Current technical assessments indicate that Bitcoin is navigating a crucial support level around $85,400 after testing the $95,000 mark. This analytics suggests that if Bitcoin holds at this support, it could indicate bullish trends, while a failure to maintain this level may lead to further declines.
Market participants remain watchful of Bitcoin’s trajectory as it hovers around pivotal technical indicators, with a focus on how the price will respond to underlying market forces moving forward. Overall, the survey reveals both the complexities and growth opportunities within the cryptocurrency OTC trading landscape as it continues to evolve.